10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Amendment No. 1)

(Mark One)

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2005

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                   to                   

Commission file number:000-17287

Outdoor Channel Holdings, Inc.

(Exact name of Registrant as specified in its charter)

Delaware	33-0074499
(State or other Jurisdiction	(IRS Employer Identification Number)
of incorporation or organization)

43445 Business Park Drive, Suite 113

Temecula, California 92590

(Address and zip code of principal executive offices)

(951) 699-4749

(Issuer’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  x Yes    o No

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).  o Yes     x No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Class	Number of Shares Outstanding at August 8, 2005
Common Stock, $0.001 par value	24,290, 913

EXPLANATORY NOTE

This amendment on Form 10-Q/A reflects the restatement of the unaudited condensed consolidated financial statements of Outdoor Channel Holdings, Inc. and Subsidiaries as of June 30, 2005 and December 31, 2004 and for the three and six months ended June 30, 2005, as discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations (Item 2) and Note 9 to the unaudited condensed consolidated financial statements to reflect the effects of a revised estimate of the useful life of intangible assets attributable to MSO relationships recorded  in connection with the September 8, 2004 acquisition of all of the outstanding shares of The Outdoor Channel, Inc. by Outdoor Channel Holdings, Inc. that it did not previously own.  Although the revised estimate of the useful life of these assets resulted in adjustments to and the restatement of our condensed consolidated balance sheet included in this Form 10-Q/A as of December 31, 2004, we determined that the effects of these adjustments were immaterial, individually and in the aggregate, to our annual and quarterly reports filed prior to January 1, 2005 and thus we did not amend those filings.

In addition, to provide more detail about our operating results and to more fully comply withthe Securities and Exchange Commission’s (the “SEC”) Regulation S-X, we have modified our presentation of the unaudited condensed consolidated statements of operations, as discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 1 to the unaudited condensed consolidated financial statements, by reclassifying the amounts originally included under “expenses” in line items under either “cost of services” or “other expenses”. Further, to better match intangible assets with the segment to which they pertain, we have reclassified the amortizable intangible assets and the goodwill which were recorded in connection with the acquisition on September 8, 2004 along with the related amortization expense from “Corporate” to the “TOC” segment. Certain other changes have been made in the historical unaudited condensed consolidated financial statements to conform with current presentations.

All of the information in this Form 10-Q/A is as of August 17, 2005, the filing date of the original Form 10-Q for the quarter ended June 30, 2005, and has not been updated for events subsequent to that date other than for the effects of the matter discussed above. Unless otherwise indicated, the exhibits previously filed with the Form 10-Q are not filed herewith but are incorporated herein by reference.

2

OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES

Quarterly Report on Form 10-Q/A

For The Period Ended June 30, 2005

Table of Contents

	Part I. Financial Information
Item 1.	Financial Statements
	Restated Condensed Consolidated Balance Sheets as of June 30, 2005 (Unaudited) and December 31, 2004
	Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2005 (Restated) and 2004
	Restated Unaudited Condensed Consolidated Statement of Stockholders’ Equity for the Six Months Ended June 30, 2005
	Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2005 (Restated) and 2004
	Notes to Restated Unaudited Condensed Consolidated Financial Statements
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Recent Accounting Developments
	Risks and Uncertainties
Item 3.	Quantitative and Qualitative Disclosures About Market Risk
Item 4.	Controls and Procedures
	Part II. Other Information
Item 1.	Legal Proceedings
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.	Defaults Upon Senior Securities
Item 4.	Submission of Matters to a Vote of Security Holders
Item 5.	Other Information
Item 6.	Exhibits
Signatures

* * *

3

PART I—FINANCIAL INFORMATION

ITEM 1.                  Financial Statements.

OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

	June 30,			December 31,
	2005			2004
	(Unaudited, Restated, Note 9)			(Restated, Note 9)
Assets
Current assets:
Cash and cash equivalents	$	9,007		$	13,105
Investment in available-for-sale securities	726			741
Accounts receivable, net of allowance for doubtful accounts of $347 and $207	5,075			4,848
Income tax refund receivable	1,919			2,291
Prepaid programming costs	2,606			606
Prepaid offering costs	902			—
Other current assets	1,559			135
Total current assets	21,794			21,726
Property, plant and equipment at cost, net:
Membership division	3,562			3,527
Outdoor Channel equipment and improvements	5,743			3,199
Property, plant and equipment, net	9,305			6,726
Amortizable intangible assets, net	11,820			12,347
Deferred tax assets, net	14,249			14,139
Goodwill	44,457			44,457
Deposits and other assets	267			174
Totals	$	101,892		$	99,569
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	3,289		$	3,705
Accrued severance payments	18			28
Current portion of capital lease obligations	22			26
Deferred tax liabilities, net	494			494
Current portion of deferred revenue	387			370
Customer deposits	1,003			61
Total current liabilities	5,213			4,684
Accrued severance payments, net of current portion	25			37
Capital lease obligations, net of current portion	—			9
Deferred revenue, net of current portion	1,228			1,145
Deferred satellite rent obligations	301			312
Total liabilities	6,767			6,187
Commitments and contingencies
Stockholders’ equity:
Preferred stock; 25,000 shares authorized; none issued	—			—
Common stock, $0.001 par value; 75,000 shares authorized: 18,660 and 18,394 shares issued and outstanding	18			18
Additional paid-in capital	113,797			111,912
Deferred compensation	(1,983		)	(1,034		)
Accumulated other comprehensive income	36			43
Accumulated deficit	(16,743		)	(17,557		)
Total stockholders’ equity	95,125			93,382
Totals	$	101,892		$	99,569

See Notes to Unaudited Condensed Consolidated Financial Statements.

4

OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations

(In thousands, except per share data)

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2005			2004		2005			2004
	(Restated, Note 9)					(Restated, Note 9)
Revenues:
Advertising	$	5,257		$	5,352	$	10,516		$	10,164
Subscriber fees	3,894			3,219		7,536			6,380
Membership income	863			986		2,023			2,218
Total revenues	10,014			9,557		20,075			18,762
Cost of services:
Programming	531			895		1,052			1,290
Satellite transmission fees	616			586		1,249			1,177
Production and operations	733			499		1,726			1,197
Other direct costs	243			204		462			450
Total cost of services	2,123			2,184		4,489			4,114
Other expenses:
Advertising	2,062			1,491		3,756			2,805
Selling, general and administrative	4,491			3,838		9,190			7,225
Depreciation and amortization	623			299		1,321			598
Total other expenses	7,176			5,628		14,267			10,628
Income from operations	715			1,745		1,319			4,020
Interest expense	(1		)	—		(2		)	—
Other income, net	38			30		90			59
Income before income taxes and minority interest	752			1,775		1,407			4,079
Income tax provision	315			704		593			1,633
Income before minority interest	437			1,071		814			2,446
Minority interest in net income of consolidated subsidiary	—			227		—			489
Net income	$	437		$	844	$	814		$	1,957
Earnings per common share:
Basic	$	0.02		$	0.06	$	0.04		$	0.13
Diluted	$	0.02		$	0.04	$	0.04		$	0.10
Weighted average number of common shares outstanding:
Basic	18,558			15,053		18,516			14,960
Diluted	22,513			15,593		22,453			15,556

See Notes to Unaudited Condensed Consolidated Financial Statements.

5

OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statement of Stockholders’ Equity

For the Six Months Ended June 30, 2005

(In thousands)

												Accumulated
							Additional					Other
	Preferred Stock			Common Stock			Paid-in		Deferred			Comprehensive			Acumulated
	Shares	Amount		Shares	Amount		Capital		Compensation			Income			Deficit			Total
Balance, January 1, 2005 (as originally reported)	—	$	—	18,394	$	18	$	111,912	$	(1,034	)	$	43		$	(17,457	)	$	93,482
Cumulative impact of restatment															(100		)	(100		)
Balance, January 1, 2005 (restated, Note 9)	—	—		18,394	18		111,912		(1,034		)	43			(17,557		)	93,382
Comprehensive income:
Net income (restated)															814			814
Effect of change in fair value of available-for-sale securities, net of deferred taxes of $7												(7		)				(7		)
Total comprehensive income (restated)																		807
Common stock issued upon exercise of stock options				194			408											408
Issuance of restricted stock to employees for services to be rendered				72			1,084		(1,084		)							—
Amortization of deferred compensation									135									135
Tax benefit from exercise of non-qualified stock options							393											393
Balance, June 30, 2005 (restated, Note 9)	—	$	—	18,660	$	18	$	113,797	$	(1,983	)	$	36		$	(16,743	)	$	95,125

See Notes to Unaudited Condensed Consolidated Financial Statements.

6

OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Cash Flows

(In thousands)

	Six Months Ended
	June 30,
	2005			2004
	(Restated, Note 9)
Operating activities:
Net income	$	814		$	1,957
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	1,321			598
Provision for doubtful accounts	140			—
Realized gain on sale of available-for-sale securities	—			(34		)
Minority interest in net income of consolidated subsidiary	—			489
Deferred tax provision	(104		)	—
Amortization of deferred compensation	135			—
Cash provided by (used in) changes in operating assets and liabilities:
Accounts receivable	(367		)	(475		)
Income tax refund receivable	767			489
Prepaid programming costs	(2,000		)	—
Other current assets	(1,424		)	26
Deposits and other assets	(93		)	(673		)
Accounts payable and accrued expenses	(416		)	232
Accrued severance payments	(22		)	(214		)
Deferred revenue	100			(470		)
Customer deposits	942			749
Deferred satellite rent obligations	(11		)	(34		)
Net cash provided by (used in) operating activities	(218		)	2,640
Investing activities:
Purchases of property, plant and equipment	(3,373		)	(966		)
Purchases of available-for-sale securities	—			(256		)
Proceeds from sale of available-for-sale securities	—			85
Net cash used in financing activities	(3,373		)	(1,137		)
Financing activities:
Principal payments on notes payable and capital leases	(13		)	(144		)
Proceeds from exercise of stock options	408			1,011
Prepaid offering costs	(902		)	—
Proceeds from common stock subscriptions receivable	—			30
Net cash (used in) provided by financing activities	(507		)	897
Net increase (decrease) in cash and cash equivalents	(4,098		)	2,400
Cash and cash equivalents, beginning of period	13,105			7,214
Cash and cash equivalents, end of period	$	9,007		$	9,614
Supplemental disclosure of cash flow information:
Interest paid	$	2		$	—
Income taxes paid	$	5		$	1,139
Supplemental disclosures of non-cash investing and financing activities:
Effect of net increase (decrease) in fair value of available-for-sale securities, net of deferred taxes	$	(7	)	$	—

See Notes to Unaudited Condensed Consolidated Financial Statements.

7

OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
(In thousands, except per share data)

NOTE 1—ORGANIZATION AND BUSINESS

Description of Operations

Outdoor Channel Holdings, Inc. (“Outdoor Channel Holdings,” or collectively with its subsidiaries, the “Company”) was reincorporated under the laws of the State of Delaware on September 14, 2004. Originally Outdoor Channel Holdings was incorporated under the name Global Resources, Inc., an Alaska corporation, and was subsequently re-named Global Outdoors, Inc. In 2003, the name was changed to Outdoor Channel Holdings, Inc. The Company acquired the remaining 17.6% minority interest in The Outdoor Channel, Inc. (“TOC”), which it did not previously hold, on September 8, 2004. TOC operates The Outdoor Channel which is a national television network devoted to traditional outdoor activities, such as hunting, fishing and shooting sports, as well as off-road motor sports and other related lifestyle programming.

Our revenues include advertising fees from advertisements aired on The Outdoor Channel, including fees paid by outside producers to purchase advertising time in connection with the airing of their programs on The Outdoor Channel, and from advertisements in “Gold Prospectors & Treasure Hunters in the Great Outdoors” magazine; subscriber fees paid by cable and satellite service providers that air The Outdoor Channel; membership fees from members in both LDMA-AU, Inc. (“Lost Dutchman’s”) and Gold Prospector’s Association of America, LLC (“GPAA”); and other income including products and services related to gold prospecting, gold expositions, expeditions and outings.

Other business activities consist of the promotion and sale of a gold prospecting expedition to our Cripple River property located near Nome, Alaska, and the sale of memberships in Lost Dutchman’s which entitle members to engage in gold prospecting on our Arizona, California, Colorado, Georgia, Michigan, North Carolina, Oregon, and South Carolina properties. We have signed an agreement with another organization for the mutual use of other properties.

Restatement of 2005 Financial Statements

The accompanying unaudited condensed consolidated financial statements as of June 30, 2005 and December 31, 2004 and for the three and six months ended June 30, 2005 and the related notes have been restated as further explained in Note 9.

Reclassifications

Certain amounts in the 2005 and 2004 unaudited condensed consolidated financial statements have been reclassified either to conform to the 2005 presentations or to provide additional detail about our operating results and more fully comply with the Securities and Exchange Commission’s Regulation S-X. In particular certain amounts included under “expenses” in the 2005 and 2004 unaudited condensed consolidated statements of operations we originally issued have been reclassified in line items under either “cost of services” or “other expenses”.  Cost of services includes programming, satellite transmission fees, production and operations and other direct costs. Other expenses include advertising, selling, general and administrative and depreciation and amortization.  Further, to better match intangible assets with the segment to which they pertain, we have reclassified the amortizable intangible assets and the goodwill which we recorded in connection with the acquisition on September 8, 2004 along with the related amortization expense from “Corporate” to the “TOC” segment.  Certain other changes have been made in the historical unaudited condensed consolidated financial statement s to conform with current presentations.

NOTE 2—UNAUDITED INTERIM FINANCIAL STATEMENTS

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary to present fairly the financial position of the Company as of June 30, 2005 and its results of operations and cash flows for the three and six months ended June 30, 2005 and 2004. Information included in the consolidated balance sheet, as of December 31, 2004 has been derived from, and certain terms used herein are defined in the audited financial statements of the Company as of December 31, 2004 (the “Audited Financial Statements”) included in the Company’s Annual Report on Form 10-K/A (the “10-K/A”) for the year ended December 31, 2004 that was previously filed with the Securities and Exchange Commission (the “SEC”). Pursuant to the rules and regulations of the SEC, certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted from these financial statements unless significant changes have taken place since the end of the most recent fiscal year. Accordingly,

8

these unaudited condensed consolidated financial statements should be read in conjunction with the Audited Financial Statements and the other information also included in the 10-K/A.

The results of the Company’s operations for the three and six months ended June 30, 2005 are not necessarily indicative of the results of operations for the full year ending December 31, 2005.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities as of the dates of the condensed consolidated balance sheets and reported amount of revenues and expenses for the periods presented. Accordingly, actual results could materially differ from those estimates.

NOTE 3—EARNINGS PER SHARE

Effective September 15, 2004 the Company effected a 5 for 2 split of its common stock in connection with its reincorporation in Delaware. All share and per share data has been adjusted where appropriate to reflect this stock split. In addition, the par value of the Company’s common stock was changed from $0.02 to $0.001 per share.

The Company has presented “basic” and “diluted” earnings per common share in the accompanying unaudited condensed consolidated statements of operations in accordance with the provisions of Statement of Financial Accounting Standards No. 128, “Earnings Per Share” (“SFAS 128”). Basic earnings per common share is calculated by dividing net income by the weighted average number of common shares outstanding during each period. The calculation of diluted earnings per common share is similar to that of basic earnings per common share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if all potentially dilutive common shares of the Company and TOC, prior to the acquisition of the remaining minority interest in TOC, were issued during the period if any such issuances have a dilutive effect.

The computation of diluted earnings per share takes into account the effects on the weighted average number of common shares outstanding of the assumed exercise of all of the outstanding stock options of Outdoor Channel Holdings for the three and six months ended June 30, 2005 and 2004 and TOC for the three and six months ended June 30, 2004, adjusted for the application of the treasury stock method. The computation of diluted earnings per share for the three and six months ended June 30, 2004 also takes into account the reduction in net income applicable to common stock attributable to the increase in the minority interest (approximately 17.5% to 33.1%) in the net income of TOC that results from the assumed exercise of all of TOC’s outstanding stock options. The number of shares potentially issuable by the Company at June 30, 2005 and 2004 upon the exercise of stock options that were not included in the computation of net earnings per common share because they were anti-dilutive totaled 110 and 25, respectively.

The following table summarizes the calculation of net income and the weighted average common shares outstanding for basic and diluted earnings per share for the three and six months ended June 30, 2005 and 2004:

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2005		2004			2005		2004
	(Restated, Note 9)					(Restated, Note 9)
Numerators:
Net income—basic	$	437	$	844		$	814	$	1,957
Deduct increase in minority interest attributable to assumed exercise of dilutive stock options of TOC	—		(196		)	—		(421		)
Net income—diluted	$	437	$	648		$	814	$	1,536
Denominators:
Weighted average common shares outstanding—basic	18,558		15,053			18,516		14,960
Dilutive effect of potentially issuable common shares upon exercise of stock options of the Company as adjusted for the application of the treasury stock method	3,955		540			3,937		596
Diluted weighted average common shares outstanding	22,513		15,593			22,453		15,556

9

NOTE 4—PRO FORMA EFFECTS OF STOCK OPTIONS

Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”), provides for the use of a fair value based method of accounting for employee stock compensation. However, SFAS 123 also allows an entity to continue to measure compensation cost for stock options granted to employees using the intrinsic value method of accounting prescribed by Accounting Principles Board Opinions No. 25, “Accounting for Stock Issued to Employees” (“APB 25”), which only requires charges to compensation expense for the excess, if any, of the fair value of the underlying stock at the date a stock option is granted (or at an appropriate subsequent measurement date) over the amount the employee must pay to acquire the stock, if such amounts differ materially. The Company has elected to continue to account for employee stock options using the intrinsic value method under APB 25. By making that election, it is required by SFAS 123 and Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation—Transition and Disclosure” to provide pro forma disclosures of net income (loss) and earnings (loss) per share as if a fair value based method of accounting had been applied.

The Company’s historical net income and earnings per common share and pro forma net income and earnings per common share assuming compensation cost had been determined for the three and six months ended June 30, 2005 and 2004 based on the fair value at the grant date for all awards by the Company using the Black-Scholes option pricing model consistent with the provisions of SFAS 123, and amortized ratably or over the vesting period, are set forth below:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2005			2004			2005			2004
	(Restated, Note 9)						(Restated, Note 9)
Net income (loss):
As reported	$	437		$	844		$	814		$	1,957
Deduct: Stock-based employee compensation expense assuming a fair value based method had been used for all awards, net of tax effects	(432		)	(456		)	(829		)	(912		)
Pro forma - basic	$	5		$	388		$	(15	)	$	1,045
Pro forma - diluted	$	5		$	192		$	(15	)	$	624
Basic earnings (loss) per share:
As reported	$	0.02		$	0.06		$	0.04		$	0.13
Pro forma	$	0.00		$	0.03		$	(0.00	)	$	0.07
Diluted earnings (loss) per share:
As reported	$	0.02		$	0.04		$	0.04		$	0.10
Pro forma	$	0.00		$	0.01		$	(0.00	)	$	0.04

The fair value of each option granted by the Company in the six months ended June 30, 2005 and the year ended December 31, 2004 was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

	Six Months Ended	Year Ended
	June 30, 2005	December 31, 2004
Risk-free interest rate	3.7 - 4.2%	1.7 - 4.2%
Dividend yield	0%	0%
Expected life of the option	3.8 - 5.1 yrs.	3 mos. - 10 yrs.
Volatility factor	37.7%	41.7 - 79%

As a result of amendments to SFAS 123, the Company will be required to charge the fair value of employee stock options as of the date of grant to expense over the vesting period beginning with its fiscal quarter ending March 31, 2006.

10

NOTE 5—EQUITY TRANSACTIONS

Issuances of Common Stock by the Company

During the six months ended June 30, 2005, the Company received cash proceeds of approximately $408 from the exercise of options for the purchase of 194 shares of common stock. Also during the six months ended June 30, 2005, the Company issued employees 72 shares of restricted stock. The rights to these shares vest over a three year period. Based on the closing market price on the day before the grant of $14.95 per share, the value of the stock was $1,084. This amount has been included in deferred compensation as an offset to stockholders’ equity and will be amortized to compensation expense as the rights to the restricted stock vest.

Outdoor Channel Holdings, Inc. Stock Option Plans

Descriptions of Outdoor Channel Holdings’ stock option plans are included in Note 9 of the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2004. A summary of the status of the options granted under Outdoor Channel Holdings’ stock option plans and outside of those plans as of June 30, 2005 and the changes in options outstanding during the six months then ended is presented in the table that follows:

	As of June 30, 2005
			Weighted
			Average
			Exercise
	Shares		Price
Outstanding at beginning of period	5,630		$	4.12
Options granted	385		14.60
Options exercised	(194	)	2.11
Options canceled or expired	(3	)	6.14
Options outstanding at end of period	5,818		$	4.88

NOTE 6—RELATED PARTY TRANSACTIONS

The Company is leasing its administrative facilities from Musk Ox Properties, LP, which in turn is owned by Messrs. Perry T. Massie and Thomas H. Massie, principal stockholders and officers of the Company. The lease agreements currently require monthly rent payments aggregating approximately $21. These lease agreements expire on December 31, 2005. Rent expense paid to Musk Ox Properties, LP totaled approximately $63 and $61 in the three months ended June 30, 2005 and 2004, respectively, and approximately $126 and $122 in the six months ended June 30, 2005 and 2004, respectively.

NOTE 7—SEGMENT INFORMATION

Pursuant to the Provisions of Statement of Financial Accounting Standards No. 131, “Disclosures About Segments of an Enterprise and Related Information” (“SFAS 131”), the Company reports segment information in the same format as reviewed by the Company’s Chief Operating Decision Maker (the “CODM”). The Company segregates its business activities into TOC and the Membership Division. TOC is a separate business activity that broadcasts television programming on The Outdoor Channel 24 hours a day, seven days a week. TOC generates revenue from advertising fees (which include fees paid by outside producers to purchase advertising time in connection with the airing of their programs on The Outdoor Channel) and subscriber fees. Lost Dutchman’s and GPAA membership sales and related activities are reported in the Membership Division. The Membership Division also includes magazine sales, the sale of products and services related to gold prospecting, gold expositions, expeditions and outings. Intersegment sales amounted to approximately $149 in each of the three months ended June 30, 2005 and 2004 and $298 in each of the six months ended June 30, 2005 and 2004.

11

Information with respect to these reportable segments as of and for the three and six months ended June 30, 2005 and 2004 follows:

			Income (Loss)							Additions to
			Before Income					Depreciation		Property,
			Taxes and			Total		and		Plant and
	Revenues		Minority Interest			Assets		Amortization		Improvements
As of and for the Three Months Ended June 30, 2005 (restated, note 9)
TOC	$	8,994	$	1,449		$	79,477	$	545	$	1,673
Membership Division	1,020		(173		)	5,929		78		32
Subtotals of Segments	10,014		1,276			85,406		623		1,705
Corporate*	—		(524		)	16,486		—		—
Totals	$	10,014	$	752		$	101,892	$	623	$	1,705
June 30, 2004
TOC	$	8,402	$	2,064		$	17,260	$	213	$	192
Membership Division	1,155		25			6,613		86		348
Subtotals of Segments	9,557		2,089			23,873		299		540
Corporate*	—		(314		)	—		—		—
Totals	$	9,557	$	1,775		$	23,873	$	299	$	540
As of and for the Six Months Ended June 30, 2005 (restated, Note 9)
TOC	$	17,751	$	2,461		$	79,477	$	1,165	$	3,185
Membership Division	2,324		(114		)	5,929		156		188
Subtotals of Segments	20,075		2,347			85,406		1,321		3,373
Corporate*	—		(940		)	16,486		—		—
Totals	$	20,075	$	1,407		$	101,892	$	1,321	$	3,373
June 30, 2004
TOC	$	16,282	$	4,471		$	17,260	$	426	$	504
Membership Division	2,480		172			6,613		172		462
Subtotals of Segments	18,762		4,643			23,873		598		966
Corporate*	—		(564		)	—		—		—
Totals	$	18,762	$	4,079		$	23,873	$	598	$	966

*The Company captures corporate overhead that is applicable to both segments, but not directly related to operations in a separate business unit, as “Corporate.” The expenses allocated to Corporate consisted primarily of: professional fees including public relations, accounting and legal fees, taxes associated with being incorporated in Delaware, board fees, and other corporate fees not associated with either TOC or the Membership division. Corporate assets consist primarily of cash not held in our operating accounts, available-for-sale securities, deferred tax asset, net and income tax refund receivable. In prior periods, essentially all of the amortizable intangible assets and goodwill, were classified as Corporate.  These amounts relate to, and have been reclassified as part of, the TOC segment.

NOTE 8—SUBSEQUENT EVENTS

On July 1, 2005, the Company completed a public offering of its common stock, whereby we sold 3,500 shares of common stock and received net proceeds of $44,415 prior to offering costs. In addition, certain selling stockholders exercised options to buy 1,688 shares of common stock which were resold in the public offering. On July 13, 2005, the underwriters exercised their over-allotment option from certain selling stockholders, whereby options to buy an additional 442 shares of common stock were exercised. The Company received $2,162 in aggregate from the exercise of these options.

NOTE 9—RESTATEMENTS OF UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

This Form 10-Q/A amends our previously filed Form 10-Q for the quarter ended June 30, 2005 to reflect adjustments to the unaudited condensed consolidated financial statements as of June 30, 2005 and December 31, 2004 and for the three and six months ended June 30, 2005 arising from the effects of a reclassification of all of the amounts originally allocated to the cost of multi-system cable operator (“MSO”) relationships from other non-amortizable intangible assets to amortizable intangible assets and the determination that they have an estimated useful life of 21 years and 4 months. Although the revised estimate of the useful life of these assets resulted in adjustments to and the restatement of our condensed consolidated balance sheet included in this form 10-Q/A as of December 31, 2004 (the adjustments did not affect the financial statements for the three and six months ended June 30, 2004) we determined that the effects of these adjustments were immaterial, individually and in the aggregate, to our annual and quarterly reports filed prior to January 1, 2005 and thus we did not amend those filings.  In addition, certain amounts included under “expenses” in the 2005 and 2004 unaudited condensed consolidated statements of operations we originally issued have been reclassified in line items under either “cost of services”

12

or “other expenses” and certain intangible assets and the related amortization expense have been reclassified from “Corporate” to the “TOC” segment as explained in Note 1. The adjustments to the 2005 and 2004 unaudited condensed consolidated financial statements are a result of a correction of the accounting treatment for the portion of the excess of the cost of the minority interest over the fair value of the underlying interest in the net identifiable assets acquired related to the acquisition of the remaining minority interest in TOC that we did not previously own on September 8, 2004 that was allocated to the MSO relationships. The adjustments were based on a review in the third quarter of 2006 of the facts and circumstances, the nature of our business, our experience with the MSOs and the proclivities of our industry as of September 8, 2004. The accompanying unaudited condensed consolidated financial statements and the related notes have been restated in comparison to those in our previously filed Form 10-Q for the quarter ended June 30, 2005 to reflect the effects of these adjustments as explained below:

THE EFFECTS ON THE CONDENSED CONSOLIDATED BALANCE SHEETS

As a result of the restatement, our unaudited condensed consolidated balance sheet as of June 30, 2005 changed as follows:

	As Originally Reported			As Restated			Change
Amortizable intangible assets, net	$	1,660		$	11,820		$	10,160
Other non-amortizable intangible assets	10,573			—			(10,573		)
Deferred tax assets, net	14,086			14,249			163
Total assets	102,142			101,892			(250		)
Accumulated deficit	(16,493		)	(16,743		)	(250		)
Total stockholders’ equity	95,375			95,125			(250		)

As a result of the restatement, our condensed consolidated balance sheet as of December 31, 2004 changed as follows:

	As Previously Reported			As Restated			Change
Amortizable intangible assets, net	$	1,939		$	12,347		$	10,408
Other non-amortizable intangible assets	10,573			—			(10,573		)
Deferred tax assets, net	14,074			14,139			65
Total assets	99,669			99,569			(100		)
Accumulated deficit	(17,457		)	(17,557		)	(100		)
Total stockholders’ equity	93,482			93,382			(100		)

THE EFFECTS ON THE UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

As a result of the restatement, the unaudited condensed consolidated statements of operations for three months ended June 30, 2005 changed as follows:

	As Originally  Reported		As Restated		Change
For the three months ended June 30, 2005
Depreciation and amortization	$	499	$	623	$	124
Total other expenses	7,052		7,176		124
Income from operations	839		715		(124		)
Income before income taxes and minority interest	876		752		(124		)
Income tax provision	364		315		(49		)
Income before minority interest	512		437		(75		)
Net income	512		437		(75		)
Earnings per share
Basic	$	0.03	$	0.02	$	(0.01	)
Diluted	$	0.02	$	0.02	—

13

As a result of the restatement, the unaudited condensed consolidated statements of operations for six months ended June 30, 2005 changed as follows:

	As Originally  Reported		As Restated		Change
For the six months ended June 30, 2005
Depreciation and amortization	$	1,073	$	1,321	$	248
Total other expenses	14,019		14,267		248
Income from operations	1,567		1,319		(248		)
Income before income taxes and minority interest	1,655		1,407		(248		)
Income tax provision	691		593		(98		)
Income before minority interest	964		814		(150		)
Net income	964		814		(150		)
Earnings per share
Basic	$	0.05	$	0.04	$	(0.01	)
Diluted	$	0.04	$	0.04	—

THE EFFECTS ON THE UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

As a result of the restatement, the balance of the accumulated deficit as of January 1, 2005 was increased by $100 to $17,557 from $17,457and the balance as of June 30, 2005 was increased by $250 to $16,743 from $16,493.

THE EFFECTS ON THE UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

As a result of the restatement, the unaudited condensed consolidated statements of cash flows for the six months ended June 30, 2005 changed as follows:

	As Originally  Reported			As Restated			Change
For the six months ended June 30, 2005
Net income	$	964		$	814		$	(150	)
Depreciation and amortization	1,073			1,321			248
Deferred tax provision	(6		)	(104		)	(98		)

THE EFFECTS ON NOTE 3 –EARNINGS PER SHARE

As a result of the restatement, net income - basic for the three months ended June 30, 2005 was decreased by $75 to $437 from $512 and for the six months ended June 30, 2005 was decreased by $150 to $814 from $964.

14

THE EFFECTS ON NOTE 4 –PRO FORMA EFFECTS OF STOCK OPTIONS

The effects of the restatements on the historical and pro forma information in Note 4 are set forth below:

	As Originally Reported		As Restated		Change
For the three months ended June 30, 2005
Net income	$	512	$	437	$	(75	)
Pro forma net income	80		5		(75		)
Basic and diluted earnings per share
As reported	$	0.03	$	0.02	$	(0.01	)
Pro forma	$	0.00	$	0.00	—

	As Originally Reported		As Restated			Change
For the six months ended June 30, 2005
Net income	$	964	$	814		$	(150	)
Pro forma net income (loss)	135		(15		)	(150		)
Basic and diluted earnings (loss) per share
As reported	$	0.05	$	0.04		$	(0.01	)
Pro forma	$	0.01	$	(0.00	)	$	(0.01	)

THE EFFECTS ON NOTE 7 – SEGMENT INFORMATION

As a result of the restatement, segment information for the three and six months ended June 30, 2005 changed as follows:

	Revenues		Income (Loss)  Before Income  Taxes			Total  Assets		Depreciation  and  Amortization		Additions to  Property,  Plant and  Improvements
As of and for the Three Months Ended June 30, 2005
As reported and adjusted for the reclassification as described in Note 7
TOC	$	8,994	$	1,573		$	79,890	$	421	$	1,673
Membership Division	1,020		(173		)	5,929		78		32
Subtotals of Segments	10,014		1,400			85,819		499		1,705
Corporate	—		(524		)	16,323		—		—
Totals	$	10,014	$	876		$	102,142	$	499	$	1,705
As restated
TOC	$	8,994	$	1,449		$	79,477	$	545	$	1,673
Membership Division	1,020		(173		)	5,929		78		32
Subtotals of Segments	10,014		1,276			85,406		623		1,705
Corporate	—		(524		)	16,486		—		—
Totals	$	10,014	$	752		$	101,892	$	623	$	1,705

15

	Revenues		Income (Loss)  Before Income  Taxes			Total  Assets		Depreciation  and  Amortization		Additions to  Property,  Plant and  Improvements
As of and for the Six Months Ended June 30, 2005
As reported and adjusted for the reclassification as described in Note 7
TOC	$	17,751	$	2,709		$	79,890	$	917	$	3,185
Membership Division	2,324		(114		)	5,929		156		188
Subtotals of Segments	20,075		2,595			85,819		1,073		3,373
Corporate	—		(940		)	16,323		—		—
Totals	$	20,075	$	1,655		$	102,142	$	1,073	$	3,373
As restated
TOC	$	17,751	$	2,461		$	79,477	$	1,165	$	3,185
Membership Division	2,324		(114		)	5,929		156		188
Subtotals of Segments	20,075		2,347			85,406		1,321		3,373
Corporate	—		(940		)	16,486		—		—
Totals	$	20,075	$	1,407		$	101,892	$	1,321	$	3,373

The changes in these balances were as follows:

	Revenues		Income (Loss) Before Income Taxes			Total Assets			Depreciation and Amortization		Additions to  Property,  Plant and  Improvements
Change as of and for the Three Months Ended June 30, 2005
TOC	$	—	$	(124	)	$	(413	)	$	124	$	—
Membership Division	—		—			—			—		—
Subtotals of Segments	—		(124		)	(413		)	124		—
Corporate	—		—			163			—		—
Totals	$	—	$	(124	)	$	(250	)	$	124	$	—
Change as of and for the Six Months Ended June 30, 2005
TOC	$	—	$	(248	)	$	(413	)	$	248	$	—
Membership Division	—		—			—			—		—
Subtotals of Segments	—		(248		)	(413		)	248		—
Corporate	—		—			163			—		—
Totals	$	—	$	(248	)	$	(250	)	$	248	$	—

* * *

16

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Safe Harbor Statement

The information contained in this report may include forward-looking statements. The Company’s actual results could differ materially from those discussed in any forward-looking statements. The statements contained in this report that are not historical are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including statements, without limitation, regarding our expectations, beliefs, intentions or strategies regarding the future. We intend that such forward-looking statements be subject to the safe-harbor provisions contained in those sections. Such forward-looking statements relate to, among other things: (1) expected revenue and earnings growth and changes in mix; (2) anticipated expenses including advertising, programming, personnel and others; (3) Nielsen Media Research, which we refer to as Nielsen, estimates regarding total households and cable and satellite homes subscribing to and viewers (ratings) of The Outdoor Channel; and (4) other matters. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

These statements involve significant risks and uncertainties and are qualified by important factors that could cause our actual results to differ materially from those reflected by the forward-looking statements. Such factors include but are not limited to risks and uncertainties which are discussed below under the caption “Risks and Uncertainties” and other risks and uncertainties discussed elsewhere in this report. In assessing forward-looking statements contained herein, readers are urged to read carefully all cautionary statements contained in this Form 10-Q/A and in our other filings with the Securities and Exchange Commission. For these forward-looking statements, we claim the protection of the safe harbor for forward-looking statements in Section 27A of the Securities Act and Section 21E of the Exchange Act.

Effects of Restatement

This Form 10-Q/A amends our previously filed Form 10-Q for the quarter ended June 30, 2005 to reflect adjustments to the unaudited condensed consolidated financial statements as of June 30, 2005 and December 31, 2004 and for the three and six months ended June 30, 2005 arising from the effects of a reclassification of all of the amounts originally allocated to the cost of MSO relationships from other non-amortizable intangible assets to amortizable intangible assets and the determination that they have an estimated useful life of 21 years and 4 months. In addition, certain amounts included under “expenses” in the 2005 and 2004 unaudited condensed consolidated financial statements we originally issued have been reclassified to either “cost of services” or “other expenses” to provide additional detail about our operating results and more fully comply with the Securities and Exchange Commission’s Regulation S-X. Cost of services includes programming, satellite transmission fees, production and operations and other direct costs. Other expenses include advertising, selling, general and administrative and depreciation and amortization.  Further, to better match intangible assets with the segment to which they pertain, we have reclassified the amortizable intangible assets and the goodwill which we recorded in connection with the acquisition on September 8, 2004 along with the related amortization expense from “Corporate” to the “TOC” segment.  Certain other changes have been made in the historical condensed consolidated financial statements to conform with current presentations. The adjustments to the 2005 and 2004 unaudited condensed consolidated financial statements are a result of a correction of the accounting treatment for the portion of the excess of the cost of the minority interest over the fair value of the underlying interest in the net identifiable assets acquired related to the acquisition of the remaining minority interest in The Outdoor Channel, Inc. (“TOC”) that we did not previously own on September 8, 2004 that was allocated to the MSO relationships. The adjustments were based on a review in the third quarter of 2006 of the facts and circumstances, the nature of our business, our experience with the MSOs and the proclivities of our industry as of September 8, 2004. Although the revised estimate of the useful life of these assets resulted in adjustments to and the restatement of our condensed consolidated balance sheet included in this Form 10-Q/A as of December 31, 2004 (the adjustments did not affect the financial statements for the three and six months ended June 30, 2004), we determined that the effects of these adjustments were immaterial, individually and in the aggregate, to our annual and quarterly reports filed prior to January 1, 2005 and thus we did not amend those filings.  The accompanying unaudited condensed consolidated financial statements and the related notes have been restated to reflect the effects of the adjustments arising from the reassessment of the estimated useful life of the MSO relationships as explained in Note 9 and below:

17

As a result of the determination of the estimated useful life of MSO relationships discussed above we have restated the following Items and sections of this Form 10-Q/A:

Item 1. Financial Statements and Supplementary Data:

Restated Condensed Consolidated Balance Sheets as of June 30, 2005 (Unaudited) and December 31, 2004;

Unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2005 (Restated) and 2004;

Restated Unaudited Condensed Consolidated Statement of Stockholders’ Equity for the six months ended June 30, 2005;

Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2005 (Restated) and 2004;

Note 3 to Unaudited Condensed Consolidated Financial Statements; Earnings Per Share;

Note 4 to Unaudited Condensed Consolidated Financial Statements; Pro Forma Effects of Stock Options;

Note 7 to Unaudited Condensed Consolidated Financial Statements; Segment Information; and

Note 9 to Unaudited Condensed Consolidated Financial Statements; Restatements of Unaudited Condensed Consolidated Financial Statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Except for the related corrections to Notes 3, 4,  and 7 to the unaudited condensed consolidated financial statements, and certain other immaterial corrections, the remaining Items required by Form 10-Q are not amended hereby, but are included herewith for ease of the reader. Except as expressly noted herein, this report continues to speak as of the date of the original filing, and we have not updated the disclosures in this report to speak as of a later date.

Except as otherwise expressly noted herein, this Form 10-Q/A does not reflect events occurring after the August 17, 2005 filing of our Quarterly Report on Form 10-Q in any way, except those required to reflect the effects of this restatement of our unaudited condensed consolidated financial statements for the periods presented or as deemed necessary in connection with the completion of restated financial statements.

While this report primarily relates to the historical periods covered, events may have taken place since the original filing that might have been reflected in this report if they had taken place prior to the original filing.

THE EFFECTS ON THE CONDENSED CONSOLIDATED BALANCE SHEETS

As a result of the restatement, our unaudited condensed consolidated balance sheet as of June 30, 2005 changed as follows:

	As Originally Reported			As Restated			Change
Amortizable intangible assets, net	$	1,660		$	11,820		$	10,160
Other non-amortizable intangible assets	10,573			—			(10,573		)
Deferred tax assets, net	14,086			14,249			163
Total assets	102,142			101,892			(250		)
Accumulated deficit	(16,493		)	(16,743		)	(250		)
Total stockholders’ equity	95,375			95,125			(250		)

18

As a result of the restatement, our condensed consolidated balance sheet as of December 31, 2004 changed as follows:

	As Previously Reported			As Restated			Change
Amortizable intangible assets, net	$	1,939		$	12,347		$	10,408
Other non-amortizable intangible assets	10,573			—			(10,573		)
Deferred tax assets, net	14,074			14,139			65
Total assets	99,669			99,569			(100		)
Accumulated deficit	(17,457		)	(17,557		)	(100		)
Total stockholders’ equity	93,482			93,382			(100		)

THE EFFECTS ON THE UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

As a result of the restatement, the unaudited condensed consolidated statements of operations for three months ended June 30, 2005 changed as follows:

	As Originally  Reported		As Restated		Change
For the three months ended June 30, 2005
Depreciation and amortization	$	499	$	623	$	124
Total other expenses	7,052		7,176		124
Income from operations	839		715		(124		)
Income before income taxes and minority interest	876		752		(124		)
Income tax provision	364		315		(49		)
Income before minority interest	512		437		(75		)
Net income	512		437		(75		)
Earnings per share
Basic	$	0.03	$	0.02	$	(0.01	)
Diluted	$	0.02	$	0.02	—

As a result of the restatement, the unaudited condensed consolidated statements of operations for six months ended June 30, 2005 changed as follows:

	As Originally  Reported		As Restated		Change
For the six months ended June 30, 2005
Depreciation and amortization	$	1,073	$	1,321	$	248
Total other expenses	14,019		14,267		248
Income from operations	1,567		1,319		(248		)
Income before income taxes and minority interest	1,655		1,407		(248		)
Income tax provision	691		593		(98		)
Income before minority interest	964		814		(150		)
Net income	964		814		(150		)
Earnings per share
Basic	$	0.05	$	0.04	$	(0.01	)
Diluted	$	0.04	$	0.04	—

THE EFFECTS ON THE UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

As a result of the restatement, the balance of the accumulated deficit as of January 1, 2005 was increased by $100 to $17,557 from $17,457 and the balance as of June 30, 2005 was increased by $250 to $16,743 from $16,493.

19

THE EFFECTS ON THE UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

As a result of the restatement, the unaudited condensed consolidated statements of cash flows for the six months ended June 30, 2005 changed as follows:

	As Originally  Reported			As Restated			Change
For the six months ended June 30, 2005
Net income	$	964		$	814		$	(150	)
Depreciation and amortization	1,073			1,321			248
Deferred tax provision	(6		)	(104		)	(98		)

THE EFFECTS ON NOTE 3 –EARNINGS PER SHARE

As a result of the restatement, net income - basic for the three months ended June 30, 2005 was decreased by $75 to $437 from $512 and for the six months ended June 30, 2005 was decreased by $150 to $814 from $964.

THE EFFECTS ON NOTE 4 –PRO FORMA EFFECTS OF STOCK OPTIONS

The effects of the restatements on the historical and pro forma information in Note 4 are set forth below:

	As Originally Reported		As Restated		Change
For the three months ended June 30, 2005
Net income	$	512	$	437	$	(75	)
Pro forma net income	80		5		(75		)
Basic and diluted earnings per share
As reported	$	0.03	$	0.02	$	(0.01	)
Pro forma	$	0.00	$	0.00	—

	As Originally Reported		As Restated			Change
For the six months ended June 30, 2005
Net income	$	964	$	814		$	(150	)
Pro forma net income (loss)	135		(15		)	(150		)
Basic and diluted earnings (loss) per share
As reported	$	0.05	$	0.04		$	(0.01	)
Pro forma	$	0.01	$	(0.00	)	$	(0.01	)

20

THE EFFECTS ON NOTE 7 – SEGMENT INFORMATION

As a result of the restatement, segment information for the three and six months ended June 30, 2005 changed as follows:

	Revenues		Income (Loss)  Before Income  Taxes			Total  Assets		Depreciation  and  Amortization		Additions to  Property,  Plant and  Improvements
As of and for the Three Months Ended June 30, 2005
As reported and adjusted for the reclassification as described in Note 7
TOC	$	8,994	$	1,573		$	79,890	$	421	$	1,673
Membership Division	1,020		(173		)	5,929		78		32
Subtotals of Segments	10,014		1,400			85,819		499		1,705
Corporate	—		(524		)	16,323		—		—
Totals	$	10,014	$	876		$	102,142	$	499	$	1,705
As restated
TOC	$	8,994	$	1,449		$	79,477	$	545	$	1,673
Membership Division	1,020		(173		)	5,929		78		32
Subtotals of Segments	10,014		1,276			85,406		623		1,705
Corporate	—		(524		)	16,486		—		—
Totals	$	10,014	$	752		$	101,892	$	623	$	1,705

	Revenues		Income (Loss)  Before Income  Taxes			Total  Assets		Depreciation  and  Amortization		Additions to  Property,  Plant and  Improvements
As of and for the Six Months Ended June 30, 2005
As reported and adjusted for the reclassification as described in Note 7
TOC	$	17,751	$	2,709		$	79,890	$	917	$	3,185
Membership Division	2,324		(114		)	5,929		156		188
Subtotals of Segments	20,075		2,595			85,819		1,073		3,373
Corporate	—		(940		)	16,323		—		—
Totals	$	20,075	$	1,655		$	102,142	$	1,073	$	3,373
As restated
TOC	$	17,751	$	2,461		$	79,477	$	1,165	$	3,185
Membership Division	2,324		(114		)	5,929		156		188
Subtotals of Segments	20,075		2,347			85,406		1,321		3,373
Corporate	—		(940		)	16,486		—		—
Totals	$	20,075	$	1,407		$	101,892	$	1,321	$	3,373

21

The changes in these balances were as follows:

	Revenues		Income (Loss) Before Income Taxes			Total Assets			Depreciation and Amortization		Additions to  Property,  Plant and  Improvements
Change as of and for the Three Months Ended June 30, 2005
TOC	$	—	$	(124	)	$	(413	)	$	124	$	—
Membership Division	—		—			—			—		—
Subtotals of Segments	—		(124		)	(413		)	124		—
Corporate	—		—			163			—		—
Totals	$	—	$	(124	)	$	(250	)	$	124	$	—
Change as of and for the Six Months Ended June 30, 2005
TOC	$	—	$	(248	)	$	(413	)	$	248	$	—
Membership Division	—		—			—			—		—
Subtotals of Segments	—		(248		)	(413		)	248		—
Corporate	—		—			163			—		—
Totals	$	—	$	(248	)	$	(250	)	$	248	$	—

General

Outdoor Channel Holdings, Inc. (which we refer to as “Outdoor Channel Holdings” or collectively with its subsidiaries, the “Company”), through its indirect wholly-owned subsidiary The Outdoor Channel, Inc. (“TOC”), owns and operates The Outdoor Channel which is a national television network devoted primarily to traditional outdoor activities, such as hunting, fishing and shooting sports, as well as off-road motor sports and other related life style programming. The Company also owns and operates related businesses which serve the interests of The Outdoor Channel’s viewers and other outdoor enthusiasts. These related businesses include: LDMA-AU, Inc. (“Lost Dutchman’s”) and Gold Prospector’s Association of America, LLC. (“GPAA”). Lost Dutchman’s is a national gold prospecting campground club with approximately 6,700 members and properties in Arizona, California, Colorado, Georgia, Michigan, North Carolina, Oregon and South Carolina. We believe GPAA is one of the largest gold prospecting clubs in the world with approximately 32,300 active members. GPAA is the publisher of the “Gold Prospectors & Treasure Hunters in the Great Outdoors” magazine and owner of a 2,300 acre property near Nome, Alaska used to provide an annual expedition for a fee to its members.

The Company’s revenues include (1) advertising fees from advertisements aired on The Outdoor Channel and from advertisements in “Gold Prospectors & Treasure Hunters in the Great Outdoors” magazine; (2) subscriber fees paid by cable and satellite service providers that air The Outdoor Channel; and (3) membership fees from members in both Lost Dutchman’s and GPAA and other income including magazine sales, products and services related to gold prospecting, gold expositions, expeditions and outings. Advertising fees include fees paid by third-party programmers to purchase advertising time in connection with the airing of their programs on The Outdoor Channel.

Recent Accounting Developments

In December 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 123 (R) (“SFAS 123 (R)”). “Share-Based Payment” which establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services and focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. SFAS 123 (R) requires that the fair value of such equity instruments, including all options granted to employees, be recognized as expense in the historical financial statements as services are performed. Prior to SFAS 123 (R), only certain pro forma disclosures of fair value were required. SFAS 123 (R) shall be effective for issuers as of the beginning of the first annual reporting period that begins after December 15, 2005. The Company intends to adopt the standards of SFAS No. 123 (R) effective January 1, 2006. Since the Company has used the intrinsic value method to account for stock options, the adoption of SFAS 123 (R) is expected to have a material impact on the financial statements of Outdoor Channel Holdings, Inc.

The FASB had issued certain other accounting pronouncements as of June 30, 2005 that will become effective in subsequent periods; however, management of the Company does not believe that any of those pronouncements would have significantly affected the Company’s financial accounting measurements or disclosures had they been in effect during the three and six months ended June 30, 2005.

22

Comparison of Operating Results for the Three Months Ended June 30, 2005 and June 30, 2004

The following table discloses certain financial information for the periods presented, expressed in terms of dollars, dollar change, percentage change and as a percent of total revenue (all dollar amounts are in thousands):

					Change					% of Total Revenue
	2005		2004		$			%		2005		2004
	(Restated)				(Restated)					(Restated)
Revenues:
Advertising	$	5,257	$	5,352	$	(95	)	(1.8	)%	52.5	%	56.0	%
Subscriber fees	3,894		3,219		675			21.0		38.9		33.7
Membership income	863		986		(123		)	(12.5	)	8.6		10.3
Total revenues	10,014		9,557		457			4.8		100.0		100.0
Cost of services:
Programming	531		895		(364		)	(40.7	)	5.4		9.4
Satellite transmission fees	616		586		30			5.1		6.1		6.1
Production and operations	733		499		234			46.9		7.3		5.2
Other direct costs	243		204		39			19.1		2.4		2.1
Total cost of services	2,123		2,184		(61		)	(2.8	)	21.2		22.8
Other expenses:
Advertising	2,062		1,491		571			38.3		20.6		15.6
Selling, general and administrative	4,491		3,838		653			17.0		44.9		40.2
Depreciation and amortization	623		299		324			108.4		6.2		3.1
Total other expenses	7,176		5,628		1,548			27.5		71.7		58.9
Income from operations	715		1,745		(1,030		)	(59.0	)	7.1		18.3
Other income, net	37		30		7			23.3		0.4		0.3
Income before income taxes and minority interest	752		1,775		(1,023		)	(57.6	)	7.5		18.6
Income tax provision	315		704		(389		)	(55.3	)	3.1		7.4
Income before minority interest	437		1,071		(634		)	(59.2	)	4.4		11.2
Minority interest in net income of consolidated subsidiary	—		227		(227		)	(100.0	)	—		2.4
Net income	$	437	$	844	$	(407	)	(48.2	)%	4.4	%	8.8	%

23

Comparison of Operating Results for the Six Months Ended June 30, 2005 and June 30, 2004

The following table discloses certain financial information for the periods presented, expressed in terms of dollars, dollar change, percentage change and as a percent of total revenue (all dollar amounts are in thousands):

					Change					% of Total Revenue
	2005		2004		$			%		2005		2004
	(Restated)				(Restated)					(Restated)
Revenues:
Advertising	$	10,516	$	10,164	$	352		3.5	%	52.4	%	54.2	%
Subscriber fees	7,536		6,380		1,156			18.1		37.5		34.0
Membership income	2,023		2,218		(195		)	(8.8	)	10.1		11.8
Total revenues	20,075		18,762		1,313			7.0		100.0		100.0
Cost of services:
Programming	1,052		1,290		(238		)	(18.4	)	5.3		6.9
Satellite transmission fees	1,249		1,177		72			6.1		6.2		6.2
Production and operations	1,726		1,197		529			44.2		8.6		6.4
Other direct costs	462		450		12			2.7		2.3		2.4
Total cost of services	4,489		4,114		375			9.1		22.4		21.9
Other expenses:
Advertising	3,756		2,805		951			33.9		18.7		15.0
Selling, general and administrative	9,190		7,225		1,965			27.2		45.8		38.5
Depreciation and amortization	1,321		598		723			120.9		6.6		3.2
Total other expenses	14,267		10,628		3,639			34.2		71.1		56.7
Income from operations	1,319		4,020		(2,701		)	(67.2	)	6.5		21.4
Other income, net	88		59		29			49.2		0.5		0.3
Income before income taxes and minority interest	1,407		4,079		(2,672		)	(65.5	)	7.0		21.7
Income tax provision	593		1,633		(1,040		)	(63.7	)	2.9		8.7
Income before minority interest	814		2,446		(1,632		)	(66.7	)	4.1		13.0
Minority interest in net income of consolidated subsidiary	—		489		(489		)	(100.0	)	—		2.6
Net income	$	814	$	1,957	$	(1,143	)	(58.4	)%	4.1	%	10.4	%

Revenues

Our revenues include revenues from (1) advertising fees; (2) subscriber fees; and (3) membership income. Advertising revenue is generated from the sale of advertising time on The Outdoor Channel including advertisements shown during a program (also known as short-form advertising) and infomercials in which the advertisement is the program itself (also known as long-form advertising) and from the sale of advertising space in publications such as the “Gold Prospectors & Treasure Hunters in the Great Outdoors” magazine. For the three months ended June 30, 2005 and 2004, The Outdoor Channel generated approximately 97.0% and 96.9% of our advertising revenue, respectively. For the six months ended June 30, 2005 and 2004, The Outdoor Channel generated approximately 97.1% and 97.4% of our advertising revenue, respectively. Subscriber fees are solely related to The Outdoor Channel. Membership income is generated by our activities other than the operation of The Outdoor Channel and includes membership sales, magazine sales, merchandise sales, and sponsored outings and expeditions in connection with GPAA and Lost Dutchman’s.

Total revenues for the three months ended June 30, 2005 were $10,014,000, an increase of $457,000, or 4.8%, compared to revenues of $9,557,000 for the three months ended June 30, 2004. Total revenues for the six months ended June 30, 2005 were $20,075,000, an increase of $1,313,000, or 7.0%, compared to revenues of $18,762,000 for the six months ended June 30, 2004. The net increases were the result of changes in several items comprising revenue as discussed below.

Advertising revenue for the three months ended June 30, 2005 was $5,257,000, a decrease of $95,000 or 1.8% compared to $5,352,000 for the three months ended June 30, 2004. Advertising revenue for the six months ended June 30, 2005 was $10,516,000, an increase of $352,000 or 3.5% compared to $10,164,000 for the six months ended June 30, 2004. The decline in advertising revenue for the three months ended June 30, 2005 principally reflects our decision to use some infomercial inventory for a program produced internally that introduces The Outdoor Channel viewers to Outdoor Channel 2

24

HD. As a result we did not earn any revenue from this inventory of time. The increase in advertising revenue for the six months ended June 30, 2005 reflects our ability to demonstrate the value of short-form advertising on The Outdoor Channel to national advertisers and thus sell a larger percentage of our advertising inventory to these accounts, generally at higher prices.

For June of 2005, Nielsen estimated that The Outdoor Channel had 24.6 million viewers, down from 26.0 million for the same period a year ago. (Nielsen revises this estimate each month and for August, Nielsen increased its estimate to approximately 25.2 million subscribers). Despite the decrease in Nielsen’s universe estimate in the first half of 2005 as compared to Nielsen’s universe estimate in the first half of 2004, we were able to increase our effective rates realized on our advertising time on The Outdoor Channel during the first quarter of 2005 and then maintain the effective advertising rates during the second quarter of 2005.

Subscriber fees for the three months ended June 30, 2005 were $3,894,000, an increase of $675,000 or 21.0% compared to $3,219,000 for the three months ended June 30, 2004. Subscriber fees for the six months ended June 30, 2005 were $7,536,000, an increase of $1,156,000 or 18.1% compared to $6,380,000 for the six months ended June 30, 2004. The increase in subscriber fees for the period was primarily due to: an increased number of paying subscribers compared to the same periods a year ago, both from new affiliates and from existing distributors such as National Cable Television Cooperative (“NCTC”), DIRECTV, Comcast, DISH Network and Charter, and contractual subscriber fee rate increases with existing service providers carrying The Outdoor Channel.

Membership income for the three months ended June 30, 2005 was $863,000, a decrease of $123,000 or 12.5% compared to $986,000 for the three months ended June 30, 2005. Membership income for the six months ended June 30, 2005 was $2,023,000, a decrease of $195,000 or 8.8% compared to $2,218,000 for the six months ended June 30, 2004. The decline is principally a result of timing of our LDMA membership sales relative to revenue recognition of these sales and also a reduction in our GPAA membership renewal rate in the first half of 2005 compared to the first half of 2004.

Cost of Services

Our cost of services consists primarily of the cost of providing our broadcast signal and programming to the distributors for transmission to the consumer and costs associated with the production and delivery of our magazine and merchandise sales. Cost of services includes (1) programming costs; (2) satellite transmission fees; (3) production and operations costs; and (4) other direct costs. Total cost of services for the three months ended June 30, 2005 was $2,123,000, a decrease of $61,000 or 2.8%, compared to $2,184,000 for the three months ended June 30, 2004. Total cost of services for the six months ended June 30, 2005 was $4,489,000 an increase of $375,000 or 9.1%, compared to $4,114,000 for the six months ended June 30, 2004. As a percentage of revenues, total cost of services was 21.2% and 22.8% in the three months ended June 30, 2005 and 2004, respectively. As a percentage of revenues, total cost of services was 22.4% and 21.9% in the six months ended June 30, 2005 and 2004, respectively. We expect cost of services to continue to increase in the future as we expand our existing markets and in-house production to support our advertising strategy.

Programming expenses for the three months ended June 30, 2005 were $531,000, a decrease of $364,000 or 40.7% compared to $895,000 for the three months ended June 30, 2004. Programming expenses for the six months ended June 30, 2005 were $1,052,000, a decrease of $238,000 or 18.4% compared to $1,290,000 for the six months ended June 30, 2004. The decreases are principally a result from our decision to not produce in 2005 a special that we had produced and aired in 2004. Further contributing to the decreases was our decision to postpone until the second half of 2005 the airing of the 2005 season of one program that in 2004 we had aired in the first half.

Our policy is to charge costs of specific shows to programming expense over the expected airing period beginning when the program first airs. Much of the cost of programming has been recorded as prepaid programming costs in anticipation of airing the programs in the third and fourth quarter of 2005 on The Outdoor Channel or corresponding with the full launch of Outdoor Channel 2 HD. A substantial portion of the prepaid programming costs will be charged to expense in these quarters. Programming expenses are expected to increase as a percentage of revenue as we pursue our strategy to produce or own more programming in-house as opposed to contracting with third party producers. As a result, we believe we will control more of our programs’ quality, advertising inventory and potential to re-package our programming for other use such as international licensing and production of DVDs for retail distribution.  Since we have limited experience in re-packaging our programming for these other uses, we do not retain costs in prepaid programming to match with these potential revenue sources. When we develop a sufficient history, our policy might change.

Satellite transmission fees for the three months ended June 30, 2005 were $616,000, an increase of $30,000, or 5.1%, compared to $586,000 for the three months ended June 30, 2004. Satellite transmission fees for the six months ended

25

June 30, 2005 were $1,249,000, an increase of $72,000, or 6.1%, compared to $1,177,000 for the six months ended June 30, 2004. This increase reflects an additional charge for the back-up satellite capability negotiated with our satellite provider during the fourth quarter of 2004. We are scheduled for a price increase in satellite transmission fees starting October 2005 amounting to $5,000 per month. However, we currently have plans to build our own broadcast facility during 2005 that we anticipate should be operational before the end of 2005 which is expected to reduce direct satellite transmission fees resulting in an approximate savings of $12,000 per month.

Production and operations costs for the three months ended June 30, 2005 were $733,000, an increase of $234,000, or 46.9%, compared to $499,000 for the three months ended June 30, 2004. Production and operations costs for the six months ended June 30, 2005 were $1,726,000, an increase of $529,000, or 44.2%, compared to $1,197,000 for the six months ended June 30, 2004.  The increase in costs principally relates to increased personnel to support our growing infrastructure as we produce more shows in-house and to support our new broadcast facility.

Other direct costs for the three months ended June 30, 2005 were $243,000, an increase of $39,000, or 19.1%, compared to $204,000 for the three months ended June 30, 2005. Other direct costs for the six months ended September 30, 2004 were $462,000, an increase of $12,000, or 2.7%, compared to $450,000 for the six months ended September 30, 2005.  Other direct costs include such items as the costs of our magazine, outings, trips and merchandise sold. These costs will likely fluctuate with the sales of our membership division.

Other Expenses

Other expenses consist of the cost of (1) advertising; (2) selling, general and administrative expenses; and (3) depreciation and amortization.

Total other expenses for the three months ended June 30, 2005 were $7,176,000, an increase of $1,548,000, or 27.5%, compared to $5,628,000 for the three months ended June 30, 2004. As a percentage of revenues, total expenses were 71.7% and 58.9% in the three months ended June 30, 2005 and 2004, respectively. Total expenses for the six months ended June 30, 2005 were $14,267,000, an increase of $3,639,000, or 34.2%, compared to $10,628,000 for the six months ended June 30, 2004. As a percentage of revenues, total expenses were 71.1% and 56.7% in the six months ended June 30, 2005 and 2004, respectively. The increase in expenses was due to several factors, such as increased corporate costs including: (1) amortization of intangible assets; (2) costs associated with compliance with Sarbanes-Oxley Act of 2002; and (3) costs associated with incorporation in Delaware and listing on Nasdaq National Market, to which the Company became subject as of September 2004. The increase is also attributable to increased personnel costs, costs associated with the launch of our second channel, Outdoor Channel 2 HD, marketing and promotion costs incurred to support the growth of the number of subscribers of The Outdoor Channel, and other items more fully described as follows.

Advertising expenses for the three months ended June 30, 2005 were $2,062,000, an increase of $571,000 or 38.3% compared to $1,491,000 for the three months ended June 30, 2004. Advertising expenses for the six months ended June 30, 2005 were $3,756,000, an increase of $951,000 or 33.9% compared to $2,805,000 for the six months ended June 30, 2004. The increase in advertising expenses is principally a result of our increased spending on consumer and trade industry awareness campaigns designed to build demand for The Outdoor Channel and for Outdoor Channel 2 HD. We plan on continuing to spend on these awareness programs, and when expressed as a percentage of revenues, we are trending at higher rates than 2004.

Selling, general and administrative expenses for the three months ended June 30, 2005 were $4,491,000, an increase of $653,000 or 17.0% compared to $3,838,000 for the three months ended June 30, 2004. As a percent of revenues, selling, general and administrative expenses were 44.9% and 40.2% for the three months ended  June 30, 2005 and 2004, respectively. Selling, general and administrative expenses for the six months ended June 30, 2005 were $9,190,000, an increase of $1,965,000 or 27.2% compared to $7,225,000 for the six months ended June 30, 2004. As a percent of revenues, selling, general and administrative expenses were 45.8% and 38.5% for the six months ended  June 30, 2005 and 2004, respectively. The increase was primarily due to the increase in the number of employees compared to the end of June 2005. We opened our New York City advertising sales office with a resultant expense in 2005 that did not exist in the same period a year ago. It currently has a staff of three employees. We have also added an executive to our management team who holds the position of General Counsel. Others have been added in all departments to support our launch of a second channel—Outdoor Channel 2 HD, and to support our increased efforts of providing more of our shows in-house. We also experienced increased travel and related costs associated with our larger advertising sales staff, support of our service providers and the promotion of The Outdoor Channel and Outdoor Channel 2 HD through a stronger presence at trade shows, conferences and seminars. Depreciation and small equipment purchases have increased as a result of pre-launch activity of Outdoor Channel 2 HD.

26

Depreciation and amortization expense for the three months ended June 30, 2005 was $623,000, an increase of $324,000 or 108.4% compared to $299,000 for the three months ended June 30, 2004. Depreciation and amortization for the six months ended June 30, 2005 were $1,321,000, an increase of $723,000 or 120.9% compared to $598,000 for the six months ended June 30, 2004.  The increase in depreciation primarily relates to depreciation and amortization of intangible assets recorded in connection with the acquisition in September 2004 of the remaining minority interest of TOC we did not already own. These expenses did not exist in the first half of 2004.

Income from Operations

Income from operations for the three months ended June 30, 2005 was $715,000, a decrease of $1,030,000 or 59.0% compared to $1,745,000 for the three months ended June 30, 2004. As a percent of revenues, income from operations was 7.1% and 18.3%, respectively. Income from operations for the six months ended June 30, 2005 was $1,319,000, a decrease of $2,701,000 or 67.2% compared to $4,020,000 for the six months ended June 30, 2004. As a percent of revenues, income from operations was 6.5% and 21.4%, respectively. As we continue to strive to drive growth of our subscriber base and as we launch Outdoor Channel 2 HD, we will incur increased expenses such as programming, marketing, and advertising as well as start-up and operating costs in 2005 that are unlikely to be immediately offset by revenues. As a result, we anticipate our operating margins will be negatively impacted for the foreseeable future. There can be no assurance that these strategies will be successful.

Other Income, Net

Other income, net for the three months ended June 30, 2005 was $37,000, an increase of $7,000 or 23.3% compared to $30,000 for the three months ended June 30, 2004. Other income, net for the six months ended June 30, 2005 was $88,000, an increase of $29,000 or 49.2% compared to $59,000 for the six months ended June 30, 2004. This improvement was primarily due to increased dividends and interest earned on our investment in available-for-sale securities and cash balances.

Income Before Income Taxes and Minority Interest in Net Income of Consolidated Subsidiary

Income before income taxes and minority interest decreased as a percentage of revenues to 7.5% for the three months ended June 30, 2005 compared to 18.3% for the three months ended June 30, 2004. Income before income taxes and minority interest decreased as a percentage of revenues to 7.0% for the six months ended June 30, 2005 compared to 21.7% for the six months ended June 30, 2004.

The TOC segment’s income before income taxes and minority interest expressed as a percentage of revenue decreased to 17.5% for the three months ended June 30, 2005, compared to 24.6% for the three months ended June 30, 2004. The TOC segment’s income before income taxes and minority interest expressed as a percentage of revenue decreased to 13.9% for the six months ended June 30, 2005, compared to 27.5% for the six months ended June 30, 2004. The decrease was due mainly to the growth of our advertising, personnel and travel related expenses and amortization of intangible assets required in September 2004 acquisition of the minority interest of TOC we did not already own. As noted, we have increased our staff in support of the launch of our second channel, Outdoor Channel 2 HD and in pursuit of growing the subscriber base of The Outdoor Channel.

The Membership Division segment’s income before income taxes and minority interest expressed as a percentage of revenues decreased to a loss of 17.0% for the three months ended June 30, 2005 compared to an income of 2.2% for the three months ended June 30, 2004. The Membership Division segment’s income before income taxes and minority interest expressed as a percentage of revenues decreased to a loss of 4.9% for the six months ended June 30, 2005 compared to an income of 6.9% for the six months ended June 30, 2004. This decrease principally reflects the combined effects of the decline in revenue of the Membership Division of approximately $135,000 and $156,000 and the increase in expenses of $63,000 and $130,000 in the three and six months ended June 30, 2005 and 2004, respectively. The reduction is principally a result of timing of our LDMA membership sales relative to revenue recognition of these sales and a reduction of our GPAA membership renewal rate. Further, we held five gold shows in the first quarter of this year compared to four last year which increased our overall expense. We did not realize as much revenue per show as last year as we held shows in areas we have never been before or have not been to for sometime. Often it takes a year or two for shows held in new areas to gain momentum. Our Denver show was negatively impacted by heavy snow fall which kept attendance down.

Corporate incurred a loss before income taxes and minority interest for the three months ended June 30, 2005 amounting to $524,000, an increase of $210,000 or 66.9% compared to a loss of $314,000 for the three months ended June 30, 2004. Corporate incurred a loss before income taxes and minority interest for the six months ended June 30, 2005 amounting to $940,000, an increase of $376,000 or 66.7% compared to $564,000 for the six months ended June 30, 2004.

27

The expenses allocated to Corporate include: professional fees such as public relations, accounting and legal fees, business insurance, board of directors fees and expenses and an allocation of corporate officers’ payroll and related expenses. The increase in the expenses of Corporate is principally related to accounting services incurred in positioning the Company to be in compliance with the requirements of the Sarbanes-Oxley Act of 2002, taxes associated with being incorporated in Delaware and listing fees of Nasdaq National Market. Increased board fees also contribute to the increase of expenses reflecting the increase in the number of independent board members from two in the first half of 2004 to five in the first half of 2005.

Income TaxProvision

Income tax provision for the three months ended June 30, 2005 was $315,000, a decrease of $389,000 or 55.3% as compared to $704,000 for the three months ended June 30, 2004. Income tax provision for the six months ended June 30, 2005 was $593,000, a decrease of $1,040,000 or 63.7% as compared to $1,633,000 for the six months ended June 30, 2004. The decrease was principally due to the Company earning less taxable income in the first half of 2005 as compared to the first half of 2004. The effective income tax rate was approximately 41.9% and 39.7% for the three months ended June 30, 2005 and 2004, respectively. The effective income tax rate was approximately 42.1% and 40.0% for the six months ended June 30, 2005 and 2004, respectively.

Minority Interest in Net Income of Consolidated Subsidiary

Minority interest for the three and six months ended June 30, 2004 was $227,000 and $489,000, respectively. Minority interest was eliminated in September 2004 as a result of our acquisition of the remaining minority interest in TOC we did not already own. Therefore, there was no minority interest for the three and six months ended June 30, 2005.

Net Income

Net income for the three months ended June 30, 2005 was $437,000 a decrease of $407,000 or 48.2% compared to $844,000 for the three months ended June 30, 2004. Net income for the six months ended June 30, 2005 was $814,000 a decrease of $1,143,000 or 58.4% compared to $1,957,000 for the six months ended June 30, 2004. The decrease was due to reasons stated above.

Liquidity and Capital Resources

We used $218,000 of cash in our operating activities in the six months ended June 30, 2005, compared to the cash provided by operating activities of $2,640,000 in the six months ended June 30, 2004 and had a cash and cash equivalents balance of $9,007,000 at June 30, 2005, which was a decrease of $4,098,000 from the balance of $13,105,000 at December 31, 2004. Net working capital decreased to $16,581,000 at June 30, 2005, compared to $17,042,000 at December 31, 2004.

Net cash used in investing activities was $3,373,000 in the six months ended June 30, 2005 compared to $1,137,000 for the six months ended June 30, 2004. The increase in cash used in investing activities was primarily related to additional capital expenditures to build our inventory of cameras and edit equipment to support our increased efforts to produce more of our programming in-house as opposed to licensing such programming from third parties and in particular to increase our HD camera and editing equipment. Also included in capital expenditures is “construction in progress” and equipment related to the build-out of our new broadcast facility described below.

We used $507,000 of cash in our financing activities in the six months ended June 30, 2005 compared to the cash provided by financing activities of $897,000 for the six months ended June 30, 2004. The cash used by financing activities in 2005 was primarily for prepaid costs for our public offering completed on July 1, 2005 partially offset by the proceeds from the exercise of stock options. The cash from financing activities in 2004 was primarily a result of the exercise of employee and service provider stock options from our 1995 incentive stock option plan. More options from this plan were eligible for exercise in 2004 than in the comparable period in 2005.

During 2004, the Company entered into a credit facility providing for a revolving line of credit of up to $5,000,000 of available borrowings. The borrowings under the credit facility are secured by accounts receivable, instruments, documents, chattel paper, general intangibles, contract rights, investment property, certificates of deposit, deposit accounts, letter of credit rights, inventory, and equipment. The credit facility matures on September 5, 2005 and contains customary financial and other covenants and restrictions including a change of control provision. As of June 30, 2005 and as of the date of this report, the Company did not have any amounts outstanding under the credit facility.

Driven by a need to increase office space, we reassessed our facilities including floor space utilization, master control equipment, uplink equipment, and other needs during the year ended December 31, 2004. On February 22, 2005 we announced our intention to purchase a 28,000 square foot building in Temecula, California for approximately $2.6 million and have executed a Purchase and Sale Agreement and Escrow Instructions to complete the purchase later this year. We have entered into a lease agreement for this property whereby we are leasing the premises until the expected closing. This building

28

is planned to house our broadcast facility including our master control, our uplink satellite dish and various programming personnel. We currently estimate that capital expenditures to complete the build-out including updated equipment could exceed $8 million. While the Company believes that such estimated capital expenditures can be funded from its cash on hand or cash from operations, the Company is currently exploring long-term debt financing and other alternatives with regard to the possible funding of a portion of these estimated capital expenditures. As of the date of the filing of this report, the Company has not obtained any actual commitments with regard to such financing.

On July 1, 2005, the Company completed a public offering of its common stock, whereby we sold 3,500,000 shares of common stock and received net proceeds of $44,415,000 prior to offering costs. In addition, certain selling stockholders exercised options to buy 1,688,000 shares of common stock which were resold in the public offering. On July 13, 2005, the underwriters exercised their over-allotment option from certain selling stockholders, whereby options to buy an additional 442,000 shares of common stock were exercised. The Company received $2,162,000 in aggregate from the exercise of these options.

As of June 30, 2005, the Company had sufficient cash on hand and generated sufficient cash flow from operations to meet its short-term cash flow requirements. Management believes that the Company’s existing cash resources at June 30, 2005, the proceeds from the offering on July 1, 2005 and anticipated cash flows from operations will be sufficient to fund the Company’s operations at current levels and anticipated capital requirements through at least July 1, 2006. To the extent that such amounts are insufficient to finance the Company’s working capital requirements or the Company’s desire to expand operations beyond current levels, the Company could seek additional financing. There can be no assurance that equity or debt financing will be available if needed or, if available, will be on terms favorable to the Company or its stockholders.

Risk and Uncertainties

The Company’s business and operations are subject to a number of risks and uncertainties, and the following list should not be considered to be a definitive list of all factors that may affect the Company’s business, financial condition and future operating results and should be read in conjunction with the risks and uncertainties contained in the Company’s other filings with the Securities and Exchange Commission. Any forward-looking statements made by the Company are made with the intention of obtaining the benefits of the “safe harbor” provisions of the Securities Litigation Reform Act and a number of factors, including, but not limited to those discussed below, could cause the Company’s actual results and experiences to differ materially from the anticipated results or expectations expressed in any forward-looking statements.

We may not be able to grow our subscriber base, and as a result our revenues and profitability may not increase.

A major component of our growth strategy is based on increasing the number of subscribers to our channels. Growing our subscriber base depends upon many factors, such as the success of our marketing efforts in driving consumer demand for The Outdoor Channel, overall growth in cable and satellite subscribers, the popularity of our programming, our ability to negotiate new carriage agreements and maintain existing distribution, and other factors that are beyond our control. There can be no assurance that we will be able to maintain or increase the subscriber base of The Outdoor Channel on cable and satellite systems or that such carriage will not decrease as a result of a number of factors. If we are unable to grow our subscriber base, our subscriber and advertising revenues may not increase and could decrease.

If we offer increased launch support fees or other incentives to service providers in order to grow our subscriber base, our operating results may be harmed.

Although we currently have plans to increase our marketing and sales efforts in an attempt to increase the number of our subscribers, we may not be able to do so economically or at all. If we are unable to increase the number of our subscribers on a cost-effective basis, or if the benefits of doing so do not materialize, our business and operating results would be harmed. In particular, if we make any upfront cash payments to service providers for an increase in our subscriber base, our cash flow could be adversely impacted, and we may incur negative cash flow for some time. In addition, if we were to make such upfront cash payments or provide other incentives to service providers, we expect to amortize such amounts ratably over the term of the agreements with the service providers. However, if a service provider terminates any such agreement prior to the expiration of the term of such agreement, then under current accounting rules we may incur a large expense in that quarter in which the agreement is terminated equal to the remaining un-amortized amounts and our operating results could accordingly be adversely affected.

29

If, in our attempt to increase our number of subscribers, we structure launch support fees with one service provider in a way that would require us to offer the same support or incentives to all other service providers, our operating results may be harmed.

Many of our existing agreements with cable and satellite service providers contain “most favored nation” clauses. These clauses typically provide that if we enter into an agreement with another service provider on more favorable terms, these terms must be offered to the existing service provider, subject to some exceptions and conditions. Future agreements with service providers may also contain similar “most favored nation” clauses. If, in our attempt to increase our number of subscribers, we structure launch support fees to effectively offer more favorable terms to any service provider, these clauses may require us to reduce the effective subscriber fee rates that we receive from other service providers, and this could negatively affect our operating results.

If The Outdoor Channel is placed in unpopular program packages by cable or satellite service providers, or if service fees are increased for our subscribers, the number of viewers of The Outdoor Channel may decline which could harm our business and operating results.

We do not control the cable channels with which The Outdoor Channel is packaged by cable or satellite service providers. The placement by a cable or satellite service provider of The Outdoor Channel in an unpopular program package could reduce or impair the growth of the number of our viewers and subscriber fees paid by service providers to us. In addition, we do not set the prices charged by cable and satellite service providers to their subscribers when The Outdoor Channel is packaged with other television channels. The prices for the channel packages in which The Outdoor Channel is bundled may be set too high to appeal to individuals who might otherwise be interested in our network. Further, if The Outdoor Channel is bundled by service providers with networks that do not appeal to our viewers or is moved to packages with fewer subscribers, we may lose viewers. These factors may reduce the number of viewers of The Outdoor Channel, which in turn would reduce our subscriber fees and advertising revenue.

Cable and satellite service providers could discontinue or refrain from carrying The Outdoor Channel, which could reduce the number of viewers and harm our operating results.

The success of The Outdoor Channel is dependent, in part, on our ability to enter into new carriage agreements and maintain existing agreements with, and carriage by, satellite systems and multiple system operators’, which we refer to as MSOs, affiliated regional or individual cable systems. Although we have relationships or agreements with most of the largest MSOs and satellite service providers, execution of an agreement with an MSO does not ensure that its affiliated regional or individual cable systems will carry The Outdoor Channel. Under our current agreements, The Outdoor Channel typically offers MSOs and their cable affiliates the right to broadcast The Outdoor Channel to their subscribers, but such contracts do not require that The Outdoor Channel be offered to all subscribers of, or any tiers offered by, the MSO. Because certain carriage agreements do not specify on which service levels The Outdoor Channel is carried, such as analog versus basic digital, expanded digital or specialty tiers, and in which geographic markets The Outdoor Channel will be offered, we have no assurance that The Outdoor Channel will be carried and available to viewers of any particular MSO or to all satellite subscribers. If cable and satellite service providers discontinue or refrain from carrying The Outdoor Channel, this could reduce the number of viewers and harm our operating results.

We may not be able to effectively manage our future growth, and our growth may not continue, which may substantially harm our business and prospects.

We have undergone rapid and significant growth in revenue and subscribers over the last several years, and our strategic objectives include not only further developing and enhancing our existing business, but also expanding our in-house production capabilities. There are risks inherent in rapid growth and the pursuit of new strategic objectives, including among others: investment and development of appropriate infrastructure, such as facilities, information technology systems and other equipment to support a growing organization; hiring and training new management, sales and marketing, production, and other personnel and the diversion of management’s attention and resources from critical areas and existing projects; and implementing systems and procedures to successfully manage growth, such as monitoring operations, controlling costs, maintaining effective quality and service, and implementing and maintaining adequate internal controls. Although we have recently upgraded our Temecula, California production facility, we expect that additional expenditures will be required as we continue to upgrade our facilities and to begin transmitting our channel from our facilities directly. In particular, we have signed an agreement to purchase a building near our current headquarters and are currently building out this property primarily for use as our broadcast facility in the future. We could incur cost overruns, delays and other difficulties with this construction. In addition, moving our broadcast facility and some of our personnel into this new facility could be disruptive to our operations. We cannot assure you that we will be able to successfully manage our growth, that future growth will occur

30

or that we will be successful in managing our business objectives. We can provide no assurance that our profitability or revenues will not be harmed by future changes in our business. Our operating results could be harmed if such growth does not occur, or is slower or less profitable than projected.

We may not be able to secure national advertising accounts, and as a result, our revenues and profitability may be negatively impacted.

Our ability to secure national advertising accounts, which generally pay higher advertising rates, depends upon the size of our audience, the popularity of our programming and the demographics of our viewers, as well as strategies taken by our competitors, strategies taken by advertisers and the relative bargaining power of advertisers. Competition for national advertising accounts and related advertising expenditures is intense. We face competition for such advertising expenditures from a variety of sources, including other cable companies and other media. We cannot assure you that our sponsors will pay advertising rates for commercial air time at levels sufficient for us to make a profit or that we will be able to attract new advertising sponsors or increase advertising revenues. If we are unable to attract national advertising accounts in sufficient quantities, our revenues and profitability may be harmed.

We may be required to pay additional state income taxes for past years.

We are required to pay income taxes in various states in which we conduct our business operations. In the past, we have paid state income taxes only in California (where our headquarters is located) and have not paid income taxes to any other state. We have recently determined that we may have state income tax liability in the eight states other than California in which our gold prospecting properties are located. Although we expect in the near future to gather sufficient information to enable us to apportion our income to such states and file income tax returns in those states for past years, we can offer no assurances as to when we will be able to file state income tax returns in those states where we may have outstanding, current and future tax liabilities. In general, we believe any income taxes that we may be required to pay to states other than California will be partially offset by a refund from the State of California for income tax amounts we have overpaid to California in past years. We may, however, be limited as to the number of years for which we can receive a refund from California for taxes previously paid, and we cannot predict when we would receive any such refund. In addition, because each state to which we may owe outstanding income taxes has a different methodology for calculating tax owed and a different tax rate, our aggregate state income tax liability could be greater than what we have paid to California in prior years. Our aggregate state income tax liability, on which we may owe accrued interest and penalties, could be material to our results of operations.

If we fail to develop and distribute popular programs, our viewership would likely decline, which could cause advertising and subscriber fee revenues to decrease.

Our operating results depend significantly upon the generation of advertising revenue. Our ability to generate advertising revenues is largely dependent on our Nielsen ratings, which estimates the number of viewers of The Outdoor Channel, and this directly impacts the level of interest of advertisers and rates we are able to charge. If we fail to program popular shows that maintain or increase our current number of viewers, our Nielsen ratings could decline, which in turn could cause our advertising revenue to decline and adversely impact our business and operating results. In addition, if we fail to program popular shows the number of subscribers to our channel may also decrease, resulting in a decrease in our subscriber fee and advertising revenue.

Changes in the methodology used by Nielsen to estimate our subscriber base or television ratings, or inaccuracies in such estimates, could cause our advertising revenue to decrease.

Our ability to sell advertising is largely dependent on television ratings and our subscriber base estimated by Nielsen. We do not control the methodology used by Nielsen for these estimates. If Nielsen modifies its methodology or changes the statistical sample it uses for these estimates, such as the demographic characteristics of the households, our ratings could be negatively affected resulting in a decrease in our advertising revenue.

Expenses relating to programming costs are generally increasing and a number of factors can cause cost overruns and delays, and our operating results may be adversely impacted if we are not able to successfully recover the costs of developing and acquiring new programming.

The average cost of programming has increased recently for the cable industry and such increases may continue. We plan to build our programming library through the acquisition of long-term broadcasting rights from third party producers, in-house production and outright acquisition of programming, and this may lead to increases in our programming costs. The

31

development, production and editing of television programming requires a significant amount of capital and there are substantial financial risks inherent in developing and producing television programs. Actual programming and production costs may exceed their budgets. Factors such as labor disputes, death or disability of key spokespersons or program hosts, damage to film negatives, master tapes and recordings or adverse weather conditions may cause cost overruns and delay or prevent completion of a project. If we are not able to successfully recover the costs of developing or acquiring programming through increased revenues, whether the programming is produced by us or acquired from third-party producers, our business and operating results will be harmed.

Our operating results may be negatively impacted if our Outdoor Channel 2 HD network is not as successful as we anticipate.

In March 2005, we began transmitting an all new, all native high definition network called Outdoor Channel 2 HD. A formal consumer marketing campaign was initiated in July 2005. There can be no assurance that Outdoor Channel 2 HD will not incur unexpected costs and expenses. Distribution of Outdoor Channel 2 HD will depend on successfully executing distribution agreements with cable and satellite service providers. There can be no assurance that such agreements can be made, and if they are made, that they will be on terms favorable to us or that they will not require us to grant periods of free service and/or marketing commitments to encourage carriage. The public may not adopt HD consumer television equipment in numbers sufficient to allow profits for an advertiser-supported service. Bandwidth constraints may keep Outdoor Channel 2 HD from achieving sufficient distribution from service providers to reach profitability. Competition for quality HD content may increase the costs of programming for Outdoor Channel 2 HD beyond our control or expectations. All of these factors, combined or separately, could increase costs or restrain revenue and adversely affect our operating results.

The market in which we operate is highly competitive, and we may not be able to compete effectively, particularly against competitors with greater financial resources, brand recognition, marketplace presence and relationships with service providers.

We compete for viewers with other basic and pay cable television networks, including the Outdoor Life Network, Spike TV, ESPN2 and others. If these or other competitors, many of which have substantially greater financial and operational resources than us, significantly expand their operations with respect to outdoor-related programming or their market penetration, our business could be harmed. In addition, certain technological advances, including the deployment of fiber optic cable, which are already substantially underway, are expected to allow cable systems to greatly expand their current channel capacity, which could dilute our market share and lead to increased competition for viewers from existing or new programming services.

We also compete with television network companies that generally have large subscriber bases and significant investments in, and access to, competitive programming sources. In some cases, we compete with cable and satellite service providers that have the financial and technological resources to create and distribute their own television networks, such as the Outdoor Life Network, which is owned and operated by Comcast. In order to compete for subscribers, we may pay either launch fees or marketing support or both for carriage in certain circumstances in the future, which may require significant cash expenditures, harming our operating results and margins. We may also issue our securities from time to time in connection with our attempts for broader distribution of The Outdoor Channel and the number of such securities could be significant. We compete for advertising sales with other pay television networks, broadcast networks, and local over-the-air television stations. We also compete for advertising sales with satellite and broadcast radio and the print media. We compete with other cable television networks for subscriber fees from, and affiliation agreements with, cable and satellite service providers. Actions by the Federal Communications Commission, which we refer to as the FCC, and the courts have removed certain of the impediments to entry by local telephone companies into the video programming distribution business, and other impediments could be eliminated or modified in the future. These local telephone companies may distribute programming that is competitive with the programming provided by us to cable operators.

We may not be able to attract new, or retain existing, members in our club organizations, and as a result our revenues and profitability may be harmed.

Our ability to attract new members and retain existing members in our club organizations, GPAA and Lost Dutchman’s, depends, in part, upon our marketing efforts, including our programming on The Outdoor Channel and such other efforts as direct mail campaigns, continued sponsorship of expositions dedicated to gold prospecting, treasure hunting and related interests around the country and introductory outings held at our campsites. We cannot assure you that we will successfully attract new members or retain existing members. A decline in membership in our club organizations could harm our business and operating results.

32

Consolidation among cable and satellite distributors may harm our business.

Cable and satellite operators continue to consolidate, making The Outdoor Channel increasingly dependent on fewer operators. If these operators fail to carry The Outdoor Channel, use their increased distribution and bargaining power to negotiate less favorable terms of carriage or to obtain additional volume discounts, our business and operating results would suffer.

The satellite infrastructure that we use may fail or be preempted by another signal, which could impair our ability to deliver programming to our cable and satellite service providers.

Our ability to deliver programming to service providers, and their subscribers, is dependent upon the satellite equipment and software that we use to work properly to distribute our programming. If this satellite system fails, or a signal with a higher priority replaces our signal, which is determined by our agreement with the owner of the satellite, we may not be able to deliver programming to our cable and satellite service provider customers and their subscribers within the time periods advertised. We recently negotiated for back-up capability with our satellite provider on an in-orbit spare satellite, which provides us carriage on the back-up satellite in the event that catastrophic failure occurs on the primary satellite. Our contract provides that our main signal is subject to preemption and until the back-up satellite is in position, we could lose our signal for a period of time. A loss of our signal could harm our reputation and reduce our revenues and profits.

Natural disasters and other events beyond our control could interrupt our signal.

Our systems and operations may be vulnerable to damage or interruption from earthquakes, floods, fires, power loss, telecommunication failures and similar events. They also could be subject to break-ins, sabotage and intentional acts of vandalism. Since our production facilities for The Outdoor Channel are all located in Temecula, California, the results of such events could be particularly disruptive because we do not have readily available alternative facilities from which to conduct our business. Our business interruption insurance may not be sufficient to compensate us for losses that may occur. Despite any precautions we may take, the occurrence of a natural disaster or other unanticipated problems at our facilities could result in interruptions in our services. Interruptions in our service could harm our reputation and reduce our revenues and profits.

Our operating results may vary significantly, and historical comparisons of our operating results are not necessarily meaningful and should not be relied upon as an indicator of future performance.

Our operations are influenced by many factors. These factors may cause our financial results to vary significantly in the future and our operating results may not meet the expectations of securities analysts or investors. If this occurs, the price of our stock may decline. Factors that can cause our results to fluctuate include, but are not limited to:

·    carriage decisions of cable and satellite service providers;

·    demand for advertising, advertising rates and offerings of competing media;

·    changes in the growth rate of cable and satellite subscribers;

·cable and satellite service providers’ capital and marketing expenditures and their impact on programming offerings and penetration;

·    seasonal trends in viewer interests and activities;

·pricing, service, marketing and acquisition decisions that could reduce revenues and impair quarterly financial results;

·the mix of cable television and satellite-delivered programming products and services sold and the distribution channels for those products and services;

·    our ability to react quickly to changing consumer trends;

·    specific economic conditions in the cable television and related industries; and

·    changing regulatory requirements.

33

Due to the foregoing and other factors, many of which are beyond our control, our revenue and operating results vary from period to period and are difficult to forecast. Our expense levels are based in significant part on our expectations of future revenue. Therefore, our failure to meet revenue expectations would seriously harm our business, operating results, financial condition and cash flows. Further, an unanticipated decline in revenue for a particular calendar quarter may disproportionately affect our profitability because our expenses would remain relatively fixed and would not decrease correspondingly.

Seasonal increases or decreases in advertising revenue may negatively affect our business.

Seasonal trends are likely to affect our viewership, and consequently, could cause fluctuations in our advertising revenues. Our business reflects seasonal patterns of advertising expenditures, which is common in the broadcast industry. For this reason, fluctuations in our revenues and net income could occur from period to period depending upon the availability of advertising revenues. Due, in part, to these seasonality factors, the results of any one quarter are not necessarily indicative of results for future periods, and our cash flows may not correlate with revenue recognition.

We may be unable to access capital on acceptable terms to fund our future operations.

Our future capital requirements will depend on numerous factors, including the success of our efforts to increase advertising revenues, the amount of resources devoted to increasing distribution of The Outdoor Channel, and acquiring and producing programming for The Outdoor Channel. As a result, we could be required to raise substantial additional capital through debt or equity financing. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the issuance of such securities could result in dilution to existing stockholders. If we raise additional capital through the issuance of debt securities, the debt securities would have rights, preferences and privileges senior to holders of common stock and the terms of such debt could impose restrictions on our operations. We cannot assure you that additional capital, if required, will be available on acceptable terms, or at all. If we are unable to obtain additional capital, our current business strategies and plans and ability to fund future operations may be harmed.

We may not be able to attract and retain key personnel.

Our success depends to a significant degree upon the continued contributions of the principal members of our sales, marketing, production and management personnel, many of whom would be difficult to replace. None of our employees are under contract and all of our employees are “at-will.” Any of our officers or key employees could leave at any time, and we do not have “key person” life insurance policies covering any of our employees. The competition for qualified personnel has been strong in our industry. This competition could make it more difficult to retain our key personnel and to recruit new highly qualified personnel. The loss of Perry T. Massie, our President and Chief Executive Officer and Co-President of The Outdoor Channel, Inc., or Thomas H. Massie, our Executive Vice President, or William A. Owen, our Chief Financial Officer, or Andrew J. Dale, the Chief Executive Officer and Co-President of The Outdoor Channel, Inc., or Thomas E. Hornish, our General Counsel, could adversely impact our business. To attract and retain qualified personnel, we may be required to grant large option or other stock-based incentive awards, which may be highly dilutive to existing stockholders. We may also be required to pay significant base salaries and cash bonuses to attract and retain these individuals, which payments could harm our operating results. If we are not able to attract and retain the necessary personnel we may not be able to implement our business plan.

New video recording technologies may reduce our advertising revenue.

A number of new personal video recorders, such as TiVo® in the United States, have emerged in recent years. These recorders often contain features allowing viewers to watch pre-recorded programs without watching advertising. The effect of these recorders on viewing patterns and exposure to advertising could harm our operations and results if our advertisers reduce the advertising rates they are willing to pay because they believe television advertisements are less effective with these technologies.

Cable and satellite television programming signals have been stolen or could be stolen in the future, which reduces our potential revenue from subscriber fees and advertising.

The delivery of subscription programming requires the use of conditional access technology to limit access to programming to only those who subscribe to programming and are authorized to view it. Conditional access systems use, among other things, encryption technology to protect the transmitted signal from unauthorized access. It is illegal to create, sell or otherwise distribute software or devices to circumvent conditional access technologies. However, theft of cable and satellite programming has been widely reported, and the access or “smart” cards used in cable and satellite service providers’ conditional access systems have been compromised and could be further compromised in the future. When conditional access systems are compromised, we do not receive the potential subscriber fee revenues from the cable and satellite service providers. Further, measures that could be taken by cable and satellite service providers to limit such theft are not under our control. Piracy of our copyrighted materials could reduce our revenue from subscriber fees and advertising and negatively affect our business and operating results.

34

Because we expect to become increasingly dependent upon our intellectual property rights, our inability to protect those rights could negatively impact our ability to compete.

We currently license approximately 80% of programs we air on The Outdoor Channel from third-party television and film producers. In order to build a library of programs and programming distribution rights, we must obtain all of the necessary rights, releases and consents from the parties involved in developing a project or from the owners of the rights in a completed program. There can be no assurance that we will be able to obtain the necessary rights on acceptable terms, or at all, or properly maintain and document such rights. In addition, protecting our intellectual property rights by pursuing those who infringe or dilute our rights or defending against third party claims can be costly and time consuming. If we are unable to protect our portfolio of trademarks, service marks, copyrighted material and characters, trade names and other intellectual property rights, our business and our ability to compete could be harmed.

We may face intellectual property infringement claims that could be time-consuming, costly to defend and result in our loss of significant rights.

Other parties may assert intellectual property infringement claims against us, and our products may infringe the intellectual property rights of third parties. From time to time, we receive letters alleging infringement of intellectual property rights of others. Intellectual property litigation can be expensive and time-consuming and could divert management’s attention from our business. If there is a successful claim of infringement against us, we may be required to pay substantial damages to the party claiming infringement or enter into royalty or license agreements that may not be available on acceptable or desirable terms, if at all. Our failure to license the proprietary rights on a timely basis would harm our business.

Some of our existing stockholders can exert control over us and may not make decisions that are in the best interests of all stockholders.

Our current officers, directors and greater than 5% stockholders together currently control approximately 52.8% of our outstanding common stock. As a result, these stockholders, acting together, would be able to exert significant influence over all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. In addition, this concentration of ownership may delay or prevent a change in control of our company, even when a change may be in the best interests of stockholders. In addition, the interests of these stockholders may not always coincide with our interests as a company or the interests of other stockholders. Accordingly, these stockholders could cause us to enter into transactions or agreements that you would not approve.

Anti-takeover provisions in our certificate of incorporation, our bylaws and under Delaware law may enable our incumbent management to retain control of us and discourage or prevent a change of control that may be beneficial to our stockholders.

Provisions of Delaware law, our certificate of incorporation and bylaws could discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares. These provisions also could limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock. Furthermore, these provisions could prevent attempts by our stockholders to replace or remove our management. These provisions:

·allow the authorized number of directors to be changed only by resolution of our board of directors;

·establish a classified board of directors, providing that not all members of the board be elected at one time;

·require a 66 2/3% stockholder vote to remove a director, and only for cause;

·authorize our board of directors to issue without stockholder approval blank check preferred stock that, if issued, could operate as a “poison pill” to dilute the stock ownership of a potential hostile acquirer to prevent an acquisition that is not approved by our board of directors;

·require that stockholder actions must be effected at a duly called stockholder meeting and prohibit stockholder action by written consent;

·establish advance notice requirements for stockholder nominations to our board of directors or for stockholder proposals that can be acted on at stockholder meetings;

·except as provided by law, allow only our board of directors to call a special meeting of the stockholders; and

·require a 66 2/3% stockholder vote to amend our certificate of incorporation or bylaws.

35

In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which may, unless certain criteria are met, prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us for a prescribed period of time.

Technologies in the cable and satellite television industry are constantly changing, and our failure to acquire or maintain state-of-the-art technology may harm our business and competitive advantage.

The technologies used in the cable and satellite television industry are rapidly evolving. Many technologies and technological standards are in development and have the potential to significantly transform the ways in which programming is created and transmitted. In addition, under some of our MSO contracts, we may be required to encrypt our signal. We cannot accurately predict the effects that implementing new technologies will have on our programming and broadcasting operations. We may be required to incur substantial capital expenditures to implement new technologies, or, if we fail to do so, may face significant new challenges due to technological advances adopted by competitors, which in turn could result in harming our business and operating results.

The cable and satellite television industry is subject to substantial governmental regulation for which compliance may be expensive, time consuming and may expose us to substantial compliance costs and penalties for failure to comply.

The cable television industry is subject to extensive legislation and regulation at the federal and local levels, and, in some instances, at the state level, and many aspects of such regulation are currently the subject of judicial proceedings and administrative or legislative proposals. Similarly, the satellite television industry is subject to federal regulation. Operating in a regulated industry increases our cost of doing business.

The Cable Television Consumer Protection and Competition Act of 1992, to which we refer to as the 1992 Cable Act, precludes video programmers affiliated with cable companies from favoring their affiliated cable operators over competitors and requires such programmers to sell their programming to other multi-channel video distributors. This provision benefits independent programmers such as us by limiting the ability of vertically integrated cable programmers to offer exclusive programming arrangements to cable companies. This provision was scheduled to expire in October 2002. However, the FCC deferred the expiration date to October 2007 unless the FCC then determines that another extension is necessary to protect competition and diversity. If this provision expires, it could have an adverse effect on our ability to obtain carriage by service providers.

Regulatory carriage requirements also could reduce the number of channels available to carry The Outdoor Channel. The 1992 Cable Act granted television broadcasters a choice of must-carry rights or retransmission consent rights. The rules adopted by the FCC generally provided for mandatory carriage by cable systems of all local full-power commercial television broadcast signals selecting must-carry rights and, depending on a cable system’s channel capacity, non-commercial television broadcast signals. Such statutorily mandated carriage of broadcast stations, coupled with the provisions of the Cable Communications Policy Act of 1984, which require cable television systems with 36 or more “activated” channels to reserve a percentage of such channels for commercial use by unaffiliated third parties and permit franchise authorities to require the cable operator to provide channel capacity, equipment and facilities for public, educational and government access channels, could reduce carriage of The Outdoor Channel by limiting its carriage in cable systems with limited channel capacity. In 2001, the FCC adopted rules relating to the cable carriage of digital television signals. Among other things, the rules clarify that a digital-only television station can assert a right to analog or digital carriage on a cable system. The FCC initiated a further proceeding to determine whether television broadcasters may assert the rights to carriage of both analog and digital signals during the transition to digital television and to carriage of all digital signals. On February 10, 2005, the FCC decided that television broadcasters do not have such additional must-carry rights. Broadcasters have appealed to the FCC this decision and are seeking legislative change. The imposition of such additional must-carry regulation, in conjunction with the current limited cable system channel capacity, would make it likely that cable operators will be forced to drop some cable programming services and could reduce carriage of The Outdoor Channel.

If we distribute television programming through other types of media, we may be required to obtain federal, state and local licenses or other authorizations to offer such services. We may not be able to obtain licenses or authorizations in a timely manner, or at all, or conditions could be imposed upon licenses and authorizations that may not be favorable to us.

36

In the future, any increased regulation of rates, and in particular the rates for basic cable services, could, among other things, put downward pressure on the rates charged by cable programming services, and affect the ability or willingness of cable system operators to retain or to add The Outdoor Channel network on their cable systems. In response to a request from the Committee on Energy and Commerce of the House of Representatives, the FCC’s Media Bureau conducted a study in 2004 regarding, among other things, government-mandated a la carte or mini-tier packaging of programming services in which each subscriber would purchase only those channels that he or she desired instead of the larger bundles of different channels as is typical today. The Media Bureau’s report on November 18, 2004 observed that such packaging would increase the cost of programming to consumers and injure programmers. If, in response to any rate or other government regulation, cable system operators implement channel offering structures that require subscribers to affirmatively choose to pay a separate fee to receive The Outdoor Channel network, either by itself or in combination with a limited number of other channels, the number of viewers for The Outdoor Channel could be reduced.

The regulation of programming services, cable television systems and satellite licensees is subject to the political process and has been in constant flux over the past decade. Further material changes in the law and regulatory requirements are difficult to anticipate and our business may be harmed by future legislation, new regulation, deregulation or court decisions interpreting laws and regulations.

We must comply with many local, state, federal and environmental regulations, for which compliance may be costly and may expose us to substantial penalties.

Our recreational outdoor activity entities, GPAA and Lost Dutchman’s, share the general risks of all outdoor recreational activities such as personal injury, environmental compliance and real estate and environmental regulation. In addition to the general cable television industry regulations, we are also subject to various local, state and federal regulations, including, without limitation, regulations promulgated by federal and state environmental, health and labor agencies. Our prospecting clubs are subject to various local, state and federal statutes, ordinances, rules and regulations concerning zoning, development and other utilization of their properties. We cannot predict what impact current or future regulations may have on these businesses. In addition, failure to maintain required permits or licenses, or to comply with applicable regulations, could result in substantial fines or costs or revocation of our operating licenses, which would have a material adverse effect on our business and operating results.

Changes in corporate governance and securities disclosure and compliance practices have increased and may continue to increase our legal compliance and financial reporting costs.

The Sarbanes-Oxley Act of 2002 required us to change or supplement some of our corporate governance and securities disclosure and compliance practices. The Securities and Exchange Commission and Nasdaq have revised, and continue to revise, their regulations and listing standards. These developments have increased, and may continue to increase, our legal compliance and financial reporting costs.

Failure to achieve and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and stock price.

We are beginning the processes necessary to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act, which requires an annual management assessment of the effectiveness of internal controls over financial reporting and an opinion by our independent registered public accounting firm addressing the assessment. During the course of our testing we may identify deficiencies which we may not be able to remediate in time to meet the deadline for compliance with the requirements of Section 404. In addition, if we fail to maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404. Effective internal controls are necessary for us to produce reliable financial reports and are important in the prevention of financial fraud. If we cannot produce reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information and our stock price could decrease.

37

If our goodwill or other indefinite-lived intangibles become impaired, we will be required to take a non-cash charge which could have a significant effect on our reported net earnings.

A significant portion of our assets consists of goodwill and other indefinite-lived intangible assets. In accordance with Statements of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets”, or SFAS 142, we test goodwill and other indefinite-lived intangible assets for impairment during the fourth quarter of each year, and on an interim date if factors or indicators become apparent that would require an interim test. A significant downward revision in the present value of estimated future cash flows for a reporting unit could result in an impairment of goodwill or other indefinite-lived intangibles under SFAS 142 and a non-cash charge would be required. Such a charge could have a significant effect on our reported net earnings.

Changes to financial accounting standards may affect our reported operating results.

We prepare our financial statements to conform with GAAP, which are subject to interpretations by the Financial Accounting Standards Board, the Securities and Exchange Commission and various bodies formed to interpret and create appropriate accounting policies. A change in those policies can have a significant effect on our reported results and may even affect our reporting of transactions completed before a change is announced. Accounting policies affecting many other aspects of our business, including rules relating to business combinations and employee stock option grants have recently been revised or are under review. Changes to those rules or the questioning of current practices may adversely affect our reported financial results or the way we conduct our business. In addition, our preparation of financial statements in accordance with GAAP requires that we make estimates and assumptions that affect the recorded amounts of assets and liabilities, disclosure of those assets and liabilities at the date of the financial statements and the recorded amounts of expenses during the reporting period. A change in the facts and circumstances surrounding those estimates could result in a change to our estimates and could impact our future operating results.

Future issuance by us of preferred shares could adversely affect the holders of existing shares, and therefore reduce the value of existing shares.

We are authorized to issue up to 25,000,000 shares of preferred stock. The issuance of any preferred stock could adversely affect the rights of the holders of shares of our common stock, and therefore reduce the value of such shares. No assurance can be given that we will not issue shares of preferred stock in the future.

We do not expect to pay dividends in the foreseeable future.

We do not anticipate paying cash dividends on our common stock in the foreseeable future. Any payment of cash dividends will also depend on our financial condition, operating results, capital requirements and other factors and will be at the discretion of our board of directors. Furthermore, we may in the future become subject to contractual restrictions on or prohibitions against, the payment of dividends.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

At June 30, 2005 and December 31, 2004, our investment portfolio included fixed-income securities of $726,000 and $741,000, respectively. These securities are subject to interest rate risk and will decline in value if interest rates increase. However, due to the short duration of our investment portfolio, an immediate 10% change in interest rates would have no material impact on our financial condition, operating results or cash flows. Declines in interest rates over time will, however, reduce our interest income while increases in interest rates over time may increase our interest expense.

We do not have a significant level of transactions denominated in currencies other than U.S. dollars and as a result we have very limited foreign currency exchange rate risk. The effect of an immediate 10% change in foreign exchange rates would have no material impact on our financial condition, operating results or cash flows.

We do not have any outstanding borrowings on our line-of-credit and as a result an immediate 10% change in interest rates would have no material impact on our financial condition, operating results or cash flows.

38

ITEM 4. CONTROLS AND PROCEDURES.

We maintain disclosure controls and procedures designed to provide reasonable assurance of achieving the objective that information in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified and pursuant to the regulations of the Securities and Exchange Commission. Disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act, include controls and procedures designed to ensure the information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. It should be noted that our system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2005, the end of the period covered by this report, and concluded that our disclosure controls and procedures were effective as of June 30, 2005.

During the fiscal quarter ended June 30, 2005, there was no change in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting other than the remedial action we took to address the material weakness in our internal control over financial reporting with respect to accounting for complex and non-standard transactions. As we previously disclosed in our Form 10-Q, as amended, for the quarter ended March 31, 2005, we engaged additional resources to advise our management on the financial reporting and accounting treatment of such transactions as the remedial action.

PART II—OTHER INFORMATION

ITEM 1.	Legal Proceedings.
	None
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds.
	None
ITEM 3.	Defaults Upon Senior Securities.
	None
ITEM 4.	Submission of Matters to a Vote of Security Holders.
	None
ITEM 5.	Other Information.
	None

39

ITEM 6.Exhibits.

Exhibit Number		Description
3.1		Certificate of Incorporation of Outdoor Channel Holdings, Inc, a Delaware corporation (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on September 20, 2004 and incorporated herein by reference)
3.2		By-Laws of Outdoor Channel Holdings, Inc., a Delaware corporation (filed as Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on September 20, 2004 and incorporated herein by reference)
4.1		Specimen stock certificate for shares of common stock of the Company (filed as Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q filed on August 12, 2005 and incorporated herein by reference)
10.1		Selling Stockholders Registration Rights Agreement, dated as of June 27, 2005, among Outdoor Channel Holdings, Inc. and the selling stockholders who are a party (filed as Exhibit 10.1 to the Company’s current report on Form 8-K filed on June 28, 2005 and incorporated herein by reference)
31.1		Certification by Chief Executive Officer
31.2		Certification by Chief Financial Officer
32.1	*	Section 1350 Certification by Chief Executive Officer
32.2	*	Section 1350 Certification by Chief Financial Officer

*Pursuant to Commission Release No. 33-8238, this certification will be treated as “accompanying” this Quarterly Report on Form 10-Q and not “filed” as part of such report for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of Section 18 of the Securities Exchange Act of 1934, as amended, and this certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

OUTDOOR CHANNEL HOLDINGS, INC.

/s/ William A. Owen

William A. Owen

Authorized Officer, Chief Financial Officer and Controller (Principal and Accounting Officer)

Date: February 12, 2007

40

EX-31.1

Exhibit 31.1

CERTIFICATION*

I, Perry T. Massie, certify that:

1. I have reviewed this quarterly report on Form 10-Q/A of Outdoor Channel Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 12, 2007	/s/ Perry T. Massie
	Perry T. Massie, Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION*

I, William A. Owen, certify that:

1. I have reviewed this quarterly report on Form 10-Q/A of Outdoor Channel Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 12, 2007	/s/ William A. Owen
	William A. Owen, Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Outdoor Channel Holdings, Inc. (the “Company”) on Form 10-Q/A for the quarter ended June 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Perry T. Massie, Chief Executive Officer of the Company, certify, to the best of my knowledge, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Perry T. Massie

Perry T. Massie

Chief Executive Officer

February 12, 2007

A signed original of this written statement required by Section 906 has been provided to Outdoor Channel Holdings, Inc. and will be retained by Outdoor Channel Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Outdoor Channel Holdings, Inc. (the “Company”) on Form 10-Q/A for the quarter ended June 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William A. Owen, Chief Financial Officer of the Company, certify, to the best of my knowledge, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ William A. Owen

William A. Owen

Chief Financial Officer

February 12, 2007

A signed original of this written statement required by Section 906 has been provided to Outdoor Channel Holdings, Inc. and will be retained by Outdoor Channel Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.