Company: CODI-PB
Filing Date: 2025-05-07
Form Type: 8-K
Source: 0001345126-25-000021
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Company: Compass Diversified Holdings
Filing Date: 2025-05-07
Form: 8-K
Item: Item 4.02
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Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.

In April 2025, the Audit Committee of Board of Directors (the “ Audit Committee”) of Compass Group Diversified Holdings LLC (“ CODI,” or the “ Company”) commenced an internal investigation into the financing, accounting, and inventory practices of Lugano Holding, Inc. (“ Lugano”), a subsidiary and operating segment of the Company, based on concerns reported to Company management as to these practices. Upon being notified of the concerns, Company management immediately informed the Audit Committee, and the Audit Committee promptly retained outside legal counsel to assist in conducting the investigation. Outside legal counsel in turn retained a forensic accounting firm to provide technical accounting guidance and analysis, as well as to assist with inventory review (outside legal counsel and the forensic accounting firm, collectively, the “ Advisors”).

The investigation, which remains ongoing, focuses on certain unrecorded financing arrangements and irregularities identified in sales, cost of sales, inventory, and accounts receivable recorded by Lugano. The investigation is limited to Lugano and the Audit Committee presently has no reason to believe the investigation affects or will involve any of the Company’s other operating segments. There have been no limitations imposed on the investigation’s scope or timing, or the Advisors’ access to information or personnel.

On May 7, 2025, after considering the advice and recommendations of the Company’s management and the Advisors, and discussion with the Company’s independent registered accounting firm, Grant Thornton LLP, the Audit Committee concluded that the Company’s consolidated financial statements and other financial information for the fiscal year ended December 31, 2024 should no longer be relied upon due to the materiality of the preliminary findings of the investigation described above. Any previously issued or filed reports, press releases, earnings releases and investor presentations or other communications describing the Company’s consolidated financial statements and other related financial information covering the fiscal year ended December 31, 2024 should also no longer be relied upon. The Company is in the process of evaluating the impact of these matters on internal control over financial reporting and expects to report one or more additional material weaknesses in internal control over financial reporting.

The Audit Committee is working diligently with its Advisors to complete this investigation as soon as possible. At this time, the Company cannot estimate the ultimate financial impact that may result from the Audit Committee’s findings on the Company’s previously issued financial statements or results of operations. However, the Company believes such findings are likely to be material,