Sport-Haley, Inc. entered into a settlement agreement to resolve all pending claims between the company and its former auditors. Pursuant to the terms of the settlement agreement and a sharing agreement between Sport-Haley and its director and officer liability insurance carrier, the company will receive a net payment of approximately $173,000.

During a mediation session in November 2005, Sport-Haley reached an agreement in principle with the former auditors to settle all disputed claims between the parties and their affiliates. The parties have now finalized a written settlement agreement, which provides payment to Sport-Haley of $525,000, of which Sport-Haley will receive 33% or approximately $173,000 with the remainder going to the company’s insurance carrier to partially recover amounts the carrier paid in connection with a previously settled class action securities lawsuit and defense costs reimbursed to the company relating to a civil action lawsuit filed by the SEC.