Risk Factors Update Summary

• Increased consolidation among auto parts suppliers may lead to disruptions, product shortages, and higher prices.
• Manufacturing facility in Hollister, California shipped 7 million units in 2023, up from 5.4 million in 2022.
• Automotive supplies business manufacturing outsourced, with most manufacturing to contract manufacturers in China and Taiwan.
• Risks related to online payment methods increased due to accepting new payment options, subject to additional regulations, compliance requirements, and fraud.
• Construction business expanded warehouse space, now employing 189 full-time employees, up from 174.
• Automotive supplies business accounted for 6.6% and 13.3% of total revenues in 2023 and 2022, respectively.
• Increased risks related to payment methods, including interchange and other fees, which may increase over time, raising operating costs.
• Fluctuations in foreign currency exchange rates could impact costs and prices, affecting profitability.
• Eyewear products business sales to Target accounted for approximately 63% and 65% of sales in 2023 and 2022.
• Risks related to intellectual property rights expanded, including challenges, litigation, and potential infringement accusations from third parties.
• Eyewear products business acquired ICU Eyewear in 2023, with large retailers committing to purchases through 2023.
• Intensified competition may result in reduced sales, lower margins, and loss of market share.
• Increased labor costs due to minimum wage laws could raise expenses and reduce profitability.
• Risks related to cybersecurity threats and information security increased, with a focus on vulnerabilities to cyber-attacks and potential breaches.
• Vendor relationships: Prosben Inc. purchases increased to $1,563,027 from $1,390,988 in 2022.
• Risks related to customer acquisition and retention emphasized, with investments in customer acquisition and the importance of customer loyalty for growth.
• Climate change regulations may impact demand for auto parts, affecting sales and operations.
• Risks related to supplier relationships highlighted, including strict conditions, potential disruptions, and the impact on business operations and financial results.
• Failure to protect intellectual property could harm reputation, brand, and customer loyalty.
• Risks related to email and messaging services underscored, with dependencies on effective communication for promoting products and engaging customers.
• Litigation costs and fines from complaints could lead to substantial expenses and reputational harm.