Compass Diversified Holdings

Disclosure Controls and Procedures

Management’s Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of our Chief Executive Officer and Chief Financial Officer, has performed an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2025. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2025, our disclosure controls and procedures were not effective due to the material weaknesses in internal control over financial reporting described below.

Report of Management on Internal Control over Financial Reporting

The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act). The Company’s internal control system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles.

The Company's management assessed the effectiveness of our internal control over financial reporting as of December 31, 2025. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control—Integrated Framework (2013 framework). Based on this assessment, management concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2025, due to the material weaknesses described below.

Attestation Report of the Registered Public Accounting Firm

Our independent registered public accounting firm has issued an attestation report on the effectiveness of our internal control over financial reporting. This report appears in Item 8 of this Annual Report on Form 10-K.

Material Weaknesses in Internal Control Over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

In connection with the Lugano Investigation and the related restatement of our previously issued consolidated financial statements, the Company identified certain material weaknesses as of December 31, 2024. Because Lugano was deconsolidated from the Company’s consolidated financial statements as of the date of its Chapter 11 filing in November 2025, certain material weaknesses previously identified within Lugano’s operations (including tone at the top considerations relating to the former Lugano chief executive officer, segregation of duties and security access rights for the former Lugano chief executive officer, and revenue, inventory, and expense controls at Lugano) no longer form part of the assessment of the Company’s internal control over financial reporting as of December 31, 2025.

As of December 31, 2025, management determined that the following material weaknesses (which were previously identified and disclosed in connection with the Lugano Investigation and CODI’s restatement of its historical financial reports filed with the SEC on Form 10-K/A on December 8, 2025) remained unremediated:

1. Risk assessment and control design over operating subsidiaries’ specific risks. Company management did not effectively execute its subsidiary risk assessment processes to identify and address industry and operating risks at its former subsidiary, Lugano. This resulted in an incomplete understanding of certain risks and the manner and means of fraud and loss associated with Lugano’s industry and practices. Specifically, the Company’s risk assessment processes did not include a sufficiently formal or rigorous evaluation of risks associated with subsidiary operations.

2. Monitoring controls and control environment over operating subsidiaries. Compensating and monitoring review controls implemented by management over its operating subsidiaries, including Lugano, lacked sufficient precision and rigor to effectively mitigate the risk of material misstatement. This includes timely identification and escalation of control deficiencies and other indicators of risk, as well as maintaining sufficient contemporaneous evidence to support the level of precision of these monitoring review controls. Accordingly, the Company did not design and/or maintain appropriate monitoring review controls that adequately addressed those risks.

Remediation and Status of Remediation Efforts

Although the material weaknesses were originally identified in connection with Lugano, the Company has implemented and continues to implement remediation measures at the CODI level to address the material weaknesses described above including enhancements to our subsidiary risk assessment processes, monitoring, and escalation, and governance and oversight practices supporting the design and operation of controls, including:

•Outsourcing the internal audit function to a qualified third-party service provider to support risk assessment, testing, and monitoring activities and to provide additional resources and expertise;

•Re-evaluating investment processes, parameters, risk assessment and governance requirements over subsidiaries;

•Enhancing post-acquisition onboarding processes;

•Evaluating and enhancing risk and compliance functions, including the effectiveness of implementation and monitoring of risk management and controls at the subsidiary level and of the whistleblower program;

•Enhancing processes for identifying and assessing risks at operating subsidiaries, including procedures designed to identify and evaluate industry-specific risks and practices, and to incorporate those risks into our control design and monitoring activities;

•Implementing additional management review and monitoring procedures focused on areas of elevated risk across operating subsidiaries, refining the level of precision of such monitoring controls, and including processes intended to improve the timeliness and effectiveness of escalation of control issues and other indicators of risk to senior management and the Audit Committee; and

•Continuing to evaluate and update policies, procedures, and governance practices relating to subsidiary oversight and financial reporting.

Although the Company has made progress in implementing these remediation actions, management will not be able to conclude that the enhanced controls are operating effectively until they have operated for a sufficient period of time and management has been able to test, and conclude on, their operating effectiveness. Management may also determine that additional remediation measures are required as our evaluation continues. While management believes the actions described above will improve internal control over financial reporting, there can be no assurance that these measures will remediate the material weaknesses or that additional material weaknesses will not be identified in the future.

Notwithstanding the material weaknesses described above, management believes that the consolidated financial statements included in this Annual Report on Form 10-K have been prepared in accordance with U.S. GAAP and fairly present, in all material respects, our financial position, results of operations and cash flows as of and for the periods presented.

Changes in Internal Control Over Financial Reporting

During the quarter ended December 31, 2025, the Company implemented certain of the remediation actions described above intended to address the material weaknesses described herein. Other than these remediation actions, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.