Risk Factors Update Summary

• Accumulated deficit increased from $75 million to $120.8 million due to convertible notes conversion.
• Change in exercise price from $3.5625 to $3.75 for Placement Agent Warrant and 2022 Underwriter Warrant.
• Net proceeds decreased from approximately $22.3 million to $2 million due to convertible notes issuance.
• Non-compliance with Nasdaq Listing Rules, potential delisting, and completed reverse stock splits.
• Sales of youth motorcycles in 2023 were lower than expected, leading to a $2.7 million inventory write-down.
• Potential need for another reverse stock split before June 17, 2024 to comply with Bid Price Rule.
• Outsourced design, development, and manufacturing to third parties to reduce costs and evaluate further cost reductions.
• Increased reliance on third-party manufacturers and designers may lead to delays and quality control issues.
• Transitioned to outsourced manufacturing model, reducing headcount and outsourcing design, development, and manufacturing.
• Entered into agreements with distributors in Latin America, New Zealand, Australia, and the Caribbean to expand international sales.