FAIR VALUE DISCLOSURES

12 Months Ended

Sep. 30, 2025

FAIR VALUE DISCLOSURES

FAIR VALUE DISCLOSURES

9. FAIR VALUE DISCLOSURES

Mandatorily Redeemable Non-Controlling Interest

MRNCI recorded on the Company’s consolidated balance sheets represents the fair value of the non-controlling interest in the Company’s strategic investment in Team Sledd. During April 2025, Team Sledd redeemed certain membership interests from its non-controlling interest, which increased the Company’s ownership interest to approximately 92% as of September 2025. The Company owned approximately 76% of Team Sledd as of September 2024. The Company has elected to present the MRNCI liability at fair value under ASC 825 as it believes this best represents the potential future liability and cash flows. As such, the MRNCI balance at both September 2025 and September 2024 represents the fair value of the remaining future membership interest redemptions and other amounts due to noncontrolling interest holders through April 2026. At September 2025 and September 2024, the difference between the contractual amount due under the MRNCI and the fair value was approximately $0.3 million and $0.7 million, respectively. The following table presents changes in the fair value of the MRNCI during each of fiscal years 2025 and 2024:

	For the Year Ended September 30,
	2025		2024
Fair value, beginning of period	$	8,211,500	$	9,490,831
Redemption of non-controlling interests		(1,812,558)		(1,812,558)
Distributions to non-controlling interest		(255,456)		(507,741)
Change in fair value		877,409		1,040,968
Fair value, end of period	$	7,020,895	$	8,211,500

Contingent Consideration

As described in Note 2, a portion of the consideration exchanged in the acquisition of Burklund was in the form of contingent consideration of up to $3.0 million in cash payable in two installments on the one-year and two-year anniversaries of the acquisition date based on the achievement of certain sales thresholds. In accordance with ASC 805, the Company recorded this contingent consideration at fair value as of the acquisition date and re-measures the liability at each reporting period. The Company calculates the estimated fair value of the contingent consideration based on a discounted cash flow valuation technique using the best information available at the reporting date, and records changes in the fair value of the contingent consideration in selling, general and administrative expenses in the consolidated statements of operations. The short-term and long-term portions of any contingent consideration payable are recorded in accrued expenses and other long-term liabilities, respectively, in the Company’s consolidated balance sheets. The contingent consideration liability is classified as Level 3 because of the Company’s reliance on unobservable assumptions.

At each reporting date, the Company reviews certain inputs, including sales thresholds and an appropriate discount rate, based on management’s knowledge and assumptions of certain events. In Q1 2025, the Company determined that due to current sales trends including customer turnover, the achievement of the sales thresholds required to meet the minimum payout of any contingent consideration was not probable. As such, the Company adjusted the fair value of its contingent consideration liability and recognized operating income of approximately $1.5 million in Q1 2025, which was recorded as a reduction of selling, general and administrative expenses in the condensed consolidated statements of operations. At September 2025, the Company reaffirmed that the achievement of the sales thresholds required to meet the minimum payout of any contingent consideration was not probable.

At September 2024, the difference between the estimated amount due under the contingent consideration arrangement and the fair value was approximately $0.2 million.

The following table presents changes in the fair value of the contingent consideration during each of fiscal years 2025 and 2024:

	For the Year Ended September 30,
		2025		2024
Fair value of contingent consideration at beginning of period	$	1,453,452	$	—
Fair value of contingent consideration at acquisition		—		1,578,444
Change in fair value		(1,453,452)		(124,992)
Fair value of contingent consideration at end of period	$	—	$	1,453,452
Less current portion at fair value		—		(710,270)
	$	—	$	743,182