Risk Factors Update Summary

• The company is required to provide new disclosures to California consumers and modify data processing practices to comply with the CCPA and CPRA, potentially incurring substantial costs.
• The company has incurred non-transaction costs related to acquisitions and expects to incur transaction fees and consolidation costs. This change might result in increased expenses and impact the company's financial performance.
• The CPRA, effective from January 1, 2023, imposes additional obligations on processing and storing personal information of California consumers.
• The company's Second Lien Credit Agreement includes provisions for the replacement of LIBOR with SOFR as a benchmark rate. This change may result in higher interest costs and affect the company's operating results and liquidity.
• Colorado, Connecticut, Utah, and Virginia have adopted comprehensive privacy laws, and other jurisdictions may adopt their own privacy laws, increasing compliance complexity.
• Vintage Capital Management, LLC owns a significant stake in the company, which could lead to conflicts of interest with other stockholders. This change may impact decision-making and corporate governance.
• The company manages information security risks by obtaining insurance and indemnification agreements, but third parties may not fully satisfy their indemnification obligations.
• The company's Badcock segment owns real estate assets, and a decrease in their value could have adverse effects. This change may impact the segment's financial position and operations.
• The company has not experienced a material data breach, but the response will be at the discretion of the Board of Directors.
• The company's Vitamin Shoppe and Pet Supplies Plus segments face regulatory restrictions on the sale of CBD products. This change may limit the growth potential of these segments.
• Applicable law requires the Board of Directors to determine adequate surplus prior to stockholder replacement, potentially discouraging takeover attempts.
• The company's warehouse and distribution facilities may experience disruptions, which could impact supply chain operations. This change may result in product shortages and affect the company's ability to meet customer demand.
• The company faces risks related to privacy laws and regulations, such as the CCPA and CPRA. This change may lead to significant fines and reputational damage if customer privacy breaches occur.