Company: CODI-PB
Filing Date: 2025-12-08
Form Type: 10-K/A
Source: 0001345126-25-000078
Chunk: 239

Company: Compass Diversified Holdings
Filing Date: 2025-12-08
Form: 10-K/A
Chunk 239
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ugano"), Relentless Topco, Inc. ("PrimaLoft"), THP Topco, Inc. ("The Honey Pot Co." or "THP"), CBCP Products, LLC ("Velocity Outdoor" or "Velocity"), AMTAC Holdings, LLC (“Arnold”), FFI Compass, Inc. ("Altor Solutions" or "Altor") and SternoCandleLamp Holdings, Inc. (“Sterno”). The segments are referred to interchangeably as “businesses”, “operating segments” or “subsidiaries” throughout the financial statements. Refer to Note R - "Operating Segment Data" for further discussion of the operating segments. Compass Group Management LLC, a Delaware limited liability Company (“CGM” or the “Manager”), manages the day to day operations of the LLC and oversees the management and operations of our businesses pursuant to a management services agreement (the "Management Services Agreement").

Note B — Summary of Significant Accounting Policies (as restated)

Basis of presentation

The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP" or "US GAAP"). The results of operations represent the results of operations of the Company’s acquired businesses from the date of their acquisition by the Company, and therefore may not be indicative of the results to be expected for the full year.

Restatement of Previously Issued Financial Statements

In April 2025, the Audit Committee of the Board of Directors (the “Audit Committee”) of the Company commenced an internal investigation into the financing, accounting, and inventory practices of Lugano based on concerns reported to Company management as to these practices (the “Lugano Investigation”). The Luga no Investigation concluded that the former Lugano chief executive officer deliberately engaged in fraudulent activity by, among other things, entering into off-balance sheet financing arrangements with third parties in violation of Company policies and directives and the terms of the Company’s intercompany credit agreement with Lugano, misrepresenting the existence and valuation of inventory, and causing the recording of fictitious sales. In doing so, the former Lugano chief executive officer sought to circumvent financial controls (including, among other things, through the creation and use of false documents and manipulation of Lugano employees who exhibited a lack of due care); ignored directives from the Company and the Audit Committee to implement additional controls; and actively recorded or edited, or caused the recording or editing of, false entries in Lugano’s accounting and financial records. The accounting errors at Lugano