Risk Factors Update Summary

• Dependency on limited suppliers for materials, parts, and chassis could increase costs or disruptions.
• Forecasting changes: Added prediction of OEM and dealer destocking/restocking cycles and production schedules. This might result in manufacturing insufficient/excess quantities.
• Investment in research and development decreased from $56.2 million in 2022 to $53 million in 2023.
• Reliance on senior management team for business success, particularly in Taiwan, California, and Georgia.
• Warranty extension: Extended limited warranty for products from one/two to two/three years. This could increase warranty-related costs.
• Sales from the Specialty Sports Group decreased from 42% in 2022 to 25% in 2023.
• Failure to compete successfully with competitors' products may negatively affect financial condition.
• Acquisition expansion: Acquired Custom Wheel House, LLC in March 2023 and Marucci Sports, LLC in November 2023. This may impact financial condition and results of operations.
• Loss of sales to the five largest OEM customers decreased from 27% in 2022 to 23% in 2023.
• Potential decrease in demand for high-end bikes and Marucci products could impact business operations.
• Interest rate impact: Mentioned potential interest rate increases by the Federal Reserve in 2024. This could affect interest expenses and financial performance.
• Privacy law changes: Discussed evolving privacy laws in the U.S. and other jurisdictions, impacting business practices and potential costs.
• Litigation risks: Highlighted potential legal proceedings and litigation matters that could adversely affect financial condition and operations.
• Environmental regulations: Noted the impact of stringent emission standards on operations and potential costs related to compliance.