Outdoor Channel 10Q/A 2005 Q3 Quarterly report (amended)

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 September 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 of incorporation or organization)	(IRS Employer Identification Number)

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 by check mark whether the registrant is a shell company (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 November 11, 2005
Common Stock, $0.001 par value	24,303,413

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 September 30, 2005 and December 31, 2004 and for the three and nine months ended September 31, 2005, as discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations (Item 2) and Note 10 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 unaudited condensed consolidated financial statements included in this Form 10-Q/A as of September 30, 2005 and December 31, 2004 and for the three and nine months ended September 30, 2005, 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 November 14, 2005, the filing date of the original Form 10-Q for the quarter ended September 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.

OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
Quarterly Report on Form 10-Q/A
For The Period Ended September 30, 2005

Table of Contents

Part I. Financial Information

Item 1.	Financial Statements

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

	Restated Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2005 and 2004

	Restated Unaudited Condensed Consolidated Statement of Stockholders’ Equity for the Nine Months Ended September 30, 2005

	Restated Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2005 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

***

PART I—FINANCIAL INFORMATION

ITEM 1. Financial Statements.

OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except per share data)

	September 30, 2005			December 31, 2004
	(Unaudited, Restated, Note 10)			(Restated, Note 10)
Assets
Current assets:
Cash and cash equivalents	$	29,775		$	13,105
Investment in available-for-sale securities	21,923			741
Accounts receivable, net of allowance for doubtful accounts of $275 and $207	5,317			4,848
Income tax refund receivable	3,477			2,291
Prepaid programming costs	3,121			606
Deferred tax assets, net	76			—
Other current assets	1,003			135
Total current assets	64,692			21,726

Property, plant and equipment at cost, net:
Membership division	3,615			3,527
Outdoor Channel equipment and improvements	9,957			3,199
Property, plant and equipment, net	13,572			6,726
Amortizable intangible assets, net	11,555			12,347
Goodwill	44,457			44,457
Deferred tax assets, net	11,362			14,139
Deposits and other assets	186			174
Totals	$	145,824		$	99,569

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	3,493		$	3,705
Accrued severance payments	18			28
Current portion of capital lease obligations	16			26
Deferred tax liabilities, net	—			494
Current portion of deferred revenue	257			370
Customer deposits	86			61
Total current liabilities	3,870			4,684

Accrued severance payments, net of current portion	21			37
Capital lease obligations, net of current portion	—			9
Deferred revenue, net of current portion	1,157			1,145
Deferred satellite rent obligations	298			312
Total liabilities	5,346			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: 24,305 and 18,394 shares issued and outstanding	24			18
Additional paid-in capital	158,543			111,912
Deferred compensation	(1,643		)	(1,034		)
Accumulated other comprehensive income	49			43
Accumulated deficit	(16,495		)	(17,557		)
Total stockholders’ equity	140,478			93,382
Totals	$	145,824		$	99,569

See Notes to Unaudited Condensed Consolidated Financial Statements.

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

	Three Months Ended September 30,					Nine Months Ended September 30,
	2005		2004			2005			2004
	(Restated, Note 10)					(Restated, Note 10)
Revenues:
Advertising	$	5,657	$	5,722		$	16,173		$	15,886
Subscriber fees	3,846		3,450			11,382			9,830
Membership income	1,901		1,777			3,924			3,995

Total revenues	11,404		10,949			31,479			29,711

Cost of services:
Programming	2,315		933			3,367			2,223
Satellite transmission fees	617		582			1,866			1,759
Production and operations	783		588			2,509			1,785
Other direct costs	785		540			1,247			990

Total cost of services	4,500		2,643			8,989			6,757

Other expenses:
Advertising	1,912		1,477			5,668			4,282
Selling, general and administrative	4,162		4,269			13,351			11,495
Non-cash compensation expense from exchange of stock options	—		47,983			—			47,983
Depreciation and amortization	693		340			2,015			937

Total other expenses	6,767		54,069			21,034			64,697

Income (loss) from operations	137		(45,763		)	1,456			(41,743		)

Interest expense	—		—			(2		)	—

Other income, net	396		34			486			93

Income (loss) before income taxes and minority interest	533		(45,729		)	1,940			(41,650		)

Income tax provision (benefit)	285		(18,192		)	878			(16,559		)

Income (loss) before minority interest	248		(27,537		)	1,062			(25,091		)

Minority interest in net income of consolidated subsidiary	—		193			—			682

Net income (loss)	$	248	$	(27,730	)	$	1,062		$	(25,773	)

Earnings (loss) per common share:
Basic	$	0.01	$	(1.76	)	$	0.05		$	(1.69	)
Diluted	$	0.01	$	(1.76	)	$	0.04		$	(1.69	)

Weighted average number of common shares outstanding:
Basic	24,236		15,789			20,444			15,238
Diluted	27,658		15,789			23,672			15,238

See Notes to Unaudited Condensed Consolidated Financial Statements.

OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statement of Stockholders’ Equity
For the Nine Months Ended September 30, 2005
(In thousands)

													Accumulated
							Additional						Other
	Preferred Stock			Common Stock			Paid-in			Deferred			Comprehensive		Accumulated
	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 restatement															(100		)	(100)

Balance, January 1, 2005 (restated, Note 10)	—	—		18,394	18		111,912			(1,034		)	43		(17,557		)	93,382

Comprehensive income:
Net income (restated, Note 10)															1,062			1,062
Effect of change in fair value of available-for-sale securities, net of deferred taxes of $2													6					6
Total comprehensive income (restated, Note 10)																		1,068

Common stock issued upon exercise of stock options				2,341	2		2,629											2,631

Issuance of restricted stock to employees for services to be rendered, net of forfeited shares				70			861			(861		)						—

Common stock issued upon sale to public, net of offering cost of $1,066				3,500	4		43,346											43,350

Amortization of deferred compensation										252								252

Change in estimate of tax benefit from exercise of stock options							(864		)									(864)

Tax benefit from exercise of stock options							659											659

Balance, September 30, 2005 (restated, Note 10)	—	$	—	24,305	$	24	$	158,543		$	(1,643	)	$	49	$	(16,495	)	$	140,478

See Notes to Unaudited Condensed Consolidated Financial Statements.

OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)

	Nine Months Ended September 30,
	2005			2004
	(Restated, Note 10)
Operating activities:
Net income (loss)	$	1,062		$	(25,773	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	2,015			937
Provision for doubtful accounts	132			—
Realized gain on sale of available-for-sale securities	—			(34		)
Minority interest in net income of consolidated subsidiary	—			682
Tax benefit from exercise of stock options	—			466
Deferred tax provision	2,221			(19,113		)
Compensation expense from exchange of stock options	—			47,983
Amortization of deferred compensation	252			—
Changes in operating assets and liabilities:
Accounts receivable	(601		)	(315		)
Income tax refund receivable	(1,391		)	945
Prepaid programming costs	(2,515		)	—
Other current assets	(868		)	152
Deposits and other assets	(11		)	(17		)
Accounts payable and accrued expenses	(212		)	749
Accrued severance payments	(26		)	(268		)
Deferred revenue	(102		)	(462		)
Customer deposits	25			—
Deferred satellite rent obligations	(14		)	(51		)
Net cash provided by (used in) by operating activities	(33		)	5,881

Investing activities:
Purchases of property, plant and equipment	(8,069		)	(1,631		)
Purchases of available-for-sale securities	(21,190		)	(256		)
Proceeds from sale of available-for-sale securities	—			85
Cost related to acquisition of minority interest	—			(593		)
Net cash used in investing activities	(29,259		)	(2,395		)
Financing activities:
Principal payments on notes payable and capital leases	(19		)	(151		)
Proceeds from exercise of stock options	2,631			1,102
Proceeds from common stock subscriptions receivable	—			30
Proceeds from the sale of common stock, net of offering costs	43,350			—
Net cash provided by financing activities	45,962			981
Net increase in cash and cash equivalents	16,670			4,467
Cash and cash equivalents, beginning of period	13,105			7,214
Cash and cash equivalents, end of period	$	29,775		$	11,681

Supplemental disclosure of cash flow information:

Interest paid	$	2		$	—

Income taxes paid	$	108		$	1,139

Supplemental disclosures of non-cash investing and financing activities:

Retirement of treasury stock	$	—		$	400
Fair value of common stock issued to acquire minority interest in subsidiary	$	—		$	46,062
Effect of net increase in fair value of available-for-sale securities, net of deferred taxes	$	6		$	—
Exchange of stock options for non-employee stock options of subsidiary	$	—		$	4,250

See Notes to Unaudited Condensed Consolidated Financial Statements.

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”) is incorporated under the laws of the State of Delaware. The Company acquired the remaining 17.6% minority interest in its subsidiary, 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. TOC also operates Outdoor Channel 2 HD, which also is a national television network with similar programming produced utilizing high definition technology.

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 these and other properties.

Outdoor Channel Holdings also wholly owns 43455 BPD, LLC which owns the Company’s broadcast facility.

Restatement of 2005 Financial Statements

The accompanying unaudited condensed consolidated financial statements as of September 30, 2005 and December 31, 2004 and for the three and nine months ended September 30, 2005 and 2004 and the related notes have been restated as further explained in Note 10.

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 September 30, 2005 and its results of operations and cash flows for the three and/or nine months ended September 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, 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 nine months ended September 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 (LOSS) 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 were issued during the period if any such issuances have a dilutive effect.

The computation of diluted earnings per common share takes into account the effects on the weighted average number of common shares outstanding of the assumed exercise of the outstanding stock options of the Company for the three and nine months ended September 30, 2005, adjusted for the application of the treasury stock method. The computation of diluted loss per common share for the three and nine months ended September 30, 2004 does not take into account either (i) the outstanding stock options of the Company because the effect of their assumed exercise would be anti-dilutive; or (ii) the increase in the net loss attributable to the increase in the minority interest in the net income of TOC that results from the assumed exercise of all of TOC’s outstanding stock options prior to the exchange of those options for Company options on September 8, 2004 because the effects of the assumed exercise of TOC stock options were not material. The number of shares potentially issuable by the Company at September 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 410 and 5,643, 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 nine months ended September 30, 2005 and 2004:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2005		2004			2005		2004
	(Restated, Note 10)					(Restated, Note 10)
Numerators:
Net income (loss) —basic	$	248	$	(27,730	)	$	1,062	$	(25,773	)

Denominators:
Weighted average common shares outstanding—basic	24,236		15,789			20,444		15,238
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	3,422		—			3,228		—
Diluted weighted average common shares outstanding	27,658		15,789			23,672		15,238

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 (loss) and earnings (loss) per common share and pro forma net income (loss) and earnings (loss) per common share assuming compensation cost had been determined for the three and nine months ended September 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 over the vesting period, are set forth below:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2005			2004			2005			2004
	(Restated, Note 10)						(Restated, Note 10)
Net income (loss):
As reported	$	248		$	(27,730	)	$	1,062		$	(25,773	)
Add: Stock-based employee compensation expense included in reported net loss, net of tax effects*	—			28,885			—			28,885
Deduct: Stock-based employee compensation expense assuming a fair value based method had been used for all awards, net of tax effects	(456		)	(478		)	(1,285		)	(1,390		)

Pro forma - basic	$	(208	)	$	677		$	(223	)	$	1,722
Pro forma - diluted	$	(208	)	$	677		$	(223	)	$	1,722

Basic earnings (loss) per share:
As reported	$	0.01		$	(1.76	)	$	0.05		$	(1.69	)
Pro forma	$	(0.01	)	$	0.04		$	(0.01	)	$	0.11
Diluted earnings (loss) per share:
As reported	$	0.01		$	(1.76	)	$	0.04		$	(1.69	)
Pro forma	$	(0.01	)	$	0.04		$	(0.01	)	$	0.11

*See Note 3

The fair value of each option granted by the Company in the nine months ended September 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:

	Nine Months Ended September 30, 2005		Year Ended 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 — 79.0	%

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. The adoption of SFAS 123 (R) is expected to have a material impact on the financial statements of Outdoor Channel Holdings, Inc.

NOTE 5—EQUITY TRANSACTIONS

Issuances of Common Stock by the Company

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 $43,350. 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 granted by certain selling stockholders, and purchased an additional 442 shares of common stock. The shares sold by the selling stockholders were purchased immediately before the sale through the exercise of options they held to buy common shares from the Company. The Company received $2,168 in the aggregate from the exercise of these options. During the nine months ended September 30, 2005, the

Company also received cash proceeds of approximately $463 from the exercise of other options for the purchase of 211 shares of common stock.

During the nine months ended September 30, 2005, the Company issued to employees an aggregate of 75 shares of restricted stock on two separate dates. The rights to these shares vest over a three year period. Based on the closing market prices on the day before these grants of $14.95 and $13.38 per share, the fair value of the stock was $1,103 but the aggregate charge to be incurred over the vesting period amounts to $861 representing the fair value net of an estimated employee turnover rate and has been included in deferred compensation as an offset to stockholders’ equity. The balance will be amortized to compensation expense as the rights to the restricted stock vest. The Company recorded a charge for these shares of $72 and $95 for the three and nine months ended September 30, 2005, respectively. For the restricted shares issued in 2004, the Company recorded a charge of $52 and $156 for the same respective periods. As of September 30, 2005, a total of 5 shares of restricted stock have been cancelled due to employee turnover.

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 September 30, 2005 and the changes in options outstanding during the nine months then ended is presented in the table that follows:

	As of September 30, 2005
	Shares		Weighted Average Exercise Price
Outstanding at beginning of period	5,630		$	4.12
Options granted	385		14.60
Options exercised	(2,341	)	1.12
Options canceled or expired	(3	)	6.14

Options outstanding at end of period	3,671		$	7.13

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 September 30, 2005 and 2004, respectively, and approximately $189 and $183 in the nine months ended September 30, 2005 and 2004, respectively. The Company has engaged a third party to determine fair market lease rates for the facility in anticipation of renewing the lease agreements for another two-year period.

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 September 30, 2005 and 2004 and $446 in each of the nine months ended September 30, 2005 and 2004.

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

	Revenues		Income (Loss) Before Income Taxes and Minority Interest			Total Assets		Depreciation and Amortization		Additions to Property, Plant and Improvements
As of and for the Three Months Ended September 30, 2005 (restated, Note 10)
TOC	$	9,309	$	274		$	80,459	$	615	$	4,567
Membership Division	2,095		428			6,186		78		129
Subtotals of Segments	11,404		702			86,645		693		4,696
Corporate*	—		(169		)	59,179		—		—
Totals	$	11,404	$	533		$	145,824	$	693	$	4,696

September 30, 2004 (restated, Note 10)
TOC	$	9,022	$	(45,561	)	$	67,544	$	254	$	581
Membership Division	1,927		306			4,400		86		84
Subtotals of Segments	10,949		(45,255		)	71,944		340		665
Corporate*	—		(474		)	19,539		—		—
Totals	$	10,949	$	(45,729	)	$	91,483	$	340	$	665

As of and for the Nine Months Ended September 30, 2005 (restated, Note 10)
TOC	$	27,061	$	2,734		$	80,459	$	1,780	$	7,752
Membership Division	4,418		314			6,186		235		317
Subtotals of Segments	31,479		3,048			86,645		2,015		8,069
Corporate*	—		(1,108		)	59,179		—		—
Totals	$	31,479	$	1,940		$	145,824	$	2,015	$	8,069

September 30, 2004 (restated, Note 10)
TOC	$	25,304	$	(41,093	)	$	67,544	$	680	$	1,081
Membership Division	4,407		482			4,400		257		550
Subtotals of Segments	29,711		(40,611		)	71,944		937		1,631
Corporate*	—		(1,039		)	19,539		—		—
Totals	$	29,711	$	(41,650	)	$	91, 483	$	937	$	1,631

*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 directly 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—INVESTMENT IN AVAILABLE-FOR-SALE SECURITIES

The Company’s short term investments are classified as available-for-sale and are recorded at fair value. Gross realized gains and losses on sales of securities during 2004 were not material. Included in short-term available-for-sale investments are auction rate securities owned by the Company that generally reset every 28 days.

The investment in available-for-sale securities at September 30, 2005 is comprised as follows:
Auction rate securities	$	21,190
Equities	733
Total current securities	$	21,923

The change in net unrealized securities gains (losses) recognized in other comprehensive income includes unrealized gains (losses) that arose from changes in market value of securities that were held during the period. The unrealized gain (loss) associated with investments was not significant for either period presented.

NOTE 9—SUBSEQUENT EVENTS

On November 2, 2005, the Company renewed its revolving line of credit agreement (the “revolver”) with U.S. Bank N.A. (the “Bank”), extending the maturity date to September 7, 2007 and increasing the total amount which can be drawn upon under the revolver to $8,000. The revolver provides that the interest rate shall be LIBOR plus 1.25%. The revolver is collateralized by substantially all of the Company’s assets. This credit facility contains customary financial and other covenants and restrictions, as amended on November 2, 2005, including a change of control provision. As of September 30, 2005, the Company did not have any outstanding borrowings under this revolver.

On November 2, 2005, the Company obtained a $1,950 mortgage loan from the Bank on its recently purchased broadcast facility located in Temecula, California which has a 10 year term with a 25 year amortization schedule. This loan carries a variable interest rate of LIBOR plus 1.35%. This loan is secured primarily by a Deed of Trust on the property and is also secondarily secured by the same assets as the revolver. It also contains customary financial and other covenants and restrictions including a change of control provision. On November 7, 2005, the Company entered into an interest rate swap agreement with its bank to reduce the potential impact of increasing interest rates and effectively fixed the interest rate on this loan at 6.59%.

On November 2, 2005, the Company obtained a $3,000, five year fully amortizing term loan. This term loan carries a variable interest rate of LIBOR plus 1.35%. This term loan is secured by the same assets as the revolver and contains customary financial and other covenants and restrictions including a change of control provision. On November 7, 2005, the Company entered into an interest rate swap agreement with the Bank to reduce the potential impact of increasing interest rates and effectively fixed the interest rate on this term loan at 6.35%. The proceeds from this loan are principally to be used for the leasehold improvements and the purchase of equipment related to our broadcast facility.

NOTE 10—RESTATEMENTS OF UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

This Form 10-Q/A amends our previously filed Form 10-Q for the quarter ended September 30, 2005 to reflect adjustments to the unaudited condensed consolidated financial statements as of September 30, 2005 and December 31, 2004 and for the three and nine months ended September 30, 2005 and 2004 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 financial statements included in this form 10-Q/A as of December 31, 2004 and for the three and nine months ended September 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” 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 September 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 September 30, 2005 changed as follows:

	As Originally Reported			As Restated			Change

Amortizable intangible assets, net	$	1,519		$	11,555		$	10,036

Other non-amortizable intangible assets	10,573			—			(10,573		)
Deferred tax assets, net	11,150			11,362			212
Total assets	146,149			145,824			(325		)
Accumulated deficit	(16,170		)	(16,495		)	(325		)
Total stockholders’ equity	140,803			140,478			(325		)

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 September 30, 2005 changed as follows:

	As Originally Reported		As Restated		Change

For the three months ended September 30, 2005
Depreciation and amortization	$	569	$	693	$	124
Total other expenses	6,643		6,767		124
Income (loss) from operations	261		137		(124		)
Income (loss) before income taxes and minority interest	657		533		(124		)
Income tax provision (benefit)	334		285		(49		)
Income (loss) before minority interest	323		248		(75		)
Net income (loss)	323		248		(75		)
Earnings (loss) per share
Basic	$	0.01	$	0.01	—
Diluted	$	0.01	$	0.01	—

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

	As Originally Reported		As Restated		Change

For the nine months ended September 30, 2005
Depreciation and amortization	$	1,643	$	2,015	$	372
Total other expenses	20,662		21,034		372
Income (loss) from operations	1,828		1,456		(372		)
Income (loss) before income taxes and minority interest	2,312		1,940		(372		)
Income tax provision (benefit)	1,025		878		(147		)
Income (loss) before minority interest	1,287		1,062		(225		)
Net income (loss)	1,287		1,062		(225		)
Earnings (loss) per share
Basic	$	0.06	$	0.05	$	(0.01	)
Diluted	$	0.05	$	0.04	$	(0.01	)

As a result of the restatement, the unaudited condensed consolidated statements of operations for three months ended September 30, 2004 changed as follows:

	As Previously Reported			As Restated			Change

For the three months ended September 30, 2004
Depreciation and amortization	$	299		$	340		$	41
Total other expenses	54,028			54,069			41
Income (loss) from operations	(45,722		)	(45,763		)	(41		)
Income (loss) before income taxes and minority interest	(45,688		)	(45,729		)	(41		)
Income tax provision (benefit)	(18,176		)	(18,192		)	(16		)
Income (loss) before minority interest	(27,512		)	(27,537		)	(25		)
Net Income (loss)	(27,705		)	(27,730		)	(25		)
Earnings (loss) per share
Basic	$	(1.75	)	$	(1.76	)	$	(0.01	)
Diluted	$	(1.75	)	$	(1.76	)	$	(0.01	)

As a result of the restatement, the unaudited condensed consolidated statements of operations for nine months ended September 30, 2004 changed as follows:

	As Previously Reported			As Restated			Change

For the nine months ended September 30, 2004
Depreciation and amortization	$	896		$	937		$	41
Total other expenses	64,656			64,697			41
Income (loss) from operations	(41,702		)	(41,743		)	(41		)
Income (loss) before income taxes and minority interest	(41,609		)	(41,650		)	(41		)
Income tax provision (benefit)	(16,543		)	(16,559		)	(16		)
Income (loss) before minority interest	(25,066		)	(25,091		)	(25		)
Net income (loss)	(25,748		)	(25,773		)	(25		)
Earnings (loss) per share
Basic	$	(1.69	)	$	(1.69	)	—
Diluted	$	(1.69	)	$	(1.69	)	—

THE EFFECTS ON THE UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’S 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 September 30, 2005 was increased by $325 to $16,495 from $16,170.

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 nine months ended September 30, 2005 changed as follows:

	As Originally Reported		As Restated		Change

For the nine months ended September 30, 2005

Net income (loss)	$	1,287	$	1,062	$	(225	)
Depreciation and amortization	1,643		2,015		372
Deferred tax provision	2,368		2,221		(147		)

As a result of the restatement, the unaudited condensed consolidated statements of cash flows for the nine months ended September 30, 2004 changed as follows:

	As Previously Reported			As Restated			Change

For the nine months ended September 30, 2004

Net income (loss)	$	(25,748	)	$	(25,773	)	$	(25	)
Depreciation and amortization	896			937			41
Deferred tax provision	(19,097		)	(19,113		)	(16		)

THE EFFECTS ON NOTE 3 — EARNINGS (LOSS) PER SHARE

As a result of the restatement, net income - basic for the three months ended September 30, 2005 was decreased by $75 to $248 from $323 and for the nine months ended September 30, 2005 was decreased $225 to $1,062 from $1,287. As a result of the restatement, net loss - - basic for the three months ended September 30, 2004 was increased by $25 to ($ 27,730) from ($27,705) and for the nine months ended September 30, 2004 was increased $25 to ($25,773) from ($25,748).

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 September 30, 2005

Net income (loss)	$	323		$	248		$	(75	)
Pro forma net income (loss) — basic and diluted	(133		)	(208		)	(75		)
Basic earnings (loss) per share
As reported	$	0.01		$	0.01		—
Pro forma	$	(0.01	)	$	(0.01	)	—

Diluted earnings (loss) per share
As reported	$	0.01		$	0.01		—
Pro forma	$	0.00		$	(0.01	)	$	(0.01	)

	As Originally Reported		As Restated			Change

For the nine months ended September 30, 2005

Net income (loss)	$	1,287	$	1,062		$	(225	)
Pro forma net income (loss)— basic and diluted	2		(223		)	(225		)
Basic earnings (loss) per share
As reported	$	0.06	$	0.05		$	(0.01	)
Pro forma	$	0.00	$	(0.01	)	$	(0.01	)

Diluted earnings (loss) per share
As reported	$	0.05	$	0.04		$	(0.01	)
Pro forma	$	0.00	$	(0.01	)	$	(0.01	)

	As Previously Reported			As Restated			Change

For the three months ended September 30, 2004

Net income (loss)	$	(27,705	)	$	(27,730	)	$	(25	)
Pro forma net income — basic and diluted	702			677			(25		)
Basic earnings (loss) per share
As reported	$	(1.75	)	$	(1.76	)	$	(0.01	)
Pro forma	$	0.04		$	0.04		—

Diluted earnings (loss) per share
As reported	$	(1.75	)	$	(1.76	)	$	(0.01	)
Pro forma	$	0.04		$	0.04		—

	As Previously Reported			As Restated			Change

For the nine months ended September 30, 2004

Net income (loss)	$	(25,748	)	$	(25,773	)	$	(25	)
Pro forma net income — basic and diluted	1,747			1,722			(25		)
Basic earnings (loss) per share
As reported	$	(1.69	)	$	(1.69	)	—
Pro forma	$	0.11		$	0.11		—

Diluted earnings (loss) per share
As reported	$	(1.69	)	$	(1.69	)	—
Pro forma	$	0.11		$	0.11		—

THE EFFECTS ON NOTE 7 — SEGMENT INFORMATION

As a result of the restatement, segment information for the three and nine months ended September 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 September 30, 2005
As reported and adjusted for the reclassification as described in Note 7
TOC	$	9,309	$	398		$	80,996	$	491	$	4,567
Membership Division	2,095		428			6,186		78		129
Subtotals of Segments	11,404		826			87,182		569		4,696
Corporate	—		(169		)	58,967		—		—
Totals	$	11,404	$	657		$	146,149	$	569	$	4,696

As restated
TOC	$	9,309	$	274		$	80,459	$	615	$	4,567
Membership Division	2,095		428			6,186		78		129
Subtotals of Segments	11,404		702			86,645		693		4,696
Corporate	—		(169		)	59,179		—		—
Totals	$	11,404	$	533		$	145,824	$	693	$	4,696

	Revenues		Income (Loss) Before Income Taxes			Total Assets		Depreciation and Amortization		Additions to Property, Plant and Improvements
As of and for the Nine Months Ended September 30, 2005
As reported and adjusted for the reclassification as described in Note 7
TOC	$	27,061	$	3,106		$	80,996	$	1,408	$	7,752
Membership Division	4,418		314			6,186		235		317
Subtotals of Segments	31,479		3,420			87,182		1,643		8,069
Corporate	—		(1,108		)	58,967		—		—
Totals	$	31,479	$	2,312		$	146,149	$	1,643	$	8,069

As restated
TOC	$	27,061	$	2,734		$	80,459	$	1,780	$	7,752
Membership Division	4,418		314			6,186		235		317
Subtotals of Segments	31,479		3,048			86,645		2,015		8,069
Corporate	—		(1,108		)	59,179		—		—
Totals	$	31,479	$	1,940		$	145,824	$	2,015	$	8,069

The changes in these balances are presented 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 September 30, 2005
TOC	$	—	$	(124	)	$	(537	)	$	124	$	—
Membership Division	—		—			—			—		—
Subtotals of Segments	—		(124		)	(537		)	124		—
Corporate	—		—			212			—		—
Totals	$	—	$	(124	)	$	(325	)	$	124	$	—

Change as of and for the Nine Months Ended September 30, 2005
TOC	$	—	$	(372	)	$	(537	)	$	372	$	—
Membership Division	—		—			—			—		—
Subtotals of Segments	—		(372		)	(537		)	372		—
Corporate	—		—			212			—		—
Totals	$	—	$	(372	)	$	(325	)	$	372	$	—

As a result of the restatement, segment information for the three and nine months ended September 30, 2004 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 September 30, 2004
As reported and adjusted for the reclassification as described in Note 7
TOC	$	9,022	$	(45,520	)	$	67,585	$	213	$	581
Membership Division	1,927		306			4,400		86		84
Subtotals of Segments	10,949		(45,214		)	71,985		299		665
Corporate	—		(474		)	19,523		—		—
Totals	$	10,949	$	(45,688	)	$	91,508	$	299	$	665

As restated
TOC	$	9,022	$	(45,561	)	$	67,544	$	254	$	581
Membership Division	1,927		306			4,400		86		84
Subtotals of Segments	10,949		(45,255		)	71,944		340		665
Corporate	—		(474		)	19,539		—		—
Totals	$	10,949	$	(45,729	)	$	91,483	$	340	$	665

	Revenues		Income (Loss) Before Income Taxes			Total Assets		Depreciation and Amortization		Additions to Property, Plant and Improvements
As of and for the Nine Months Ended September 30, 2004
As reported and adjusted for the reclassification as described in Note 7
TOC	$	25,304	$	(41,052	)	$	67,585	$	639	$	1,081
Membership Division	4,407		482			4,400		257		550
Subtotals of Segments	29,711		(40,570		)	71,985		896		1,631
Corporate	—		(1,039		)	19,523		—		—
Totals	$	29,711	$	(41,609	)	$	91,508	$	896	$	1,631



As restated
TOC	$	25,304	$	(41,093	)	$	67,544	$	680	$	1,081
Membership Division	4,407		482			4,400		257		550
Subtotals of Segments	29,711		(40,611		)	71,944		937		1,631
Corporate	—		(1,039		)	19,539		—		—
Totals	$	29,711	$	(41,650	)	$	91,483	$	937	$	1,631

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 September 30, 2004
TOC	$	—	$	(41	)	$	(41	)	$	41	$	—
Membership Division	—		—			—			—		—
Subtotals of Segments	—		(41		)	(41		)	41		—
Corporate	—		—			16			—		—
Totals	$	—	$	(41	)	$	(25	)	$	41	$	—

Change as of and for the Nine Months Ended September 30, 2004
TOC	$	—	$	(41	)	$	(41	)	$	41	$	—
Membership Division	—		—			—			—		—
Subtotals of Segments	—		(41		)	(41		)	41		—
Corporate	—		—			16			—		—
Totals	$	—	$	(41	)	$	(25	)	$	41	$	—

* * *

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) future performance that may result from the taking of strategic initiatives; (2) expected revenue and earnings growth and changes in mix; (3) anticipated expenses including advertising, programming, personnel and others; (4) 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 (5) 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 September 30, 2005 to reflect adjustments to the unaudited condensed consolidated financial statements as of September 30, 2005 and December 31, 2004 and for the three and nine months ended September 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 financial statements included in this Form 10-Q/A as of December 31, 2004 and for the three and nine months ended September 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 10 and below:

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 September 30, 2005 (Unaudited) and December 31, 2004;

Restated Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2005 and 2004;

Restated Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the nine months ended September 30, 2005;

Restated Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2005 and 2004;

Note 3 to Unaudited Condensed Consolidated Financial Statements; Earnings (Loss) 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 10 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 November 14, 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 September 30, 2005 changed as follows:

	As Originally Reported			As Restated			Change

Amortizable intangible assets, net	$	1,519		$	11,555		$	10,036

Other non-amortizable intangible assets	10,573			—			(10,573		)
Deferred tax assets, net	11,150			11,362			212
Total assets	146,149			145,824			(325		)
Accumulated deficit	(16,170		)	(16,495		)	(325		)
Total stockholders’ equity	140,803			140,478			(325		)

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 September 30, 2005 changed as follows:

	As Originally Reported		As Restated		Change

For the three months ended September 30, 2005
Depreciation and amortization	$	569	$	693	$	124
Total other expenses	6,643		6,767		124
Income (loss) from operations	261		137		(124		)
Income (loss) before income taxes and minority interest	657		533		(124		)
Income tax provision (benefit)	334		285		(49		)
Income (loss) before minority interest	323		248		(75		)
Net income (loss)	323		248		(75		)
Earnings (loss) per share
Basic	$	0.01	$	0.01	—
Diluted	$	0.01	$	0.01	—

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

	As Originally Reported		As Restated		Change

For the nine months ended September 30, 2005
Depreciation and amortization	$	1,643	$	2,015	$	372
Total other expenses	20,662		21,034		372
Income (loss) from operations	1,828		1,456		(372		)
Income (loss) before income taxes and minority interest	2,312		1,940		(372		)
Income tax provision (benefit)	1,025		878		(147		)
Income (loss) before minority interest	1,287		1,062		(225		)
Net income (loss)	1,287		1,062		(225		)
Earnings (loss) per share
Basic	$	0.06	$	0.05	$	(0.01	)
Diluted	$	0.05	$	0.04	$	(0.01	)

As a result of the restatement, the unaudited condensed consolidated statements of operations for three months ended September 30, 2004 changed as follows:

	As Previously Reported			As Restated			Change

For the three months ended September 30, 2004
Depreciation and amortization	$	299		$	340		$	41
Total other expenses	54,028			54,069			41
Income (loss) from operations	(45,722		)	(45,763		)	(41		)
Income (loss) before income taxes and minority interest	(45,688		)	(45,729		)	(41		)
Income tax provision (benefit)	(18,176		)	(18,192		)	(16		)
Income (loss) before minority interest	(27,512		)	(27,537		)	(25		)
Net income (loss)	(27,705		)	(27,730		)	(25		)
Earnings (loss) per share
Basic	$	(1.75	)	$	(1.76	)	$	(0.01	)
Diluted	$	(1.75	)	$	(1.76	)	$	(0.01	)

As a result of the restatement, the unaudited condensed consolidated statements of operations for nine months ended September 30, 2004 changed as follows:

	As Previously Reported			As Restated			Change

For the nine months ended September 30, 2004
Depreciation and amortization	$	896		$	937		$	41
Total other expenses	64,656			64,697			41
Income(loss) from operations	(41,702		)	(41,743		)	(41		)
Income (loss) before income taxes and minority interest	(41,609		)	(41,650		)	(41		)
Income tax provision (benefit)	(16,543		)	(16,559		)	(16		)
Income (loss) before minority interest	(25,066		)	(25,091		)	(25		)
Net income (loss)	(25,748		)	(25,773		)	(25		)
Earnings (loss) per share
Basic	$	(1.69	)	$	(1.69	)	—
Diluted	$	(1.69	)	$	(1.69	)	—

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

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 nine months ended September 30, 2005 changed as follows:

	As Originally Reported		As Restated		Change

For the nine months ended September 30, 2005

Net income (loss)	$	1,287	$	1,062	$	(225	)
Depreciation and amortization	1,643		2,015		372
Deferred tax provision	2,368		2,221		(147		)

As a result of the restatement, the unaudited condensed consolidated statements of cash flows for the nine months ended September 30, 2004 changed as follows:

	As Previously Reported			As Restated			Change

For the nine months ended September 30, 2004

Net (loss)	$	(25,748	)	$	(25,773	)	$	(25	)
Depreciation and amortization	896			937			41
Deferred tax provision	(19,097		)	(19,113		)	(16		)

THE EFFECTS ON NOTE 3 — EARNINGS (LOSS) PER SHARE

As a result of the restatement, net income - basic for the three months ended September 30, 2005 was decreased by $75 to $248 from $323 and for the nine months ended September 30, 2005 was decreased $225 to $1,062 from $1,287. As a result of the restatement, net loss - basic for the three months ended September 30, 2004 was increased by $25 to ($27,730) from ($27,705) and for the nine months ended September 30, 2004 was increased $225 to ($25,773) from ($25,748).

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 September 30, 2005

Net income (loss)	$	323		$	248		$	(75	)
Pro forma net income (loss) — basic and diluted	(133		)	(208		)	(75		)
Basic earnings (loss) per share
As reported	$	0.01		$	0.01		—
Pro forma	$	(0.01	)	$	(0.01	)	—

Diluted earnings (loss) per share
As reported	$	0.01		$	0.01		—
Pro forma	$	0.00		$	(0.01	)	$	(0.01	)

	As Originally Reported		As Restated			Change

For the nine months ended September 30, 2005

Net income (loss)	$	1,287	$	1,062		$	(225	)
Pro forma net income (loss)— basic and diluted	2		(223		)	(225		)
Basic Earnings (loss) per share
As reported	$	0.06	$	0.05		$	(0.01	)
Pro forma	$	0.00	$	(0.01	)	$	(0.01	)

Diluted Earnings (loss) per share
As reported	$	0.05	$	0.04		$	(0.01	)
Pro forma	$	0.00	$	(0.01	)	$	(0.01	)

	As Previously Reported			As Restated			Change

For the three months ended September 30, 2004

Net income (loss)	$	(27,705	)	$	(27,730	)	$	(25	)
Pro forma net income — basic and diluted	702			677			(25		)
Basic Earnings (loss) per share
As reported	$	(1.75	)	$	(1.76	)	$	(0.01	)
Pro forma	$	0.04		$	0.04		—

Diluted Earnings (loss) per share
As reported	$	(1.75	)	$	(1.76	)	$	(0.01	)
Pro forma	$	0.04		$	0.04		—

	As Previously Reported			As Restated			Change

For the nine months ended September 30, 2004

Net income (loss)	$	(25,748	)	$	(25,773	)	$	(25	)
Pro forma net income — basic and diluted	1,747			1,722			(25		)
Basic Earnings (loss) per share
As reported	$	(1.69	)	$	(1.69	)	—
Pro forma	$	0.11		$	0.11		—

Diluted Earnings (loss) per share
As reported	$	(1.69		$	(1.69	)	—
Pro forma	$	0.11		$	0.11		—

THE EFFECTS ON NOTE 7 — SEGMENT INFORMATION

As a result of the restatement, segment information for the three and nine months ended September 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 September 30, 2005
As reported and adjusted for the reclassification as described in Note 7
TOC	$	9,309	$	398		$	80,996	$	491	$	4,567
Membership Division	2,095		428			6,186		78		129
Subtotals of Segments	11,404		826			87,182		569		4,696
Corporate	—		(169		)	58,967		—		—
Totals	$	11,404	$	657		$	146,149	$	569	$	4,696

As restated
TOC	$	9,309	$	274		$	80,459	$	615	$	4,567
Membership Division	2,095		428			6,186		78		129
Subtotals of Segments	11,404		702			86,645		693		4,696
Corporate	—		(169		)	59,179		—		—
Totals	$	11,404	$	533		$	145,824	$	693	$	4,696

	Revenues		Income (Loss) Before Income Taxes			Total Assets		Depreciation and Amortization		Additions to Property, Plant and Improvements
As of and for the Nine Months Ended September 30, 2005
As reported and adjusted for the reclassification as described in Note 7
TOC	$	27,061	$	3,106		$	80,996	$	1,408	$	7,752
Membership Division	4,418		314			6,186		235		317
Subtotals of Segments	31,479		3,420			87,182		1,643		8,069
Corporate	—		(1,108		)	58,967		—		—
Totals	$	31,479	$	2,312		$	146,149	$	1,643	$	8,069

As restated
TOC	$	27,061	$	2,734		$	80,459	$	1,780	$	7,752
Membership Division	4,418		314			6,186		235		317
Subtotals of Segments	31,479		3,048			86,645		2,015		8,069
Corporate	—		(1,108		)	59,179		—		—
Totals	$	31,479	$	1,940		$	145,824	$	2,015	$	8,069

The changes in these balances are presented 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 September 30, 2005
TOC	$	—	$	(124	)	$	(537	)	$	124	$	—
Membership Division	—		—			—			—		—
Subtotals of Segments	—		(124		)	(537		)	124		—
Corporate	—		—			212			—		—
Totals	$	—	$	(124	)	$	(325	)	$	124	$	—

Change as of and for the Nine Months Ended September 30, 2005
TOC	$	—	$	(372	)	$	(537	)	$	372	$	—
Membership Division	—		—			—			—		—
Subtotals of Segments	—		(372		)	(537		)	372		—
Corporate	—		—			212			—		—
Totals	$	—	$	(372	)	$	(325	)	$	372	$	—

As a result of the restatement, segment information for the three and nine months ended September 30, 2004 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 September 30, 2004
As reported and adjusted for the reclassification as described in Note 7
TOC	$	9,022	$	(45,520	)	$	67,585	$	213	$	581
Membership Division	1,927		306			4,400		86		84
Subtotals of Segments	10,949		(45,214		)	71,985		299		665
Corporate	—		(474		)	19,523		—		—
Totals	$	10,949	$	(45,688	)	$	91,508	$	299	$	665

As restated
TOC	$	9,022	$	(45,561	)	$	67,544	$	254	$	581
Membership Division	1,927		306			4,400		86		84
Subtotals of Segments	10,949		(45,255		)	71,944		340		665
Corporate	—		(474		)	19,539		—		—
Totals	$	10,949	$	(45,729	)	$	91,483	$	340	$	665

	Revenues		Income (Loss) Before Income Taxes			Total Assets		Depreciation and Amortization		Additions to Property, Plant and Improvements
As of and for the Nine Months Ended September 30, 2004
As reported and adjusted for the reclassification as described in Note 7
TOC	$	25,304	$	(41,052	)	$	67,585	$	639	$	1,081
Membership Division	4,407		482			4,400		257		550
Subtotals of Segments	29,711		(40,570		)	71,985		896		1,631
Corporate	—		(1,039		)	19,523		—		—
Totals	$	29,711	$	(41,609	)	$	91,508	$	896	$	1,631




As restated
TOC	$	25,304	$	(41,093	)	$	67,544	$	639	$	1,081
Membership Division	4,407		482			4,400		257		550
Subtotals of Segments	29,711		(40,611		)	71,944		896		1,631
Corporate	—		(1,039		)	19,539		—		—
Totals	$	29,711	$	(41,650	)	$	91,483	$	896	$	1,631

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 September 30, 2004
TOC	$	—	$	(41	)	$	(41	)	$	41	$	—
Membership Division	—		—			—			—		—
Subtotals of Segments	—		(41		)	(41		)	41		—
Corporate	—		—			16			—		—
Totals	$	—	$	(41	)	$	(25	)	$	41	$	—

Change as of and for the Nine Months Ended September 30, 2004
TOC	$	—	$	(41	)	$	(41	)	$	41	$	—
Membership Division	—		—			—			—		—
Subtotals of Segments	—		(41		)	(41		)	41		—
Corporate	—		—			16			—		—
Totals	$	—	$	(41	)	$	(25	)	$	41	$	—

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 lifestyle 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 6,850 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 31,700 active members. GPAA is the publisher of the “Gold Prospectors & Treasure Hunters in the Great Outdoors” magazine and has rights to a 2,300 acre property near Nome, Alaska used to provide an annual expedition for a fee to its members.

Outdoor Channel Holdings also wholly owns 43455 BPD, LLC which owns our broadcast facility.

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.

During the latter part of 2004, we decided to pursue strategic initiatives to increase our long-term profitability. Such initiatives included growing The Outdoor Channel’s subscriber base, by developing a second network — Outdoor Channel 2 HDSM, opening a new advertising sales office in New York, producing more programming in-house and purchasing a new building to house our new state of the art broadcast facility. Although we anticipate these initiatives will increase our costs in the near term, we believe such strategic pursuits will ultimately enhance our overall performance.

In some of the following period-to-period comparisons, the Company has specifically noted, and at times excluded the September 2004 non-cash, non-recurring compensation expense of $47,983,000 incurred by the Company and the related tax benefit of $19,098,000 as the result of the assumption of TOC options in connection with the acquisition of the minority interest in TOC because it believes quantifying the effects of this charge provides a better understanding of the Company’s results of operations. The Company’s management also believes that disclosure of its results in this manner, when presented in conjunction with the corresponding GAAP measures, provides useful information to investors and others in identifying and understanding the Company’s operating performance for the periods presented.

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 for employee options. The Company will 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 September 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 nine months ended September 30, 2005.

Comparison of Operating Results for the Three Months Ended September 30, 2005 and September 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	$	5,657	$	5,722		$	(65	)	(1.1	)%	49.6	%	52.3	%
Subscriber fees	3,846		3,450			396			11.5		33.7		31.5
Membership income	1,901		1,777			124			7.0		16.7		16.2
Total revenues	11,404		10,949			455			4.2		100.0		100.0

Cost of Services:
Programming	2,315		933			1,382			148.1		20.3		8.5
Satellite transmission fees	617		582			35			6.0		5.4		5.3
Production and operations	783		588			195			33.2		6.9		5.4
Other direct costs	785		540			245			45.4		6.9		4.9
Total cost of services	4,500		2,643			1,857			70.3		39.5		24.1

Other expenses:
Advertising	1,912		1,477			435			29.5		16.7		13.5
Selling, general and administrative	4,162		4,269			(107		)	(2.5	)	36.5		39.1
Non-cash compensation expense from exchange of stock options	—		47,983			(47,983		)	(100.0	)	—		438.2
Depreciation and amortization	693		340			353			103.8		6.1		3.1
Total other expenses	6,767		54,069			(47,302		)	(87.5	)	59.3		493.9

Income (loss) from operations	137		(45,763		)	45,900			(100.3	)	1.2		(418.0	)

Other income, net	396		34			362			1,064.7		3.5		0.3

Income (loss) before income taxes and minority interest	533		(45,729		)	46,262			(101.2	)	4.7		(417.7	)

Income tax provision (benefit)	285		(18,192		)	18,477			(101.6	)	2.5		(166.2	)

Income (loss) before minority interest	248		(27,537		)	27,785			(100.9	)	2.2		(251.5	)

Minority interest in net income of consolidated subsidiary	—		193			(193		)	(100.0	)	—		1.8

Net income (loss)	$	248	$	(27,730	)	$	27,978		(100.9	)%	2.2	%	(253.3	)%

Comparison of Operating Results for the Nine Months Ended September 30, 2005 and September 30, 2004

						Change					% of Total Revenue
	2005		2004			$			%		2005		2004
	(Restated)					(Restated)					(Restated)
Revenues:
Advertising	$	16,173	$	15,886		$	287		1.8	%	51.4	%	53.5	%
Subscriber fees	11,382		9,830			1,552			15.8		36.1		33.1
Membership income	3,924		3,995			(71		)	(1.8	)	12.5		13.4
Total revenues	31,479		29,711			1,768			6.0		100.0		100.0

Cost of services:
Programming	3,367		2,223			1,144			51.5		10.7		7.5
Satellite transmission fees	1,866		1,759			107			6.1		5.9		5.9
Production and operations	2,509		1,785			724			40.6		8.0		6.0
Other direct costs	1,247		990			257			26.0		4.0		3.3
Total cost of services	8,989		6,757			2,232			33.0		28.6		22.7

Other expenses:
Advertising	5,668		4,282			1,386			32.4		18.0		14.4
Selling, general and administrative	13,351		11,495			1,856			16.1		42.4		38.7
Non-cash compensation expense from exchange of stock options	—		47,983			(47,983		)	(100.0	)	—		161.5
Depreciation and amortization	2,015		937			1,078			115.0		6.4		3.2
Total other expenses	21,034		64,697			(43,663		)	(67.5	)	66.8		217.8

Income (loss) from operations	1,456		(41,743		)	43,199			(103.5	)	4.6		(140.5	)

Other income, net	484		93			391			420.4		1.6		0.3

Income (loss) before income taxes and minority interest	1,940		(41,650		)	43,590			(104.7	)	6.2		(140.2	)

Income tax provision (benefit)	878		(16,559		)	17,437			(105.3	)	2.8		(55.7	)

Income (loss) before minority interest	1,062		(25,091		)	26,153			(104.2	)	3.4		(84.5	)

Minority interest in net income of consolidated subsidiary	—		682			(682		)	(100.0	)	—		2.3

Net income (loss)	$	1,062	$	(25,773	)	$	26,835		(104.1	)%	3.4	%	(86.8	)%

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. Advertising revenue is also generated from fees paid by third party programmers that purchase advertising time in connection with the airing of their programs on The Outdoor Channel. For the three months ended September 30, 2005 and 2004, The Outdoor Channel generated approximately 97.0% and 97.4% of our advertising revenue, respectively. For the nine months ended September 30, 2005 and 2004, The Outdoor Channel generated approximately 97.0% 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 September 30, 2005 were $11,404,000, an increase of $455,000, or 4.2% compared to revenues of $10,949,000 for the three months ended September 30, 2004. Total revenues for the nine months ended September 30, 2005 were $31,479,000, an increase of $1,768,000, or 6.0%, compared to revenues of $29,711,000 for the nine months ended September 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 September 30, 2005 was $5,657,000, a decrease of $65,000 or 1.1% compared to $5,722,000 for the three months ended September 30, 2004. Advertising revenue for the nine months ended September 30, 2005 was $16,173,000, an increase of $287,000 or 1.8% compared to $15,886,000 for the nine months ended September 30, 2004. The decline in advertising revenue for the three months ended September 30, 2005 principally reflects less than projected growth in our Nielsen Universe Estimate resulting in under delivery of households for our advertising clients. For September of 2005, Nielsen estimated that The Outdoor Channel had 25.6 million viewers, down from 26.2 million for the same period a year ago. (Nielsen revises this estimate each month and for November, Nielsen increased its estimate to approximately 25.7 million subscribers). Because of this under delivery, we record a liability, commonly referred to in the cable industry and as we refer to it as “Make Good Liability,” thereby reducing revenue we might otherwise recognize and deferring it into the future when we air additional advertising for the client at no additional cost. The increase in advertising revenue for the nine months ended September 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.

Subscriber fees for the three months ended September 30, 2005 were $3,846,000, an increase of $396,000 or 11.5% compared to $3,450,000 for the three months ended September 30, 2004. Subscriber fees for the nine months ended September 30, 2005 were $11,382,000, an increase of $1,552,000 or 15.8% compared to $9,830,000 for the nine months ended September 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 and contractual subscriber fee rate increases with existing service providers carrying The Outdoor Channel. We plan to accelerate our subscriber growth utilizing various means including deployment of launch support fees. Such fees are capitalized and amortized over the life of the carriage agreement. To the extent revenue is associated with the incremental subscribers, the amortization is charged to offset the related revenue. Any excess of launch support amortization over the related subscriber revenue is charged to expense. As a result, we anticipate that subscriber revenue, net of amortization of launch fees, may not increase over the foreseeable future once we deploy this tactic and, in fact, due to contractual volume discounts, could actually decrease over the new contract lives.

Membership income for the three months ended September 30, 2005 was $1,901,000, an increase of $124,000 or 7.0% compared to $1,777,000 for the three months ended September 30, 2004. Membership income for the nine months ended September 30, 2005 was $3,924,000, a decrease of $71,000 or 1.8% compared to $3,995,000 for the nine months ended September 30, 2004. The improvement of the third quarter over last year principally reflects the increased participation of our gold prospecting expedition to our Cripple River property located near Nome, Alaska.

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 September 30, 2005 was $4,500,000, an increase of $1,857,000 or 70.3%, compared to $2,643,000 for the three months ended September 30, 2004. Total cost of services for the nine months ended September 30, 2005 was $8,989,000, an increase of $2,232,000 or 33.0%, compared to $6,757,000 for the nine months ended September 30, 2004. As a percentage of revenues, total cost of services was 39.5% and 24.1% in the three months ended September 30, 2005 and 2004, respectively. As a percentage of revenues, total cost of services was 28.6% and 22.7% in the nine months ended September 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 September 30, 2005 were $2,315,000, an increase of $1,382,000 or 148.1% compared to $933,000 for the three months ended September 30, 2004. Programming expenses for the nine months ended September 30, 2005 were $3,367,000, an increase of $1,144,000 or 51.5% compared to $2,223,000 for the nine months ended September 30, 2004. The increase is principally a result from our decision to launch our second channel, Outdoor Channel 2 HD, on July 1, 2005. This channel is entirely programmed with shows produced in-house as opposed to the preponderance of third party production on our standard definition channel. We produced in excess of 40 shows plus numerous specials in-house to air in the third and fourth quarters of 2005 and in some situations again in 2006. We aired 16 shows that were internally produced during the third and fourth quarters of 2004.

Our policy is to charge costs of specific show production to programming expense over the expected airing period beginning when the program first airs. The cost of programming is generally first recorded as prepaid programming costs and is then charged to programming expense based on the anticipated airing schedule. The anticipated airing schedule is typically over 2 or 4 quarters that

generally does not extend more than 2 years. As the anticipated airing schedule changes, the timing and amount of the charge to expense is prospectively adjusted accordingly. At the time we determine a program is unlikely to air or re-air, we charge programming expense with the remaining associated cost recorded in prepaid programming. We are reassessing our programming direction and may charge to expense prepaid programming costs in the fourth quarter that had otherwise been planned to expense in the future as they air.

Much of the cost of programming has been recorded as prepaid programming costs corresponding with the full launch of Outdoor Channel 2 HD. Many of these programs began airing during the third quarter of 2005, and we anticipate re-airing the programs in the fourth quarter of 2005 and in some situations re-airing the same programs on The Outdoor Channel in 2006. 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 video-on-demand, 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 September 30, 2005 were $617,000, an increase of $35,000, or 6.0%, compared to $582,000 for the three months September 30, 2004. Satellite transmission fees for the nine months ended September 30, 2005 were $1,866,000, an increase of $107,000, or 6.1%, compared to $1,759,000 for the nine months ended September 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.

Production and operations costs for the three months ended September 30, 2005 were $783,000, an increase of $195,000, or 33.2%, compared to $588,000 for the three months ended September 30, 2004. Production and operations costs for the nine months ended September 30, 2005 were $2,509,000, an increase of $724,000, or 40.6%, compared to $1,785,000 for the nine months ended September 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 September 30, 2005 were $785,000, an increase of $245,000, or 45.4%, compared to $540,000 for the three months ended September 30, 2004. Other direct costs for the nine months ended September 30, 2005 were $1,247,000, an increase of $257,000, or 26.0%, compared to $990,000 for the nine months ended September 30, 2004. This increase is primarily additional expenses associated with support of our membership segment including magazine production and outings.

Other Expenses

Other expenses consist of the cost of (1) advertising; (2) selling, general and administrative expenses; (3) compensation expense from exchange of TOC stock options; and (4) depreciation and amortization.

Total other expenses for the three months ended September 30, 2005 were $6,767,000, a decrease of $47,302,000, or 87.5%, compared to $54,069,000 for the three months ended September 30, 2004. Total other expenses for the nine months ended September 30, 2005 were $21,034,000, a decrease of $43,663,000 or 67.5%, compared to $64,697,000 for the nine months ended September 30, 2004. As a percentage of revenues, total other expenses were 59.3% and 493.9% in the three months ended September 30, 2005 and 2004, respectively. As a percentage of revenues, total other expenses were 66.8% and 217.8% in the nine months ended September 30, 2005 and 2004, respectively. The decrease in expenses was due to the non-recurring charge to compensation expense incurred in September 2004 as a result of the issuance of options to TOC employees with an intrinsic value of $47,983,000 in accordance with the terms of the acquisition by the Company of substantially all of the remaining 17.6% minority interest in TOC it did not already own. Otherwise total expenses increased as illustrated when the non-cash, non-recurring compensation expense of $47,983,000 incurred in September 2004 is excluded.

Total other expenses, net of the compensation expense from exchange of stock options, increased $681,000 or 11.1% and $4,320,000 or 24.0% for the three and nine months, respectively. As a percentage of revenues, total other expenses, net of compensation expense from exchange of stock options, were 59.3% and 55.5 % in the three months ended September 30, 2005 and 2004, respectively. As a percentage of revenues, total expenses, net of compensation expense from exchange of stock options, were 66.8% and 56.3% in the nine months ended September 30, 2005 and 2004, respectively.

The increase in these expenses was due to several factors, 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. Those increased costs will continue to be incurred becoming part of our cost of doing business. The increase is also attributable to increased programming and personnel costs, costs

associated with the launch of our second channel, Outdoor Channel 2 HD, marketing and promotion costs and other items more fully described as follows.

Advertising expenses for the three months ended September 30, 2005 were $1,912,000, an increase of $435,000 or 29.5% compared to $1,477,000 for the three months ended September 30, 2004. Advertising expenses for the nine months ended September 30, 2005 were $5,668,000, an increase of $1,386,000 or 32.4% compared to $4,282,000 for the nine months ended September 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 September 30, 2005 were $4,162,000, a decrease of $107,000 or 2.5% compared to $4,269,000 for the three months ended September 30, 2004. As a percent of revenues, selling, general and administrative expenses were 36.5% and 39.1% in the three months ended September 30, 2005 and 2004, respectively. Selling, general and administrative expenses for the nine months ended September 30, 2005 were $13,351,000, an increase of $1,856,000 or 16.1% compared to $11,495,000 for the nine months ended September 30, 2004. As a percent of revenues, selling, general and administrative expenses were 42.4% and 38.7% in the nine months ended September 30, 2005 and 2004, respectively.

The increase was primarily due to the increase in the number of employees. 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. We increased other corporate overhead expenses such as our activity surrounding Sarbanes-Oxley compliance in 2005, fees for our listing on Nasdaq National Market and fees associated with incorporation in the state of Delaware.

We anticipate that selling, general and administrative costs will continue to climb over the foreseeable future both in dollars and when expressed as a percent of revenue as we continue to work to gain penetration of both channels, corporate spending on Sarbanes-Oxley compliance, fees to maintain our common stock listing and improved communication with our stockholders, among other corporate expenses.

Compensation expense from exchange of stock options for the three and nine months ended September 30, 2004 was $47,983,000 and was incurred as a result of the issuance of 4,012,000 options to TOC option holders in accordance with the terms of the acquisition of substantially all of the remaining 17.6% minority interest in TOC we did not already own. This charge is both non-cash and non-recurring.

Depreciation and amortization for the three months ended September 30, 2005 were $693,000, an increase of $353,000 or 103.8% compared to $340,000 for the three months ended September 30, 2004. Depreciation and amortization for the nine months ended September 30, 2005 were $2,015,000, an increase of $1,078,000 or 115.0% compared to $937,000 for the nine months ended September 30, 2004. The increase in depreciation and amortization is principally a result of amortization of intangible assets created as part of 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. Also increased depreciation expense reflects the purchase and installation of the equipment related to the launch of our second network, Outdoor Channel 2HD.

Income (Loss) from Operations

Income (loss) from operations for the three months ended September 30, 2005 was $137,000, an increase of $45,900,000 compared to ($45,763,000) for the three months ended September 30, 2004. As a percent of revenues, income from operations was 1.2% and (418.0%), respectively. Income (loss) from operations for the nine months ended September 30, 2005 was $1,456,000, an increase of $43,199,000 compared to ($41,743,000) for the nine months ended September 30, 2004. As a percent of revenues, income from operations was 4.6% and (140.4%), respectively. As we continue to strive to drive growth of our subscriber base including the planned payment of launch support and as we further develop our second channel, 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.

As explained above, the non-cash, non-recurring compensation expense charge of $47,983,000 which resulted from the assumption of options in connection with the acquisition of the minority interest in TOC accounts for the majority of the loss from operations for the three and nine months ended September 30, 2004. If we excluded this charge, income from operations for the three months ended September 30, 2004 would have been $2,220,000. As a percentage of revenue this adjusted total would have been

20.3% for the three months ended September 30, 2004. If we excluded this charge, income from operations for the nine months ended September 30, 2004 would have been $6,240,000. As a percentage of revenue this adjusted total would have been 21.0% for the nine months ended September 30, 2004.

Other Income, Net

Other income, net for the three months ended September 30, 2005 was $396,000, an increase of $362,000 compared to $34,000 for the three months ended September 30, 2004. Other income, net for the nine months ended September 30, 2005 was $484,000, an increase of $391,000 compared to $93,000 for the nine months ended September 30, 2004. This improvement was primarily due to increased dividends and interest earned on our increased investment in available-for-sale securities and cash and cash equivalent balances that resulted from the sale, on July 1, 2005, of 3,500,000 shares of common stock for net cash proceeds of $43,350,000 plus $2,631,000 from the exercise of stock options during the nine months ended September 30, 2005.

Income (Loss) Before Income Taxes and Minority Interest in Net Income of Consolidated Subsidiary

Income (loss) before income taxes and minority interest increased as a percentage of revenues to 4.7% for the three months ended September 30, 2005 compared to (417.7%) for the three months ended September 30, 2004. Income (loss) before income taxes and minority interest decreased as a percentage of revenues to 6.2% for the nine months September 30, 2005 compared to (140.2%) for the nine months ended September 30, 2004.

The TOC segment’s income before income taxes and minority interest expressed as a percentage of revenue increased to 2.9% for the three months ended September 30, 2005, compared to a loss of 162.4% for the three months ended September 30, 2004. The TOC segment’s income before income taxes and minority interest expressed as a percentage of revenue increased to 10.1% for the nine months ended September 30, 2005, compared to a loss of 505.0% for the nine months ended September 30, 2004. The decrease was due to the non-cash, non-recurring charge of $47,983,000, and to the growth of our programming expenses and increased staff in support of the launch of our second channel, Outdoor Channel 2 HD, increased spending on advertising, personnel and travel/promotional related expenses as well as depreciation expenses related to the deployment of additional equipment and amortization of the intangible assets related to the acquisition of the minority interest of TOC.

The Membership Division segment’s income before income taxes and minority interest expressed as a percentage of revenues increased to 20.4% for the three months ended September 30, 2005 compared to 15.9% for the three months ended September 30, 2004. The Membership Division segment’s income before income taxes and minority interest expressed as a percentage of revenues decreased to 7.1% for the nine months ended September 30, 2005 compared to 10.9% for the nine months ended September 30, 2004. The improvement in the third quarter’s results reflects the success of our annual Alaska trip driven by increased number of participants. The results of this quarter did not overcome the poorer results in the prior six months of 2005 when compared to 2004.

Corporate incurred a loss before income taxes and minority interest for the three months ended September 30, 2005 amounting to $169,000, a change of $305,000 compared to a loss of $474,000 for the three months ended September 30, 2004. Corporate incurred a loss before income taxes and minority interest for the nine months ended September 30, 2005 amounting to $1,108,000, a decrease of $69,000 compared to $1,039,000 for the nine months ended September 30, 2004. The expenses allocated to Corporate include: professional fees such as public relations, accounting and legal fees, amortization of intangibles, 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, listing fees of Nasdaq National Market and amortization of the intangible assets related to the acquisition of the minority interest of TOC. 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 eight months of 2004 to five in 2005.

Income TaxProvision (Benefit)

Income tax provision for the three months ended September 30, 2005 was $285,000, an increase of $18,477,000 as compared to a benefit of $18,192,000 for the three months ended September 30, 2004. Income tax provision for the nine months ended September 30, 2005 was $878,000, an increase of $17,437,000 as compared to a benefit of $16,559,000 for the nine months ended September 30, 2004. The increase was principally due to the Company earning taxable income in the 2005 periods as compared to a loss for the 2004 periods. The effective income tax rate was approximately 53.5% and 39.8% for the three months ended September 30, 2005 and 2004, respectively. The effective income tax rate was approximately 45.3% and 39.8% for the nine months ended September 30, 2005 and 2004, respectively. The increased effective income tax rates experienced in 2005 compared to 2004 are principally a result of increases in the estimated amount of expenditures not fully deductible and adjustments to the state tax provision rate.

Minority Interest in Net Income of Consolidated Subsidiary

Minority interest for the three and nine months ended September 30, 2004 was $193,000 and $682,000, 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 nine months ended September 30, 2005.

Net Income (Loss)

Net income (loss) for the three months ended September 30, 2005 was $248,000 an increase of $27,978,000 compared to ($27,730,000) for the three months ended September 30, 2004. Net income (loss) for the nine months ended September 30, 2005 was $1,062,000 an increase of $26,835,000 compared to ($25,773,000) for the nine months ended September 30, 2004. The increase was due to reasons stated above. Excluding the non-cash, non-recurring charge of $47,983,000, net of income tax benefit of $19,098,000, net income for the three months ended September 30, 2004 would have been $1,180,000 or 10.8% of revenue. Excluding the non-cash, non-recurring charge of $47,983,000, net of income tax benefit of $19,098,000, net income for the nine months ended September 30, 2004 would have been $3,112,000 or 10.5% of revenue.

Liquidity and Capital Resources

We used $33,000 of cash in our operating activities in the nine months ended September 30, 2005, compared to $5,881,000 in the nine months ended September 30, 2004 and had cash and cash equivalents balance of $29,775,000 at September 30, 2005, which was an increase of $16,670,000 from the balance of $13,105,000 at December 31, 2004. Net working capital increased to $60,822,000 at September 30, 2005, compared to $17,042,000 at December 31, 2004.

Net cash used in investing activities was $29,259,000 in the nine months ended September 30, 2005 compared to $2,395,000 for the nine months ended September 30, 2004. The increase in cash used in investing activities was related to the purchase of (i) short term auction rate securities to enhance our returns on cash balances and (ii) capital expenditures on “construction in progress” and equipment related to the build-out of our new broadcast facility as further discussed below. Additional capital expenditures were to build our inventory of cameras and edit equipment used 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.

Cash provided by financing activities in the nine months ended September 30, 2005 was $45,962,000 compared to $981,000 for the nine months ended September 30, 2004. The cash provided by financing activities in 2005 was primarily from the completion, on July 1, 2005, of a public offering of our common stock, whereby we sold 3,500,000 shares of common stock and received net proceeds of $43,350,000. 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 granted by certain selling stockholders and purchased an additional 442,000 shares of common stock. The shares sold by the selling stockholders were purchased immediately before the sale through the exercise of options they held to buy common shares from the Company. The Company received $2,168,000 in the aggregate from the exercise of these options. The Company also received cash proceeds of approximately $463,000 from the exercise of other options for the purchase of 211,000 shares of common stock. The cash provided by 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.

The net proceeds from the public offering are intended to be used to expand our marketing and sales efforts to increase the number of subscribers to The Outdoor Channel and the purchase of programming from third parties , increased internal production of programming and for general corporate purposes.

On November 2, 2005, we renewed our revolving line of credit agreement (the “revolver”) with U.S. Bank N.A. (the “Bank”), extending the maturity date to September 7, 2007 and increasing the total amount which can be drawn upon under the revolver to $8,000,000. The revolver provides that the interest rate shall be LIBOR plus 1.25%. The revolver is collateralized by substantially all of the Company’s assets. This credit facility contains customary financial and other covenants and restrictions, as amended on November 2, 2005, including a change of control provision. As of September 30, 2005 and as of the date of this report, we did not have any amounts outstanding under this 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 we completed the purchase during the third quarter of 2005. We are in the process of completing improvements to this building which is planned to house our broadcast facility including our master control, our uplink satellite dish and various programming personnel. We currently estimate that aggregate capital expenditures to complete the build-out including updated equipment could exceed $8 million. As of September 30, 2005 we have spent approximately $4.8 million on such upgrades.

On November 2, 2005, we obtained a $1,950,000 mortgage loan from the Bank on our recently purchased broadcast facility located in Temecula, California which has a 10 year term loan with a 25 year amortization schedule. This loan carries a variable interest rate of LIBOR plus 1.35%. This loan is secured primarily by a Deed of Trust on the property and is also secondarily secured by the same assets as the revolver. It also contains customary financial and other covenants and restrictions including a change of control provision. On November 7, 2005, we entered into an interest rate swap agreement with the Bank to reduce the potential impact of increasing interest rates and effectively fixed the interest rate on this loan at 6.59%.

On November 2, 2005, we obtained into a $3,000,000, five year fully amortizing term loan. This loan carries a variable interest rate of LIBOR plus 1.35%. This term loan is secured by the same assets as the revolver and contains customary financial and other covenants and restrictions including a change of control provision. On November 7, 2005, we entered into an interest rate swap agreement with the Bank to reduce the potential impact of increasing interest rates and effectively fixed the interest rate on this term loan at 6.35%.

As of September 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 including cash on-hand, various notes including the line-of-credit at September 30, 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 November 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 and could decrease.

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. In addition, as we plan for such growth, our expenses are expected to increase and if we are not able to concurrently increase our revenue, our profitability 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.

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 purchased 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 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 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.

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 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 July 2005, we launched an all new, all native high definition network called Outdoor Channel 2 HD. 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.

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.

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.

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 pay cable television and broadcast 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.

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.

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. In November 2005, we entered into an aggregate of up to thirteen million dollars in debt financing from a commercial bank. 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.

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 77% 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 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.

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 increase our costs and expose us to 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 as a video programmer.

The Cable Television Consumer Protection and Competition Act of 1992, to which we refer as the 1992 Cable Act, includes provisions that precludes cable companies affiliated with video programmers from favoring their programmers over competitors. The 1992 Cable Act also precludes such programmers from selling their programming exclusively to their affiliated cable companies. These provisions potentially benefit independent programmers such as us by limiting the ability of cable companies affiliated with programmers from carrying only programming in which they have an ownership interest and from offering exclusive programming arrangements to cable companies. However, the United States Court of Appeals for the District of Columbia Circuit vacated the FCC Rule limiting the carriage of affiliated programmers by cable companies, and the FCC has not adopted a new rule. The exclusivity provision is scheduled to expire in October 2007 unless the FCC then determines that a further extension is necessary to protect competition and diversity. If these provisions of the 1992 Cable Act expire or become no longer applicable, and if we are still able to increase the number of subscribers to our channel, then the costs associated with doing so may increase significantly.

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 formally have requested that the FCC reconsider this decision and are seeking legislative change to require such carriage. The imposition of such additional must-carry regulation, in conjunction with the current limited cable system channel capacity, would increase the likelihood that cable operators may be forced to drop some cable programming services and could reduce carriage of The Outdoor Channel.

The Telecommunications Act of 1996 required the FCC to establish rules and an implementation schedule to ensure that video programming is fully accessible to the hearing impaired through closed captioning. The rules adopted by the FCC require substantial closed captioning over a six to ten year phase-in period, which began in 2000, with only limited exemptions. As a result, we will continue to incur additional costs for closed captioning.

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.

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.

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 September 30, 2005 and December 31, 2004, our investment portfolio included fixed-income securities of $21,923,000 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.

As of September 30, 2005, we had no outstanding debt. As of November 14, 2005, the date of the original Form 10-Q for the quarter ended September 30, 2005 we had aggregate outstanding borrowings of approximately $4,950,000. The rates of interest on our currently outstanding debt are fixed while the rate of interest on our line-of-credit is variable, but we currently have no outstanding balance under this credit facility. Because of these reasons, an immediate 10% change in interest rates would have no material, immediate impact on our financial condition, operating results or cash flows.

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 September 30, 2005, the end of the period covered by this report, and concluded that our disclosure controls and procedures were effective as of September 30, 2005.

During the fiscal quarter ended September 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.

PART II—OTHER INFORMATION

ITEM 1. Legal Proceedings.

None

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On July 13, 2005, the Company issued to Mr. Ray V. Miller 93,516 shares of common stock upon the exercise of options. No underwriters were involved with this issuance to Mr. Miller. The aggregate consideration paid by Mr. Miller was approximately $86,325, and such issuance was deemed exempt from registration under the Securities Act of 1933, as amended, in reliance on Section 4(2) thereof as a transaction by an issuer not involving a public offering.

ITEM 3. Defaults Upon Senior Securities.

None

ITEM 4. Submission of Matters to a Vote of Security Holders.

(a) Annual Meeting of Stockholders was held on August 30, 2005.

(b) Stockholders voted for the election of Messrs. Jerry R. Berglund and Ray V. Miller as directors whose term shall expire in 2008. Messrs. Thomas H. Massie, David C. Merritt and Ms. Elizabeth J. Sanderson continued as directors whose term shall expire in 2006. Messrs. Perry T. Massie and T. Bahnson Stanley continued as directors whose term shall expire in 2007.

(c) Proposal One to elect two directors to the Company’s board of directors to serve until the 2008 Annual Meeting resulted in the election of Mr. Berglund with 16,428,222 (99.52%) votes for and 79,438 (0.48%) withheld, and Mr. Miller with 16,428,222 (99.52%) votes for and 79,438 (0.48%) withheld.

ITEM 5. Other Information.

The date of our 2006 annual meeting of stockholders will be May 16, 2006, which is more than 30 calendar days earlier than the date of our 2005 annual meeting of stockholders. All stockholder proposals and director nominations for the 2006 annual meeting must be submitted in accordance with the procedures set forth in our bylaws.

If a stockholder wants us to consider including a proposal in our proxy materials for the 2006 annual meeting, pursuant to Rule 14a-8 under the Exchange Act the stockholder must submit the proposal no later than an expected date of November 30, 2005. Any proposal received at the Company’s executive offices after such date will be considered untimely and may be excluded from the proxy statement and form of proxy for the 2006 annual meeting. If the proposal complies with all of the requirements of Rule 14a-8, we will include it in the Proxy Statement and set it forth on the form of proxy issued for the 2006 annual meeting. Any such stockholder proposals should be directed to the attention of the Company’s Secretary or Assistant Secretary at our headquarters at 43445 Business Park Drive, Suite 113, Temecula, California 92590.

With respect to any proposal that a stockholder intends to present at the 2006 annual meeting but is not submitted for inclusion in our proxy materials pursuant to Rule 14a-8, the proxy for such annual meeting will confer discretionary voting authority to vote on such stockholder proposal unless we are notified of such proposal no later than an expected date of February 13, 2006 and the proponent complies with all applicable requirements set forth in Regulation 14A under the Exchange Act.

On November 2, 2005, the Company renewed its line-of-credit agreement with U.S. Bank N.A. extending the maturity date to September 7, 2007 and increasing the available borrowings to $8,000, 000, subject to certain provisions. This credit line carries a variable interest rate of LIBOR plus 1.25%. The borrowings under this 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. This credit facility contains customary financial and other covenants and restrictions, as amended on November 2, 2005, including a change of control provision. As of date of this report, the Company did not have any amounts outstanding under this credit facility.

On November 2, 2005, the Company entered into a $1,950,000 mortgage loan with U.S. Bank N.A. on its recently purchased broadcast facility located in Temecula, California representing a 75% loan to value, 10 year term loan with a 25 year amortization schedule. This loan carries a variable interest rate of LIBOR plus 1.35%. This loan is secured primarily by a Deed of Trust on the property and is also secondarily secured by the same assets as the line-of-credit. It also contains customary financial and other covenants and restrictions including a change of control provision. On November 7, 2005, the Company entered into an interest rate swap agreement with U.S. Bank N.A. to reduce the potential impact of increasing interest rates and effectively fixed the interest rate on this loan at 6.59%.

On November 2, 2005, the Company entered into a $3,000,000, 5 year fully amortizing term loan with U.S. Bank N.A. This loan carries a variable interest rate of LIBOR plus 1.35%. This term loan is secured by the same assets as the line-of-credit and contains customary financial and other covenants and restrictions including a change of control provision. On November 7, 2005, the Company entered into an interest rate swap agreement with U.S. Bank N.A. to reduce the potential impact of increasing interest rates and effectively fixed the interest rate on this term loan at 6.35%.

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)
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

Outdoor Channel (OUTD) Inactive 10-Q/A2005 Q3 Quarterly report (amended)