Outdoor Holding Company

This Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide a reader of our financial statements with management’s perspective on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with (i) the accompanying unaudited condensed consolidated financial statements and notes thereto for the three months ended June 30, 2026, (ii) the audited consolidated financial statements and notes thereto for the year ended March 31, 2026 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on June 22, 2026 (the "Form 10-K") and (iii) the discussion under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Form 10-K. Except for certain information as of March 31, 2026, all amounts herein are unaudited. The following discussion contains forward-looking statements that are subject to risks and uncertainties. See “Special Note Regarding Forward-Looking Statements.” Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Quarterly Report on Form 10-Q (this “Form 10-Q”), particularly in the section entitled “Risk Factors.” Unless we state otherwise or the context otherwise requires, the terms “we,” “us,” “our” and the “Company” refer to Outdoor Holding Company (formerly AMMO, Inc.) and its consolidated subsidiaries.

Overview

Outdoor Holding Company is the owner of the GunBroker Marketplace ("GunBroker" or the "Marketplace"), a leading online marketplace serving the firearms and shooting sports industries. Through our Marketplace, we allow third party sellers to list items consisting of firearms, hunting gear, fishing equipment, outdoor gear, collectibles, and much more, while facilitating compliance with federal and state laws that govern the sale of firearms and other restricted items. This allows our base of over 8.9 million users to follow ownership policies and regulations through a network of federally licensed firearms dealers ("FFLs") who serve as transfer agents. The nature and operation of the Marketplace as an online auction and sales platform also affords us a unique view into the total domestic market for the purpose of understanding sales trends at a granular level across all elements of the outdoor sports and shooting space. We generate revenue from marketplace fees, which include marketplace revenue, marketplace service fee revenue, advertising campaign revenue, FFL transfer revenue, and shipping revenue. Our key strategic initiatives include: launching universal payment processing to facilitate electronic transactions, decrease transaction friction, increase gross merchandise value ("GMV"), improve the user experience with the use of AI, and accelerate user adoption; deploying capital opportunistically by repurchasing shares; further streamlining the business to increase operational efficiency and reduce operational costs; and implementing further user enhancements to the platform with new tools, analytics, and personalization features to deliver best-in-class buyer and seller experiences. As part of our key strategic initiatives, we invested in a platform integration with Master FFL beginning in November 2025. Master FFL integration allows us to provide platform users access to a larger network of FFL dealers, centralizing FFL dealer verification and compliance, and allowing streamlined firearm transfers through automatic verification of federally-licensed firearm dealers.

Recent Developments

Settlement of SEC Investigation

As previously disclosed, we were subject to an investigation by the SEC relating to certain accounting, disclosure, and internal control issues primarily arising during periods prior to the tenure of our current management team (the "SEC Investigation"). We made an Offer of Settlement to the SEC, and on December 15, 2025, the SEC instituted settled cease-and-desist proceedings that fully resolved the investigation. We consented to the entry of the cease-and-desist order (the “SEC Order”) without admitting or denying the SEC’s findings, except as to jurisdiction.

Under the terms of the settlement, the SEC did not impose any civil penalty or monetary sanction. We agreed to cease and desist from committing or causing any future violations of certain provisions of the federal securities laws and related rules. The SEC’s findings relate primarily to historical disclosure failures, accounting misstatements, non-GAAP financial metric disclosures, and deficiencies in internal accounting controls during the period from August 2020 through July 2023. As part of the SEC settlement, we agreed to undertakings requiring us to engage a third-party compliance consultant to review and make recommendations concerning the remediation of material weaknesses in internal control over financial reporting. We are required to cooperate fully with the consultant, adopt

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and implement the consultant’s recommendations within two years of the SEC Order, and provide written certifications of compliance to the SEC staff.

We began significant remediation efforts prior to the settlement and continued those efforts following the resolution of the SEC matter. These actions included, among other measures, conducting an independent internal investigation, restating affected historical financial statements, replacing prior senior leadership, expanding and enhancing the accounting and external reporting function, retaining external accounting and internal control advisors, strengthening policies and procedures related to expense classification, capitalization, and stock-based compensation, enhancing period-end close and reconciliation controls, establishing a formal disclosure committee, and implementing a more robust process for identifying and disclosing related-party transactions. In July 2026, we delivered a certification and supporting documentation to the SEC Staff that, in the Company’s opinion, it had fully complied with the undertakings concerning the remediation of material weaknesses in internal control over financial reporting as required by the SEC Order. The SEC Staff is currently evaluating the Company’s certification and supporting documentation.

The settlement with the SEC did not result in any civil penalty or disgorgement and, accordingly, did not have any direct adverse impact on our liquidity or capital resources. However, we incurred, and expect to continue to incur, costs related to compliance with the settlement undertakings and indemnification of three former directors and officers. These costs include fees and expenses associated with the compliance consultant and internal control remediation activities, along with advancement of legal expenses to former directors and officers against whom the SEC has instituted a separate enforcement action. These costs may be material in individual reporting periods but are not expected to impair our ability to meet our obligations or execute our business strategy.

Management believes that the resolution of the SEC Investigation eliminates a significant source of uncertainty and allows us to focus on operating our business, enhancing our control environment, and pursuing our strategic objectives.

Results of Operations

The following table presents summarized financial information taken from our unaudited condensed consolidated statements of operations for the three months ended June 30, 2026, compared with the three months ended June 30, 2025:

Non-GAAP Financial Measures

We analyze operational and financial data to evaluate our business, allocate our resources, and assess our performance. In addition to total net sales, net income (loss), and other results under accounting principles generally accepted in the United States ("GAAP"), the following information includes key operating metrics and non-GAAP financial measures that we use to evaluate our business. We believe that these measures are useful for period-to-period comparisons of our performance. We have included these non-GAAP financial measures in this Form 10-Q because they are key measures management uses to evaluate our operational performance, produce future strategies for our operations, and make strategic decisions, including those relating to operating expenses and the allocation of our

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resources. Accordingly, we believe that these measures provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors.

Adjusted EBITDA

We define Adjusted EBITDA as net income (loss) from continuing operations excluding (i) provision or benefit for income taxes, (ii) depreciation and amortization, (iii) interest expense, net, (iv) stock-based compensation expenses relating to stock awards and common stock purchase options, (v) interest and other income (expense), net, (vi) expenses related to acquisition and divestitures, (vii) gain on extinguishment of debt, (viii) professional service and legal fees related to an investigation conducted by a special committee of the Board of Directors (the “Special Committee Investigation”), the SEC Investigation and the Delaware Litigation (xi) other nonrecurring expenses, such as contingencies associated with litigation or settlements and (x) corporate restructuring costs related to headcount reductions, severance, and expense consolidation.

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

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

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

Net Revenues

We generate revenue from marketplace fees, which includes marketplace revenue, marketplace service fee revenue, FFL transfer revenue, advertising revenue and shipping revenue. Marketplace revenue consists of optional

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listing fees with variable pricing components based on customer options and final value fees based on a percentage of the final selling price of the listed item. Marketplace service fee revenue consists of fees charged to customers based on the final price of an item at the time of purchase. The marketplace service fee is assessed by GunBroker and added to the price of the item at the time of purchase for all buyers, based on the final price of an item at the time of purchase. The marketplace service fee helps offset increased costs associated with compliance with new state laws related to taxation, privacy, and firearms, which have significantly increased GunBroker’s operational compliance expenses. FFL transfer revenue is a variable per unit fee associated with transactions requiring FFL transfers. Advertising revenue consists of fees charged for advertisement placement and impressions generated through the GunBroker website. Shipping revenue consists of fees for the shipping of items sold on the GunBroker website.

Net revenues for the three months ended June 30, 2026 increased by $2.6 million, or 22.1%, from the three months ended June 30, 2025 due to the addition of FFL transfer revenue and increased GMV from our Marketplace primarily driven by increases in firearms sales.

Cost of Revenues

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

Cost of revenues increased $0.7 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The increase is associated with investments in the GunBroker platform and higher transaction volume.

Gross Margin

Our gross margin, which measures our gross profit as a percentage of sales, decreased slightly to 84.5% for the three months ended June 30, 2026 compared to 87.2% for the three months ended June 30, 2025. This decrease in gross margin was primarily the result of costs relating to the efforts to implement the Master FFL platform.

Operating Expenses

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

Operating expenses decreased by $7.4 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The decrease in operating expenses was the result of a reduction of $3.7 million in legal and professional fees primarily related to the completion of the Delaware Litigation, the Special Committee Investigation and accounting restatement, a reduction of stock-based compensation expense of $0.4 million due to a reduction in stock award grants, a reduction of $0.6 million related to one-time sales tax audit expenses recorded in the prior year and a $2.7 million reduction in salaries and related expenses due to reduced headcount and restructuring efforts as well as a reduction in the number of directors.

Other Income and Expenses, Net

Total other income, net for the three months ended June 30, 2026 increased by $0.2 million compared to the three months ended June 30, 2025. This increase was the result of an increase in interest income of $0.1 million

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generated from holding a higher cash balance and a decrease in interest expense of $0.1 million as a result of no longer financing corporate insurance premium payments.

Income Taxes

Income tax expense for the three months ended June 30, 2026 was $36,715 compared to zero for the three months ended June 30, 2025. The increase in income tax expense is related to our estimated net income for the full year compared to a net loss in the prior year.

Our effective tax rate was 1% and zero for the three months ended June 30, 2026 and 2025, respectively. Our effective tax rate differed from the statutory rate due to recording a full valuation allowance against our deferred tax assets.

Liquidity and Capital Resources

As of June 30, 2026, we had $68.8 million of cash and cash equivalents, an increase of $0.7 million from March 31, 2026. The increase was primarily attributable to cash generated from operations.

Working capital is summarized and compared as follows:

Changes in cash flow are summarized as follows:

Operating Activities

For the three months ended June 30, 2026, net cash provided by operations was primarily the result of the benefit of non-cash expense for depreciation and amortization as well as our net income from operations, partially offset by a reduction in accounts payable and accrued liabilities primarily associated with a decrease in legal and professional fees.

For the three months ended June 30, 2025, net cash used in operations was primarily the result of a reduction in accounts payable and accrued liabilities primarily associated with legal and professional fees as well as payments for insurance resulting in an increase in prepaid expenses.

Investing Activities

For the three months ended June 30, 2026, net cash used in investing activities consisted primarily of $0.7 million in capitalized development costs related to our Marketplace.

For the three months ended June 30, 2025, net cash provided by investing activities consisted primarily of proceeds of $42.9 million related to the sale in April 2025 of the Ammunition Manufacturing Business partially offset by $0.9 million related to capitalized development costs for our Marketplace.

Financing Activities

For the three months ended June 30, 2026, net cash used in financing activities consisted of $0.8 million in payments of preferred stock dividends, $0.2 million to make principal payments on related party notes, $2.0 million to purchase shares under our share repurchase program and $0.1 million used in the repurchase of common stock to cover taxes on shares issued to employees.

For the three months ended June 30, 2025, net cash used in financing activities consisted of $0.6 million in payments of preferred stock dividends and $0.2 million used in the repurchase of common shares to cover taxes on shares issued to employees.

Liquidity

We expect existing working capital and cash flows from operations to be adequate to fund our operations over the next 12 months. Generally, we have financed operations to date through the proceeds of stock sales, bank financings, sales of equity, the sale of our Ammunition Manufacturing Business and related-party notes. These sources have been adequate to fund our recurring cash expenditures including but not limited to our working capital

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requirements, capital expenditures to expand our operations, debt repayments, and acquisitions. In the longer-term, we intend to continue to use the aforementioned sources of funding for our share repurchase program, capital expenditures, debt repayments and any potential acquisitions.

Leases

We currently lease three locations, two of which are office space and one of which is a 2,660 square-foot mixed-use warehouse space in Marietta, GA. The office space in Scottsdale is our former headquarters and is currently not being utilized. We attempted to sublease the Scottsdale office space but such efforts have proven unsuccessful thus far and we recorded an impairment of the lease asset in the year ended March 31, 2026. As of three months ended June 30, 2026, we had $1.1 million of fixed lease payment obligations with $0.5 million payable within the next 12 months. Please refer to Note 6, "Leases" for additional information.

Promissory Notes Issued in Settlement of the Delaware Litigation

As described in Note 12, "Related Party Transaction", on May 30, 2025, we issued to Mr. Urvan's affiliated designee, an unsecured promissory note for a principal amount of $12.0 million ("Note 1") and an unsecured promissory note in a principal amount of $39 million (" Note 2") pursuant to the 2025 Settlement Agreement. The aggregate principal amount of Note 1 and Note 2 was $51.0 million, and we were required to make aggregate annual prepayments of $2.95 million beginning on May 30, 2026. On September 17, 2025, the independent and disinterested members of the Board of Directors approved the exercise of an option to prepay all of the then-outstanding principal amount of Note 2 and accrued and unpaid interest thereon in exchange for the issuance of a the Additional Warrant to purchase 13.0 million shares of common stock (the "Prepayment Option"), and we issued the Additional Warrant in satisfaction of Note 2.

For the three months ended June 30, 2026 and 2025, we recorded interest expense of $244,363 and $81,955 on Note 1, respectively. For the three months ended June 30, 2026 and 2025, we recorded interest expense of zero and $266,375 on Note 2, respectively.

We made a $220,000 principal payment and $780,000 interest payment on Note 1 on May 29, 2026. The remaining principal balance on Note 1 is $11.8 million and we are required to make an annual prepayment of $1.0 million on Note 1 annually on May 30 until Note 1 matures on May 30, 2027.

Share Repurchase Program

On January 4, 2026, the Board authorized a discretionary share repurchase program pursuant to which we may repurchase up to $15.0 million of our outstanding common stock over a period of twelve months. Repurchases under the program may be made from time to time, in management’s discretion, through open market purchases, privately negotiated transactions, and other means in accordance with federal securities laws, including pursuant to one or more Rule 10b5-1 trading plans. The timing, volume, and value of any repurchases will be determined by management based on factors including market conditions, our liquidity and capital needs, and other factors deemed relevant. The share repurchase program does not obligate us to repurchase any specific number of shares and may be modified, suspended, or terminated at any time at the discretion of the Board of Directors or management. Any repurchases under the program will be funded from our existing cash balances, future operating cash flows, or other legally available funds.

During the three months ended June 30, 2026, we repurchased 1,020,004 shares at an average purchase price of $1.98 per share. The total cash paid to repurchase shares during the three months ended June 30, 2026 was $2.0 million.

As of June 30, 2026, we had repurchased an aggregate of 1,533,929 shares under the share repurchase program at an average price of $1.97 per share. As of June 30, 2026, the share repurchase program had $12.0 million in remaining authorized funds.

Off-Balance Sheet Arrangements

As of June 30, 2026 and March 31, 2026, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, net sales, expenses, results of operations, liquidity capital expenditures, or capital resources.

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Critical Accounting Estimates

Our condensed consolidated financial statements were prepared in accordance with GAAP. Critical accounting estimates are those that we believe are most important to the portrayal of our financial condition and results of operations. The preparation of our condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. Our estimates are evaluated on an ongoing basis and are drawn from historical operations, current trends, future business plans and other factors that management believes are relevant at the time our condensed consolidated financial statements are prepared. Actual results may differ from our estimates. Management believes that the accounting estimates reflect the more significant judgments and estimates we use in preparing our condensed consolidated financial statements.

Certain accounting policies that require significant management estimates, and are deemed critical to our results of operations or financial position, are discussed in the critical accounting policies and estimates section of "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in the Form 10-K. There have been no material changes to the critical accounting policies disclosed in the Form 10-K.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, we are not required to provide this information

ITEM 4. CONTROLS AND PROCEDURES

Limitations on Effectiveness of Disclosure Controls and Procedures

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of the disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and our principal financial officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d 15(e) under the Exchange Act). Based on that evaluation, our principal executive officer and our principal financial officer have concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2026.

Changes in Internal Control Over Financial Reporting

There have not been any changes in our internal control over financial reporting (as such term is defined in Exchange Act in Rule 13a-15(c) and 15d-15(e) under the Exchange Act) during three months ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Management continues to monitor the effectiveness of newly implemented controls and assess whether any additional changes are warranted.

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