Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

For the fiscal year ended December 31, 20212022

OR

For the transition period from __________to__________to

Commission file number: 001-39599

HOLLEY INC.

(Exact name of registrant as specified in its charter)

1801 Russellville Road,, Bowling Green,, KY42101

(Address of principal executive offices)

(270) 782-2900

(270) 782-2900

(Registrant’sRegistrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report) N/A

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.

Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(§S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit reportreport. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.  ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act). Yes ☐ No ☒

As of June 30, 2021,July 1, 2022, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the registrant’s common stock outstanding of Empower Ltd. (the former name of the registrant), other than shares held by persons who may be deemed affiliates of the registrant,non-affiliates, computed by reference to the closing sales price for the ordinary shares of Empower Ltd. on such date, as$10.98 reported on the New York Stock Exchange, was $250,250,000. On July 19, 2021, the registrant’s common stock and warrants began trading on the New York Stock Exchange under the symbols “HLLY” and “HLLY WS,” respectively.approximately $560 million.

There were 117,993,139118,241,747 shares of Common Stock, including 2,187,5001,093,750 restricted earn-out shares, par value $0.0001 per share, issued and outstanding as of March 14, 2022.10, 2023.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended.amended (the "Exchange Act"), that are intended to enjoy the protection of the safe harbor for forward-looking statements provided by the Securities Act and Exchange Act, as well as protections afforded by other federal securities laws. These forward-looking statements relate to expectations for future financial performance, business strategies or expectations for the Company’s business. TheseForward-looking statements may be precededaccompanied by followed by or include the words “believes,such as “believe,” “estimates,“estimate,” “expects,“expect,” “projects,“project,” “forecasts,“forecast,” “may,” “will,” “should,” “seeks,“seek,” “plans,“plan,” “scheduled,” “anticipates,“anticipate,” “intends”“intend” or similar expressions. These forward-looking statements are subject to various risks and uncertainties, many of which are outside our control. Therefore, you should not place undue reliance on such statements. These forward-looking statements are subject to a number of risks and uncertainties and actual results could differ materially due to numerous factors, including, but not limited to, the Company’s ability to do any of the following:

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Forward-looking statements are based on information available as of the date of this Annual Report on Form 10-K and our management’s expectations, forecasts and assumptions, and involve a number of judgements, risks and uncertainties, and actual results, developments and business decisions may differ materially from those envisaged by such forward-looking statements. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date. We undertake no obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as mymay be required under applicable securities laws.

SUMMARY OF RISK FACTORS

The following summarizes the principal factors that make an investment in Holley speculative or risky. You should carefully consider the following risks as well as the other information included in this Annual Report on Form 10-K, including “Cautionary Note Regarding Forward-Looking Statements,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the related notes thereto included elsewhere herein, before investing in our securities. See “Risk Factors” for a more detailed discussion of the risk factors listed below.

Risk Related to Our Business and Industry

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Legal, Regulatory and Compliance Risks Related to Our Business

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Risks Related to Ownership of Our Securities

PART I

Item 1. Business

About Us

Founded in 1903, Holley, Inc. (“Holley” or the “Company”) has been a part of the automotive industry for well over a century. We are a leading designer, marketer, and manufacturer of high-performance automotive aftermarket products for car and truck enthusiasts. Our products span a number of automotive platforms and are sold across multiple channels. We attribute a major component of our success to our brands, including “Holley”, “APR”, “MSD” and “Flowmaster”, among others. In addition, we have recently added to our brand lineup through a series of strategic acquisitions, including our 20202022 acquisitions of Simpson Racing Products,substantially all the assets of John’s Ind., Inc. (“Simpson”John’s”), Drake Automotive Group LLCSouthern Kentucky Classics (“Drake”SKC”), and Detroit Speed,Vesta Motorsports USA, Inc., d.b.a. RaceQuip (“Detroit Speed”RaceQuip”) and, our 2021 acquisitions of substantially all the assets of AEM Performance Electronics (“AEM”), Finspeed, LLC (“Finspeed”), Classic Instruments LLC (“Classic Instruments”), ADS Precision Machining, Inc., d.b.a. Arizona Desert Shocks (“ADS”), Baer, Inc, d.b.a. Baer Brakes (“Baer”), Brothers Mail Order Industries, Inc., d.b.a. Brothers Trucks (“Brothers”), Rocket Performance Machine, Inc., d.b.a. Rocket Racing Wheels (“Rocket”), and Speartech Fuel Injections Systems, Inc. (“Speartech”), and our 2020 acquisitions of Simpson Racing Products, Inc. (“Simpson”), Drake Automotive Group LLC (“Drake”) and Detroit Speed, Inc. (“Detroit Speed”). Through these strategic acquisitions, we have increased our market position in the otherwise highly fragmented performance automotive aftermarket industry.

We operate in the performance automotive aftermarket parts industry. We believe there is ample opportunity to continue our expansion into new products and markets, such as exterior accessories and mobile electronics, representing a natural progression for us to grow market share as these adjacencies are driven by passionate enthusiasts, consistent with our core categories. See also “Risk Factors—Factors—Risks Relating to Holley’sHolley’s Business and Industry—Industry—If the Company is unable to successfully design, develop and market new products, the Company business may be harmed” for a discussion of the risks related to the Company’s new product development.

On July 16, 2021, we consummated a business combination (“Business Combination”) pursuant to that certain Agreement and Plan of Merger dated March 11, 2021 (the “Merger Agreement”), by and among Empower Ltd., (“Empower”), Empower Merger Sub I Inc., a direct wholly owned subsidiary of Empower (“Merger Sub I”), Empower Merger Sub II LLC, a direct wholly owned subsidiary of Empower (“Merger Sub II”), and Holley Intermediate Holdings, Inc. ("Holdings"). The Merger Agreement provided for, among other things, the following transactions: (i) Merger Sub I merged with and into Holdings, the separate corporate existence of Merger Sub I ceased, and Holdings became the surviving corporation, and (ii) Holdings merged with and into Merger Sub II, the separate corporate existence of Holdings ceased, and Merger Sub II became the surviving limited liability company. Upon closing, Empower changed its name to Holley Inc. and its trading symbol on the New York Stock Exchange (the “NYSE”) from “EMPW” to “HLLY.”

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Business Strategy

Our vision is to be the most compelling and inclusive platform for automotive enthusiasts, to inspire and support enthusiasts’ transition to cleaner, more sustainable technologies, and to further accelerate the automotive lifestyle. Our aim is to provide a platform where automotive enthusiasts can purchase aftermarket auto parts for both old model restorations and new vehicle enhancements. We believe our consumers are enthusiastic and passionate about the performance and the personalization of their classic and modern cars. We aim to provide the products and service they need to pursue that passion. We will continue to drive growth and value for our shareholders through our key strategies:

Competition

The performance automotive industry is highly competitive, and we face substantial competition in all the markets that we serve. The principal factors on which industry participants compete include technical features, performance, product design, innovation, reliability and durability, brand, time to market, customer service, reliable order execution, and price. Our success in the marketplace depends on our ability to execute our Business Strategy discussed above.

The performance automotive aftermarket parts industry in the United States is large and highly fragmented. In addition, we have seen consistent growth within the automotive aftermarket parts industry over the last two decades. Products in the performance automotive aftermarket parts industry range from functional products that enhance vehicle performance to products that improve safety, stability, handling and appearance.

Our core competitive set is comprised of four primary types of competitors with fragmentation across the majority of our major product categories:

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We believe the following factors distinguish Holley from its competitors:

Brands

We have a strong portfolio of brands covering various product categories. Our portfolio consists of over 6070 brands spanning across 30 product categories. Our top seven brands generated 74%68% of our sales in 2021.2022.

We believe the popularity of our brands is the result of consistently delivering high quality, innovative products that resonate with our enthusiast consumers. Our brands have allowed us to build direct, trusted and long-lasting relationships with our consumers and resellers.

Our top seven brands all experienced sales growth between 2020 and 2021 and we expect to continue our growth in these brands through new product development. We believe our continued marketing effort will support the continued growth

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Product Development

We have a history of developing innovative products, including new products in existing product families,categories like Electronic Fuel Injection, product line expansions, and accessories, as well as products that bring us into new categories.markets including components for converting ICE vehicles to electric powertrains. We have thoughtfully expanded our product portfolio over time to adapt to consumer needs.needs and find solutions to new consumer demands. We expand our existing product families and enter new product categories by creating solutions grounded in our expert insights and relevant market knowledge. We believe we have a meaningful runway across our target product categories and product vintages, and we are well positioned for future growth by expanding in adjacent and transformational categories that present opportunities for further market penetration in the EFIPerformance Suspension, Braking and Powertrain Conversion Systems markets. We believe there are also opportunities to capitalize on newly enteredgrowing our powertrain agnostic categories like Performance & Appearance Packages, Wheels & Tires,Automotive and Performance Suspension.Motorcycle Safety.

Suppliers

We run a flexible sourcing model with a mix of global sourcing and in-house manufacturing. Our best value sourcing model decisions are based on a mix of cost, quality and service. We have a diverse global supplier base and no material supplier concentration. Our efficient sourcing model enables strong gross margins and cash conversion.

We believe there is an adequate supply of raw materials and key components; however, there can be no assurance over the long term that the availability of materials and components or increases in commodity prices will not materially affect our business or results of operations. Ongoing supply chain disruptions, resulting in supply shortages and higher shipping charges, have and could continue to impact our ability to maintain supplies of products and the costs associated with obtaining raw materials and key components. We have experienced, and may continue to experience, disruptions due to the global supply shortage of automotive-grade microchips, which has resulted in increased microchip delivery lead times.

Marketing

We reach and engage our consumers where they participate in the performance automotive aftermarket – online and in person. Our marketing strategy is centered on strong brand equity, leading new product innovation capabilities and delivering consistently high-quality products. In 2021,2022, we spent approximately $10approximately $11.6 million (or approximately 1%2% of our 20212022 annual gross sales) on marketing and advertising. Going forward, consistent with our value creation strategies, we intend to meaningfully increasecontinue our investments in direct consumer marketing and advertising as well as refocusrefocus our current mix of spending towards activities believed to generate the highest return on investment. We believe these strategies will have a meaningfully positive impact across our brand portfolio and will result in the continuation of net sales growth.portfolio.

In recent years, we have shifted our marketing efforts towards digital advertising and have increased investments in consumer engagement directly via digital and social media platforms and campaigns. Additionally, since mid-2020 we increased resources focused on expanding our e-commerce and digital platforms. These efforts have included turning Holley.com into a destination for automotive enthusiasts and launching MotorLife,Motor Life, our internal digital publication that is available to the public on our website. As a result, we have experienced a significant increase in social media and online engagement during 2020since that has continued to grow in 2021.time. Continued expansion of and investment in digital and social media are expected in the future, including focusing on strategies to grow the high margin DTC channel.

We have also spent significant time and effort in creating engaging, in-person events.events to build the Holley tribe. These events focus on creating memorable experiences for enthusiast consumers and encourage consumers to be among other enthusiasts, celebrate car culture, build community and show enthusiasts how Holley products can help them enjoy their vehicles.vehicles. Since 2015, our events have grown in total annual attendance from 14,000 to 77,000 106,000in 2021.2022. We currently host fiveseven annual self-funding events, (LSincluding LS Fest East, LS Fest West, Ford Fest, MoParty, and High Voltage) throughout the year that are rootedVoltage, Brother's Truck Show, plus a new event launched in popular engine and car platforms. We launched2022, LS Fest Texas, our first Electric Vehiclelargest inaugural event Holley High Voltage Experience, in November 2021.to date. 

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Sales and Distribution

We have a diverse omni-channel distribution strategy led by our growing DTC channel. Our omni-channel model enables us to reach our consumers through DTC, E-tailer, warehouse distributor, traditional retailer, and jobber/ installer channels. We have mutually beneficial relationships with our resellers and are able to maintain strong pricing discipline across our channels with strict conformance to minimum advertised pricing.

DTC channel: Consumers are increasingly meeting us online through our DTC channel. Our DTC channel provides consumers full access to all of our brands, our unique branded content and our full product assortment. We have turned Holley.com into our primary hub for consumer communication and continue to add features and brands that make it an increasingly attractive digital destination for our consumers. Our DTC channel enables us to directly interact with our customers, more effectively control our brand experience, better understand consumer behavior and preferences, and offer exclusive products, content, and customization capabilities. We believe our control over our DTC channel provides our customers with quality brand engagement and further builds customer loyalty, while generating attractive margins.

Resellers: We have historically sold the majority of our products through resellers who purchase our products and resell them through various channels. These resellers consist of E-tailers, warehouse distributors, traditional retailers, and jobber/installers with (i) E-tailers and warehouse distributors accounting for 59%for 60% of our sales in 2021, (ii)2022, and our top ten resellers accounting for 42%for 39% of our sales in 2021, 2022 with our largest reseller making up 19% of our sales in 2021, and (iii) the top ten accounts growing 14% from 2020 to 2021.2022.

We have established mutually beneficial and long-term relationships with our resellers. We believe resellers benefit from our broad suite of product offerings that they can leverage to meet consumer demand across multiple product categories. Based on the value that we offer to our resellers, we are able to operate with pricing discipline that supports the value of our products in the marketplace and buttresses our profit margins. We believe our approach to pricing allows us to better understand consumer demand and identify what our end consumers are buying.

Intellectual Property

Patents, trademarks, and other proprietary rights are important to the continued success of our business. We own and have licensing arrangements for a number of U.S. and foreign patents, trademarks, and other proprietary rights related to our products and business. We also rely upon continuing technological innovation and licensing opportunities to develop and maintain our competitive position. We protect our proprietary rights through a variety of methods, including the use of confidentiality and other similar agreements. We do not consider our business to be dependent on any single patent, nor is the expiration of any patent expected to materially affect our business. Our current patents will expire over various periods and we continue to file new patent applications on newly-developednewly developed technology. We fromFrom time to time, we become aware of potential infringement of our patent, trademark, or other proprietary rights, and we investigate instances of alleged infringement where we believe it is merited and take appropriate actions under applicable intellectual property laws in response to such infringements where we determine it is valuable to do so. Similarly, from time to time we are the subject of intellectual property and other proprietary rights related suits and other litigation.

Seasonality

Holley’s operating results have fluctuated on a quarterly and annual basis in the past and can be expected to continue to fluctuate in the future as a result of a number of factors, some of which are beyond the Company’s control. Traditionally, our sales in the first half of the year are generally higher than in the second half of the year. Due to these factors and others, which may be unknown to the Company at this time, operating results in future periods can be expected to fluctuate. Accordingly, the Company’s historical results of operations may not be indicative of future performance.

Regulations

We are subject to a variety of federal, state, local and foreign laws and regulations, including those governing the discharge of pollutants into the air or water, the management and disposal of hazardous substances or wastes, and the cleanup of contaminated sites. Some of our operations require environmental permits and controls to prevent and reduce air and water pollution. These permits are subject to modification, renewal and revocation by issuing authorities. We believe we are in substantial compliance with all material environmental laws and regulations applicable to our plants and operations. Historically, our annual costs of achieving and maintaining compliance with environmental, health and safety requirements have not been material to our financial results.

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Increasing global efforts to control emissions of carbon dioxide, methane, ozone, nitrogen oxide and other greenhouse gases and pollutants, as well as the shifting focus of regulatory efforts towards total emissions output, have the potential to impact our facilities, costs, products and customers. The U.S. Environmental Protection Agency (“EPA”) has taken action to control greenhouse gases from certain stationary and mobile sources. In addition, several states have taken steps, such as adoption of cap and tradecap-and-trade programs or other regulatory systems, to address greenhouse gases. There have also been international efforts seeking legally binding reductions in emissions of greenhouse gases. These developments and further actions that may be taken in the U.S. and in other countries, states or provinces could affect our operations both positively and negatively (e.g., by affecting the demand for or suitability of some of our products).

We also may be subject to liability as a potentially responsible party under the Comprehensive Environmental Response, Compensation and Liability Act and similar state or foreign laws for contaminated properties that we currently own, lease or operate or that we or our predecessors have previously owned, leased or operated, and sites to which we or our predecessors sent hazardous substances. Such liability may be joint and several so that we may be liable for more than our share of any contamination, and any such liability may be determined without regard to causation or knowledge of contamination. We or our predecessors have been named potentially responsible parties at contaminated sites from time to time. We do not anticipate any potential liability relating to contaminated sites to be material to our financial results.

Employees

Holley’s employees are integral to our strategic growth and success. We consider our team members to be our most valuable asset and seek to attract and maintain the highest quality talent by offering competitive benefits and wellness services, opportunities to grow professionally, and regular evaluations, among other initiatives. As of December 31, 2021,2022, we employed 1,7211,622 full-time employees and 137100 temporary employees. Our employees are not involved in any labor unions. Approximately 29%48% of our full-time employees are based primarily in our Bowling Green, KY headquarters.headquarters, distribution center and manufacturing plants. None of our employees are subject to collective bargaining agreements or represented by a labor union. We believe our facilities are in labor markets with ready access to adequate numbers of skilled and unskilled workers, and we believe our relations with our employees are good.

Many of our employees are automotive enthusiasts themselves.enthusiasts. We pride ourselves on having a platform built for enthusiasts by enthusiasts. As of December 2021, we have over 1502022, our Engineering function includes approximately 203 employees, including many enthusiast-focused engineers many of whomwho are passionate about cars themselves.cars. We continue to seek out top level talent that will help accomplish our mission and vision moving forward. Our goal is to create an inclusive and safe environment for our employees that keeps them engaged in their work.

Compensation and Benefits. We strive to hire, develop and retain top talent. We attract and reward our employees by providing competitive benefits, including market-competitive compensation, medical, dental and vision insurance, short-term and long-term disability insurance, basic life and accidental death and dismemberment insurance, voluntary supplemental coverages, flexible spending accounts, paid time off, and our 401(k) program. Holley matches employee contributions to the 401(k) Plan up to 3.5% each pay period, and an additional discretionary match of up to 1.5% is made based on company performance to targets.

Health, Safety and Wellness. Holley is committed to the health and well-being of its employees and designs its compensation and benefit programs to demonstrate this commitment. Our programs are intended to support the physical and mental well-being of our employees and their families by providing the tools and resources for employees to improve or maintain their health and to lessen concerns about missing work and the potential financial impact.

Employee health and safety in the workplace is one of our top priorities. We have implemented programs and training designed to eliminate workplace incidents, risks and hazards. The core training provided includes Emergency Response, OSHA Reporting, Fire Safety, and Office Ergonomics. We also review and monitor our performance closely. In response to the COVID-19 pandemic, we followed guidance from the Centers for Disease Control, the World Health Organization, and the various states and counties in which we operate in order to keep our employees safe. We will continue to make the health and wellbeing of our employees a priority.

Inclusion. We know that diversity throughout our company creates stronger teams, leads to innovation, and results in an organization that provides the best service to our customers. We have a recruitment strategy that encourages diversity across the company. We leverage our employee referral program to identify diverse talent during the recruitment process. We also engage with a local development board and a local refugee center in Bowling Green, KY to increase our diverse talent candidate pool. 

We believe our employees should reflect the customers we serve. Notably, approximately 30% of Holley consumers are female. Accordingly, we recognize the benefits of female representation in our workforce, and in 2022 over 30% of our workforce were women. We are committed to closing the gender gap and our recruitment and retention strategies support improving women’s representation in leadership roles.

Our Culture. At Holley, we believe that an engaged workforce leads to a more innovative, productive, and profitable organization. For this reason, we measure employee engagement through periodic culture surveys. These surveys allow our employees to provide confidential feedback on culture, company strategy and trust in their direct leaders. This feedback helps create action plans to improve the engagement of our employees. These survey results have demonstrated that our employees have a strong sense of belonging, trust in management, and confidence in Holley. These strengths provide a foundation for our success, and we are dedicated to enhancing the employee experience at Holley.

Talent Development. The development of our employees’ skills and knowledge is critical to Holley’s success. Our educational assistance program is designed to encourage personal development by helping employees maintain and improve their skills or knowledge related to their current job or a potential future position at Holley through reimbursement of certain educational expenses, including external training programs or educational courses, pursuit and maintenance of job-related professional licenses and certifications, workshops, seminars, and professional conferences. Further, we are introducing an internship program designed to provide students in the community an opportunity to gain practical experience. We are committed to fostering an equitable work environment that seeks to ensure fair treatment, equality of opportunity, and fairness in access to information and resources.

Social Responsibility. We are committed to social responsibility. Our socially responsible initiatives include donations to community organizations, sponsorship of local sports teams and weekend family events. Through these programs, Holley and its employees are able to give back to the community through monetary donations and by providing community services. Holley gives its subsidiaries the ability to lead their own community engagement initiatives through contributions to charities and participation in fundraising events.

Available Information

Our principal executive offices are located at 1801 Russellville Rd., Bowling Green, KY 42101, and our telephone number is (270) 782-2900. Our Internet address is www.holley.com. The information on our website is not, and should not be considered, part of this Form 10-K and is not incorporated by reference in this Form 10-K. The website is, and is only intended to be, for reference purposes only. We make available free of charge on or through our website our Annual Report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission. These reports and other information are also available, free of charge, at www.sec.gov. In addition, we will provide, at no cost, paper or electronic copies of our reports and other filings made with the SEC. Requests can be made in writing or by phone.

Item 1A. Risk Factors

The following discussion of "Risk Factors" identifies factors that may adversely affect our business, operations, financial condition or future performance. This information should be read in conjunction with "Management’s“Cautionary Note Regarding Forward-Looking Statements,” "Management’s Discussion and Analysis of Financial Condition and Result of Operations" and the consolidated financial statements and related notes. The following discussion of risks is not all-inclusive but is designed to highlight what we believe are the material factors to consider when evaluating our business and expectations. These factors could cause our future results to differ materially from our historical results and from expectations reflected in forward-looking statements.

Risks Relating to Our Business and Industry

The

Unfavorable economic conditions could have an adverse impact on consumer discretionary spending and therefore adversely impact our business, sales, financial condition and results of operations.

Our products are largely recreational in nature and are therefore discretionary purchases for consumers. Consumers are generally more willing to make discretionary purchases of automotive products during favorable economic conditions and when consumers are feeling confident and prosperous. Discretionary spending is also affected by many other factors, including general business conditions, inflation, interest rates, the availability of consumer credit, taxes, and consumer confidence in future economic conditions. Purchases of our products could decline during periods when disposable income is lower, or during periods of actual or perceived unfavorable economic conditions. A significant or prolonged decline in general economic conditions or uncertainties regarding future economic prospects that adversely affect consumer discretionary spending, whether in the United States or in our international markets, could result in reduced sales of our products, which in turn would have an adverse impact on our business, sales, financial condition and results of operations.

Inflation could result in higher costs and decreased profitability.

Rising inflation may continue to adversely affect us by increasing the cost of raw materials. Our products contain various raw materials, including corrosion-resistant steel, non-ferrous metals such as aluminum and nickel, and precious metals such as platinum and palladium. We use raw materials directly in manufacturing and in components that we purchase from our suppliers. We generally purchase components with significant raw material content on the open market. Volatility in the prices of raw materials such as steel, aluminum and nickel could continue to increase the cost of manufacturing our products. In some cases, those cost increases can be passed on to customers in the form of price increases, in other cases, they cannot. Recent inflationary pressures and other factors have also resulted in significant increases in transportation and freight service costs due to limited capacity and/or availability of containers, shipping vessels, and/or receiving port services. If the prices of raw material and other inputs increase, and we are not able to charge our customers higher prices to compensate, our results of operations would be adversely affected. 

Many of the markets in which we sell have been experiencing high levels of inflation, which may depress consumer demand for our products and reduce our profitability. Even in the event that increased costs can be passed through to customers, our gross margin percentages may decline. Additionally, our suppliers are also subject to fluctuations in the prices of raw materials and may attempt to pass all or a portion of such increases on to us. In the event they are successful in doing so, our margins would decline. If prolonged, and if they cannot be passed on to customers in the form of price increases, these fluctuations in the price of raw materials, product components, other inputs, and/or transportation services could have a material adverse effect on our business, sales, financial condition and results of operations.

Disruptions of supply or shortages of raw materials or components used in our products could harm our business and profitability.

We have experienced, and may continue to experience, disruptions and higher costs in manufacturing, supply chain, logistical operations, and shortages of steel, non-ferrous metals and precious metals. Additionally, we have been adversely impacted by the global supply shortage of automotive-grade microchips. This shortage has resulted in increased microchip delivery lead times, delays in production and increased costs to source available automotive-grade microchips. If our supply of these products continues to be adversely affected, there can be no assurance that we will be able to obtain adequate replacements for the existing components or that supplies will be available on terms and prices that are favorable to us, if at all.

Our success depends in part on our ability to anticipate and react to changes in supply costs and disruptions in the supply chain due to factors beyond our control. We have taken steps to minimize the adverse impacts of supply chain volatility and rising inflation by implementing cost savings initiatives, increasing prices to customers, increasing inventory levels of certain products, and working closely with our suppliers and customers to minimize disruptions in delivering products to customers. Despite the actions we have undertaken to minimize these impacts, there can be no assurance that unforeseen future events in the global supply chain and our ability to pass on inflationary costs to our customers could have a material adverse effect on our business, financial condition and results of operations.

Current global economic conditions, including inflation and supply chain disruptions, could continue to adversely affect our distributors’ financial condition, their levels of business activity and their ability to pay trade obligations.

We primarily sell our products to retailers directly and through our domestic and foreign subsidiaries, and to foreign distributors. We generally require no collateral from our customers. However, if the current economic conditions and macroeconomic trends, including heightened inflation, capital market volatility, and interest rate fluctuations, continue, our results of operations may be adversely affected. These disruptions and delays have strained certain domestic and international supply chains, which have affected and could continue to adversely affect the flow or availability of certain products or components. As a result, we have experienced, and could continue to experience, disruptions and higher costs in manufacturing, supply chain, logistical operations, and shortages of certain of our products in distribution channels.

A prolonged or severe downturn in the general economy could adversely affect the retail market, which in turn, would adversely impact the liquidity and cash flows of our customers, including the ability of such customers to obtain credit to finance purchases of our products and to pay their trade obligations. This could result in increased delinquent or uncollectible accounts for some of our customers. A failure by our customers to pay on a timely basis a significant portion of outstanding account receivable balances would adversely impact our business, sales, financial condition and results of operations.

A significant disruption in the operations of our manufacturing facilities or distribution centers could have a material adverse effect on our business, sales, financial condition and results of operations.

A significant disruption at any of our manufacturing facilities or distribution centers could materially and adversely affect our business, sales, financial condition and results of operations. Our manufacturing facilities and distribution centers are highly automated, which means that our operations are complicated and may be subject to a number of risks related to computer viruses, the proper operation of software and hardware, electronic or power interruptions, and other system failures, including failures caused by factors outside of our control, such as hostilities, political unrest, terrorist attacks, war (including the ongoing conflict in Ukraine), natural disasters or extreme weather (including events that may be caused or exacerbated by climate change). Risks associated with upgrading or expanding these facilities may significantly disrupt or increase the cost of our operations, which may have an immediate, or in some cases prolonged, impact on our margins. Our risk management, business continuity and disaster recovery plans may not be effective at preventing or mitigating the effects of such disruptions, particularly in the case of catastrophic events or longer-term developments, such as the impacts of climate change.

A global pandemic, such as the COVID-19 pandemic could adversely affect the Company’sour business, sales, financial condition and results of operations and the Company’sour ability to access current or obtain new lending facilities.

The

A global pandemic, or the outbreak of a disease, such as the COVID-19 pandemic, andcould adversely affect our business. The preventative measures taken to contain or mitigate thea pandemic have caused,may cause, and are continuing to cause, business slowdowns or shutdowns in affected areas and significant disruption in the financial markets both globally and in the United States, which could lead to a decline in discretionary spending by consumers, and in turn impact, possibly materially, the Companyour business, sales, financial condition and results of operations. TheThese impacts could include, but are not limited to:

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The COVID-19outbreak of a different global pandemic, has significantly impactedor the global supply chain, with restrictions and limitations on related activities causing disruption and delay. These disruptions and delays have strained certain domestic and international supply chains, which have affected and could continue to adversely affect the flow or availability of certain products. As a result, the Company has experienced, and could continue to experience, disruptions and higher costs in manufacturing, supply chain, logistical operations, and shortages of certain Company products in distribution channels.

The further spread of COVID-19, and the requirements to take action to help limit the spread of the illness, could impact the Company’sour ability to carry out itsour business as usual and may materially adversely impact global economic conditions, the Company’sour business, sales, financial condition and results of operations. The extent of the impact of a global pandemic, such as COVID-19, on the Company’sour business and financial results will depend on future developments, including the duration and spread of thesuch outbreak (including new variants) within the markets in which the Company operates,we operate, the related impact on consumer confidence and spending, and the effect of governmental regulations imposed in response to the pandemic, all of which are highly uncertain and ever-changing. The sweeping natureduration of the COVID-19 pandemic makes it extremely difficultany such impacts cannot be predicted.

Failure to predict how the Company’s businesscompete effectively could reduce our market share and operations will be affected in the longer run. Any of the foregoing factors, or other cascading effects of the coronavirus pandemic, could materially increase the Company’s costs, adversely impact the Company’s sales and damage the Company’ssignificantly harm our business, sales, financial condition and results of operations, possibly to a significant degree. The duration of any such impacts cannot be predicted.operations.

Unfavorable economic conditions could have an adverse impact on consumer discretionary spending and therefore adversely impact the Company’s business, sales, financial condition and results of operations.

The Company’s products are recreational in nature and are therefore discretionary purchases for consumers. Consumers are generally more willing to make discretionary purchases of automotive products during favorable economic conditions and when consumers are feeling confident and prosperous. Discretionary spending is also affected by many other factors, including general business conditions, inflation, interest rates, inflation, the availability of consumer credit, taxes, and consumer confidence in future economic conditions. Purchases of the Company’s products could decline during periods when disposable income is lower, or during periods of actual or perceived unfavorable economic conditions. A significant or prolonged decline in general economic conditions or uncertainties regarding future economic prospects that adversely affect consumer discretionary spending, whether in the United States or in the Company’s international markets, could result in reduced sales of the Company’s products, which in turn would have an adverse impact on the Company’s business, sales, financial condition and results of operations.

A severe or prolonged economic downturn could adversely affect the Company’s distributors’ financial condition, their levels of business activity and their ability to pay trade obligations.

The Company primarily sells its products to retailers directly and through its domestic and foreign subsidiaries, and to foreign distributors. The Company generally requires no collateral from its customers. However, a severe or prolonged downturn in the general economy could adversely affect the retail market, which in turn, would adversely impact the liquidity and cash flows of the Company’s customers, including the ability of such customers to obtain credit to finance purchases of the Company’s products and to pay their trade obligations. This could result in increased delinquent or uncollectible accounts for some of the Company’s customers. A failure by the Company’s customers to pay on a timely basis a significant portion of outstanding account receivable balances would adversely impact the Company’s business, sales, financial condition and results of operations.

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Failure to compete effectively could reduce the Company’s market share and significantly harm the Company’s business, sales, financial condition and results of operations.

The Company’sOur industry is highly competitive, and the Company’sour success depends on the Company’sour ability to compete with suppliers of automotive aftermarket products, some of which may have substantially greater financial, marketing and other resources than the Company does.we do. Due to the diversity of the Company’sour product offering, the Company competeswe compete with several large and medium-sized companies and a large number of smaller regional and specialty companies and numerous category-specific competitors. In addition, the Company faceswe face competition from original equipment manufacturers, which, through their automotive dealerships, supply many of the same types of replacement parts the Company sells.that we sell. Existing competitors may expand their product offerings and sales strategies, and new competitors may enter the market.

Some of the Company’sour competitors may have larger customer bases and significantly greater financial, technical and marketing resources than the Company does.we do. These factors may allow the Company’sour competitors to:

Increased competition could put additional pressure on the Companyus to reduce prices or take other actions, which may have an adverse effect on the Company’sour business, sales, financial condition and results of operations. The CompanyWe may also lose significant customers or lines of business to competitors.

If the Company iswe are unable to successfully design, develop and market new products, the Company’sour business may be harmed.

To maintain and increase sales, the Companywe must continue to introduce new products on a timely basis to respond to new and evolving consumer preferences and improve or enhance the Company’sour existing products. The success of the Company’sour new and enhanced products depends on many factors, including anticipating consumer preferences, finding innovative solutions to consumer problems, differentiating the Company’sour products from those of the Company’sour competitors, and maintaining the strength of the Company’sour brands. The design and development of the Company’sour products is costly, and the Companywe typically hashave several products in development at the same time. Problems in the design or quality of the Company’sour products, or delays in product introduction, may harm the Company’sour brands, business, sales, financial condition and results of operations. Any new products that the Company developswe develop and marketsmarket may not generate sufficient revenues to recoup theirour development, production, marketing, selling and other costs.

A drive toward electric vehicles or away from vehicle ownership in general could impact the Company’s and its subsidiaries’our business, sales, financial condition and results of operations.

The automotive industry is increasingly focused on the development of hybrid and electric vehicles and of advanced driver assistance technologies, with the goal of developing and introducing a commercially viable, fully automated driving experience, and many manufacturers have announced plans to transition from internal- combustion engines into electric vehicle platforms over the coming years. There has also been an increase in consumer preferences for mobility on demand services, such as car and ride sharing, as opposed to automobile ownership, which may result in a long-term reduction in the number of vehicles per capita. Accordingly, if we do not continue to innovate and develop, or acquire, new and compelling products that capitalize upon new technologies in response to original equipment manufacturer and consumer preferences, or if there is a future shift in consumer preferences towards ownership of more utilitarian vehicles or vehicles that are otherwise less interesting to a large portion of the Company’sour customers who are automotive enthusiasts, or if there is otherwise a future shift away from automobile ownership among consumers in general, the Company’sour and itsour subsidiaries’ business, sales, financial condition and results of operations could be impacted.

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The Company’sOur business depends on maintaining and strengthening itsour brands to generate and maintain ongoing demand for itsour products, and a significant reduction in such demand could harm the Company’sour business, sales, financial condition and results of operations.

The Company’s

Our success depends on the value and reputation of the Company’sour brands, which, in turn, depends on factors such as the quality, design, performance, functionality, and durability of the Company’sour products, the image of the Company’sour e-commerce platform and retail partner floor spaces, the Company’sour communication activities, including advertising, social media, and public relations, and the Company’sour management of the customer experience, including direct interfaces through customer service. Maintaining, promoting, and positioning the Company’sour brands are important to expanding itsour customer base, and will largely depend largely on the success of the Company’sour marketing and merchandising efforts and the Company’sour ability to provide consistent, high-quality customer experiences. The Company intendsWe intend to continue making investments in these areas in order to maintain and enhance the Company’sour brands, and such investments may not be successful. Ineffective marketing, negative publicity, product diversion to unauthorized distribution channels, product or manufacturing defects, counterfeit products, unfair labor practices, and failure to protect the intellectual property rights in the Company’sour brands are some of the potential threats to the strength of the Company’sour brands, and those and other factors could rapidly and severely diminish customer confidence in us. Furthermore, theseour relationships with customers and suppliers. These factors could cause the Company’sour customers to lose the personal connection they feel with the Company’s brands. The Company believesour brands and reduce our ability to attract new customers and lead to suppliers terminating their relationships with us. We believe that maintaining and enhancing the image of the Company’sour brands in itsour current markets and in new markets where it haswe have limited brand recognition is important to expanding itsour customer base. If the Company iswe are unable to maintain or enhance itsour brands in current or new markets, the Company’sour business, sales, financial condition and results of operations could be harmed.

If the Companywe inaccurately forecastsforecast demand for itsour products, itwe may manufacture either insufficient or excess quantities, which, in either case, could adversely affect itsour financial performance.

The Company plans its

We plan our manufacturing capacity based upon the forecasted demand for itsour products. Forecasting the demand for the Company’sour products is very difficult given the manufacturing lead time and the amount of specification involved. Forecastinginvolved especially given the volatility of the markets and the economic downturn, including the impact of the COVID-19 pandemic. Aside from supply chain disruptions and inflationary pressures, forecasting demand for specific automotive part goodsparts can also be challenging due to changing consumer preferences and competitive pressures and longer supply lead times. The nature of the Company’sour business makes it difficult to quickly adjust quickly itsour manufacturing capacity if actual demand for itsour products exceeds or is less thanvaries from forecasted demand. If actual demand for itsour products exceeds the forecasted demand, the Companywe may not be able to produce sufficient quantities of new products in time to fulfill actual demand, which could limit the Company’sour sales and adversely affect itsour financial performance. On the other hand, if actual demand is less than the forecasted demand for itsour products, the Companywe could produce excess quantities, resulting in excess inventories and related obsolescence charges that could adversely affect the Company’sour financial performance.

The Company

We may not be able to effectively manage itsour growth.

As the Company grows itswe grow our business, slower growing or reduced demand for the Company’sour products, increased competition, a decrease in the growth rate of the Company’sour overall market, failure to develop and successfully market new products, or the maturation of the Companyour business or marketmarkets could harm the Company’sour business. The Company hasWe have made and expectsexpect to continue to make significant investments in the Company’sour research and development and sales and marketing organizations, expand the Company’sour operations and infrastructure both domestically and internationally, design and develop new products, and enhance the Company’sour existing products. In addition, in connection with operating as a public company, the Company will incur significant additional legal, accounting, and other expenses that the Company did not incur as a private company. If the Company’sour sales do not increase at a sufficient rate to offset these increases in the Company’sour operating expenses, itsour profitability may decline in future periods.

The Company

We only hashave a limited history operating the Company’sour business as a public company at its current scale. Consequently, if the Company’sour operations grow at a rapid pace in the future, the Companywe may experience difficulties in managing this growth and building the appropriate processes and controls. Future rapid growth may increase the strain on the Company’sour resources, and the Companywe could experience operating difficulties, including difficulties in sourcing, logistics, recruiting, maintaining internal controls, marketing, designing innovative products, and meeting consumer needs. If the Company doeswe do not adapt to meet these evolving challenges, the strength of the Company’sour brands may erode, the quality of the Company’sour products may suffer, the Companywe may not be able to deliver products on a timely basis to the Company’sour customers, and the Company’sour corporate culture may be harmed.

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We have set certain growth initiatives for our business to meet long-term strategic objectives and improve stockholder value. We may incur certain costs to achieve our growth initiatives, and we may not meet anticipated implementation timetables or stay within budgeted costs. As these growth initiatives are undertaken, we may not achieve our expected results, which could adversely impact our customer retention or results of operation.

If the Company failswe fail to attract new customers, or failsfail to do so in a cost-effective manner, the Companywe may not be able to increase sales.

The Company’s

Our success depends, in part, on itsour ability to attract customers in a cost-effective manner. In order to expand the Company’sour customer base, the Companywe must appeal to and attract customers ranging from automotive enthusiasts to individuals who simply value products of uncompromising quality and design. The Company hasWe have made, and the Company expects that the Company willexpect to continue to make, significant investments in attracting new customers, including through the use of traditional, digital, and social media and participation in, and sponsorship of, community events. Marketing campaigns can be expensive and may not result in the cost- effectivecost-effective acquisition of customers. Further, as the Company’sour brands becomesbecome more widely known, future marketing campaigns may not attract new customers at the same rate as past campaigns. If the Company iswe are unable to attract new customers, or failsfail to do so in a cost-effective manner, the Company’sour growth could be slower than it expectswe expect, and the Company’sour business willmay be harmed.

The Company’s

Our growth depends, in part, on expanding into additional consumer markets, and the Companywe may not be successful in doing so.

The Company believes

We believe that itsour future growth depends not only on continuing to reach itsour current core demographic, but also continuing to broaden itsour retail partner and customer bases. The growth of the Company’sour business will depend, in part, on the Company’sour ability to continue to expand itsour retail partner and customer bases in the United States, as well as in international markets. In these markets, the Companywe may face challenges that are different from those the Companywe currently encounters,encounter, including competitive, merchandising, distribution, hiring, and other difficulties. The CompanyWe may also encounter difficulties in attracting customers due to a lack of consumer familiarity with or acceptance of the Company’sour brands, or a resistance to paying for premium products, particularly in international markets. The Company continuesWe continue to evaluate marketing efforts and other strategies to expand the customer base for itsour products. In addition, although the Company iswe are investing in sales and marketing activities to further penetrate newer regions, including expansion of itsour dedicated sales force, the Companywe cannot ensure that itwe will be successful. If the Company iswe are not successful, itsour business, sales, financial condition and results of operations may be harmed.

Competitors have attempted, and will likely continue to attempt to, imitate the Company’sour products and technology. If the Company iswe are unable to protect or preserve the image of the Company’sour brands and proprietary rights, the Company’sour business, sales, financial condition and results of operations may be harmed.

As the Company’sour business continues to expand, itsour competitors have imitated or attempted to imitate, and will likely continue to imitate or attempt to imitate, the Company’sour product designs and branding, which could harm the Company’sour business, sales, financial condition and results of operations. Only a portion of the intellectual property used in the manufacture and design of the Company’sour products is patented, and the Companywe, therefore, reliesrely significantly on trade secrets, trade and service marks, trade dress, and the strength of the Company’sour brands. The Company regards itsWe regard our patents, trade dress, trademarks, copyrights, trade secrets, and similar proprietary rights as critical to itsour success. The CompanyWe also reliesrely on trade secret protection and confidentiality agreements with itsour employees, consultants, suppliers, manufacturers, and others to protect itsour proprietary rights. Nevertheless, the steps the Company takeswe take to protect itsour proprietary rights against infringement or other violations may be inadequate, and itwe may experience difficulty in effectively limiting the unauthorized use of itsour patents, trademarks, trade dress, and other intellectual property and proprietary rights worldwide. The CompanyWe also cannot guarantee that others will not independently develop technology with the same or similar function to any proprietary technology the Company reliesthat we rely on to conduct itsour business and differentiate itselfour self from itsour competitors. Unauthorized use or invalidation of itsour patents, trademarks, copyrights, trade dress, trade secrets, or other intellectual property or proprietary rights may cause significant damage to the Company’sour brands and harm itsour business, sales, financial condition and results of operations.

While the Companywe actively developsdevelop and protects itsprotect our intellectual property rights, there can be no assurance that the Companywe will be adequately protected in all countries in which the Company conducts itswe conduct our business or that the Companywe will prevail when defending itsour patent, trademark, and proprietary rights. Additionally, the Companywe could incur significant costs and management distraction in pursuing claims to enforce itsour intellectual property rights through litigation and defending any alleged counterclaims. If the Company iswe are unable to protect or preserve the value of itsour patents, trade dress, trademarks, copyrights, or other intellectual property rights for any reason, or if the Company failswe fail to maintain the image of the Company’sour brands due to actual or perceived product or service quality issues, adverse publicity, governmental investigations or litigation, or other reasons, the Company’sour brands and reputation could be damaged, and the Company’sour business may be harmed.

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The Company’sOur profitability may decline as a result of increasing pressure on pricing.

The Company’s

Our industry is subject to significant pricing pressure caused by many factors, including unfavorable economic conditions, intense competition, consolidation in the retail industry, pressure from retailers to reduce the costs of products, and changes in consumer demand. The current economic conditions and macroeconomic trends, including heightened inflation, capital market volatility, interest rate and current rate fluctuations, have had and may continue to have an impact on pricing. These factors may cause the Companyus to reduce itsour prices to retailers and customers or engage in more promotional activity than the Company anticipates,we anticipate, which could adversely impact itsour margins and cause the Company’sour profitability to decline if it iswe are unable to offset price reductions with comparable reductions in the Company’sour operating costs. This could materially harm the Company’sour business, sales, financial condition and results of operations. In addition, ongoing and sustained promotional activities could harm the image of the Company’sour brands.

A significant disruption in the operations of the Company’s manufacturing facilities or distribution centers could have a material adverse effect on the Company’s business, sales, financial condition and results of operations.

A significant disruption at any of the Company’s manufacturing facilities or distribution centers could materially and adversely affect the Company’s business, sales, financial condition and results of operations. The Company’s manufacturing facilities and distribution centers are highly automated, which means that their operations are complicated and may be subject to a number of risks related to computer viruses, the proper operation of software and hardware, electronic or power interruptions, and other system failures, including failures caused by factors outside of our control, such as hostilities, political unrest, terrorist attacks, war (including the ongoing conflict in Ukraine), natural disasters or extreme weather (including events that may be caused or exacerbated by climate change). Risks associated with upgrading or expanding these facilities may significantly disrupt or increase the cost of the Company’s operations, which may have an immediate, or in some cases prolonged, impact on the Company’s margins. Our risk management, business continuity and disaster recovery plans may not be effective at preventing or mitigating the effects of such disruptions, particularly in the case of catastrophic events or longer term developments, such as the impacts of climate change.

Increases in cost, disruption of supply or shortage of raw materials or components used in the Company’s products could harm its business and profitability.

The Company’s products contain various raw materials, including corrosion-resistant steel, non-ferrous metals such as aluminum and nickel, and precious metals such as platinum and palladium. The Company uses raw materials directly in manufacturing and in components that the Company purchases from its suppliers. The Company generally purchases components with significant raw material content on the open market. The prices for and availability of these raw materials fluctuate depending on market conditions. Volatility in the prices of raw materials such as steel, aluminum and nickel could increase the cost of manufacturing the Company’s products. The Company may not be able to pass on these costs to its customers, and this could have a material adverse effect on the Company’s business, sales, financial condition and results of operations. Even in the event that increased costs can be passed through to customers, the Company’s gross margin percentages would decline. Additionally, the Company’s suppliers are also subject to fluctuations in the prices of raw materials and may attempt to pass all or a portion of such increases on to the Company. In the event they are successful in doing so, the Company’s margins would decline.

The Company’s current and future products may experience quality problems from time to time that can result in negative publicity, litigation, product recalls, and warranty claims, which could result in decreased sales and operating margin, and harm to the Company’sour brand.

Although the Companywe extensively and rigorously teststest new and enhanced products, there can be no assurance the Companywe will be able to detect, prevent, or fix all defects. Defects in materials or components can unexpectedly interfere with the products’ intended use and safety and damage the Companyour reputation. Failure to detect, prevent, or fix defects could result in a variety of consequences, including a greater number of product returns than expected from customers and retail partners, litigation, product recalls, and credit claims, among others, which could harm the Company’sour business, sales, financial condition and results of operations. The occurrence of real or perceived quality problems or material defects in the Company’sour current and future products could expose the Companyus to product recalls, warranty, or other claims. In addition, any negative publicity or lawsuits filed against the Companyus related to the perceived quality and safety of the Companyour products could also harm the Companyour brand and decrease demand for the Company’sour products.

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The Company’sOur reliance on foreign suppliers for some of the automotive parts the Companywe sell to itsour customers or includedinclude in itsour products presents risks to the business.

A portion of automotive parts and components the Company useswe use in itsour manufacturing processprocesses are imported from suppliers located outside the U.S. As a result, the Company iswe are subject to various risks of doing business in foreign markets and importing products from abroad, such as:and these risks may become heightened as a result of unfavorable global economic conditions, including as a result of COVID-19. These risks may include, but are not limited to:

Any of the foregoing factors, or a combination of them, could increase the cost or reduce the supply of products available to the Companyus and materially and adversely impact the Company’sour business, sales, financial condition and results of operations.

The Company depends

We depend on retail partners to display and present itsour products to customers, and the Company’sour failure to maintain and further develop the Company’sour relationships with retail partners could harm the Company’sour business.

The Company sells

We sell a significant amount of itsour products through knowledgeable national, regional, and independent retail partners. The Company’sOur retail partners service customers by stocking and displaying the Company’sour products, explaining the Company product attributes of our products, and sharing the story of the Company’sour brands. The Company’sOur relationships with these retail partners are important to the authenticity of the Company’sour brands and the marketing programs the Company continueswe continue to deploy. The Company’sOur failure to maintain these relationships with itsour retail partners or financial difficulties experienced by these retail partners could harm itsour business.

The Company has

We have key relationships with national retail partners. If the Company loseswe lose any of the Company’sour key retail partners or any key retail partner reduces itstheir purchases of the Company’sour existing or new products or itstheir number of stores or operations, or promotes products of the Company’sour competitors over the Company’s, the Company’sours, our sales would be harmed. Because the CompanyHolley is a premium brand, itsour sales depend, in part, on retail partners effectively displaying itsour products, including providing attractive space and point of purchase displays in their stores, and training their sales personnel to sell itsour products. If the Company’sour retail partners reduce or terminate those activities, the Companywe may experience reduced sales of itsour products, resulting in lower gross margins, which would harm itsour business, sales, financial condition and results of operations.

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If the Company’sour plans to increase sales through itsour DTC channel are not successful, the Company’sour business, sales, financial condition and results of operations could be harmed.

For 2021, the Company2022, we generated through itsour DTC channel approximately $117$149.1 million in gross sales. Part of the Company’sour growth strategy involves increasing sales through itsour DTC channel. The level of customer traffic and volume of customer purchases through the Company’sour website is substantially dependent on the Company’sour ability to provide a content-rich and user-friendly website, a hassle- freehassle-free customer experience, sufficient product availability, and reliable, timely delivery of the Company’sour products. If the Company iswe are unable to maintain and increase customers’ use of itsour website, allocate sufficient product to the Company’sour website, and increase any sales through itsour website, the Company’sour business, sales, financial condition and results of operations could be harmed.

The Company’s

Our future success depends on the continuing efforts of the Company’sour management and key employees, and on the Company’sour ability to attract and retain highly skilled personnel and senior management.

The Company depends

We depend on the talents and continued efforts of itsour senior management and key employees. The loss of members of management or key employees may disrupt the Company’sour business and harm the Company’sour business, sales, financial condition and results of operations. Furthermore, the Company’sour ability to manage further expansion will require itus to continue to attract, motivate, and retain additional qualified personnel. Competition for this type of personnel is intense, and the Companywe may not be successful in attracting, integrating, and retaining the personnel required to grow and operate itsour business effectively. There can be no assurance that the Company’sour current management team or any new members of the management team will be able to successfully execute the Company’sour business and operating strategies.

The Company reliesOur results of operations may be adversely affected by labor shortages, turnover and labor cost increases.

An overall labor shortage, lack of skilled labor, increased turnover or labor inflation, increase in federal or state minimum wages, or increase in general labor costs, caused by the COVID-19 pandemic or as a result of general macroeconomic factors, could have a material adverse impact on our operations, results of operations, liquidity or cash flows. During 2021, the country experienced an overall tightening and increasingly competitive labor market, and the labor market remained competitive throughout 2022. A sustained labor shortage or increased turnover rates within our employee base, caused by worsening economic conditions, increases in labor costs or the COVID-19 pandemic or other national or international emergencies, could lead to increased costs, such as increased overtime to meet demand and increased salaries and wage rates to attract and retain employees. Further, labor shortages or increased turnover rates could negatively affect our ability to efficiently operate our business if we are unable to hire and retain employees capable of performing at a high-level, or if mitigation measures we take to respond to a decrease in labor availability have unintended negative consequences. If we are unable to hire or retain skilled personnel our results of operations would suffer.

We rely on complex information systems for management of itsour manufacturing, distribution, sales and other functions. If the Company’sour information systems fail to perform these functions adequately or if the Company experienceswe experience an interruption in their operation,our operations, including a breach in cyber security, itsour business, sales, financial condition and results of operations could suffer.

All of the Company’sour major operations, including manufacturing, distribution, sales and accounting, are dependent upon the Company’sour complex information systems. The Company’sOur information systems are vulnerable to damage or interruption from:

Any damage or significant disruption in the operation of such systems, the failure of the Company’sour information systems to perform as expected, the failure to successfully integrate the information technology systems of the businesses that the Company haswe have recently acquired or any security breach to the information systems (including financial or credit/payment frauds) would disrupt the Company’sour business, which may result in decreased sales, increased overhead costs, excess inventory and product shortages and otherwise adversely affect the Company’sour reputation, operations, financial performance and condition.

Our information systems are subject to security threats and sophisticated cyber-based attacks, including, but not limited to, denial-of-service attacks, hacking, “phishing” attacks, computer viruses, ransomware, malware, employee or insider error, malfeasance, social engineering, or physical breaches, that can cause deliberate or unintentional damage, create system disruptions, unauthorized acquisition of our or customer information, or destruction or misuse, manipulation, denial of access to or disclosure of confidential or important information. We have experienced, and expect to continue to confront, efforts by hackers and other third parties to gain unauthorized access or deny access to, or otherwise disrupt, our information systems. For example, we were the target of an external cyber-attack in third quarter 2021, which resulted in a temporary suspension of services to our customers. To date these incidents have not had a material impact on the Company’sour reputation, operations, financial performance and condition; however, there is no assurance that such impacts will not be material in the future, and such incidents have in the past and may in the future have the impacts discussed below. Any future successful cyber-attack or catastrophic natural disaster could significantly affect our operating and financial systems and could temporarily disrupt our ability to provide services to our customers, impact our ability to manage our operations and perform vital financial processes, any of which could have a materially adverse effect on our business.

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Moreover, the threat of cyber-attacks is constantly evolving, thereby increasing the difficulty of successfully defending against them or implementing adequate preventative measures and we cannot ensure that we will be able to identify, prevent or contain the effects of future cyber-attacks or other cybersecurity risks that bypass our security measures or disrupt our information technology systems or business. While we have security technologies, processes and procedures in place to protect against cybersecurity risks and security breaches, the hardware, software or applications we develop or procure from third parties may contain defects in design, manufacturer defects or other problems that could unexpectedly compromise information security. In addition, because the techniques used to obtain unauthorized access, disable or degrade service or sabotage systems change frequently, are becoming increasingly sophisticated, and may not immediately produce signs of intrusion, we may be unable to anticipate these techniques, timely discover or counter them or implement adequate preventative measures.

As a result of any such incidents, we could be subject to litigation and regulatory risk, civil and criminal penalties, additional costs and diversion of management attention due to investigation, remediation efforts and engagement of third party consultants and legal counsel in connection with such incidents, payment of “ransoms” to regain access to our systems and information, loss of customers, damage to customer relationships, reduced revenue and profits, refunds of customer charges and damage to our reputation, any of which could have a material adverse effect on our business, cash flows, financial condition and results of operations. While we have contingency plans and insurance coverage for potential liabilities of this nature, they may not be sufficient to cover all claims and liabilities and in some cases are subject to deductibles and layers of self-insured retention.

Cyber-attacks, unauthorized access to, or accidental disclosure of, consumer personally-identifiablepersonally identifiable information including credit card information, that the Company collectswe collect through itsour websites may result in significant expense and adversely impact the Company’sour reputation and business.

There is heightened concern and awareness over the security of personal information transmitted over the Internet, consumer identity theft and user privacy. While the Company haswe have implemented security measures, the Company’sour computer systems may nevertheless be susceptible to electronic or physical computer break-ins, viruses and other disruptions and security compromises. Any perceived or actual unauthorized or inadvertent disclosure of personally-identifiablepersonally identifiable information, whether through a compromise of the Company’sour network by an unauthorized party, employee theft, misuse or error or otherwise, could harm the Company’sour reputation, impair the Company’sour ability to attract website visitors, or subject the Companyus to claims or litigation arising from damages suffered by consumers, and adversely affect the Company’sour operations, financial performance and condition.

The Company depends

We depend on cash generated from itsour operations to support itsour growth, and the Companywe may need to raise additional capital, which may not be available on terms acceptable to the Companyus, or at all.

The Company

We primarily reliesrely on cash flow generated from itsour sales to fund itsour current operations and growth initiatives. As the Company expands itswe expand our business, the Companywe will need significant cash from operations to purchase inventory, increase product development, expand itsour manufacturer and supplier relationships, pay personnel, pay for the increased costs associated with operating as a public company and further invest in sales and marketing efforts. If the Company’sour business does not generate sufficient cash flow from operations to fund these activities and sufficient funds are not otherwise available from the Company’sour current or future credit facility, the Companywe may need additional equity or debt financing. If such financing is not available to the Companyus on satisfactory terms, the Company’sour ability to operate and expand the Company’sour business or to respond to competitive pressures could be harmed. Moreover, if the Company raiseswe raise additional capital by issuing equity securities or securities convertible into equity securities, the ownership of the Company’sour existing stockholders may be diluted. The holders of new securities may also have rights, preferences or privileges which are senior to those of existing holders of theour Common Stock. In addition, any indebtedness the Company incurswe incur may subject the Companyus to covenants that restrict the Company’sour operations and will require interest and principal payments that could create additional cash demands and financial risk for the Company.us.

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Indebtedness of the Company and its subsidiariesOur indebtedness may limit the Company’s and its subsidiaries’our ability to invest in the ongoing needs of itsour business and if the Company and its subsidiarieswe are unable to comply with the covenants in itsour current credit agreements, the Company’s and its subsidiaries’our business, sales, financial condition and results of operations could be harmed.

On November 18, 2021, the Companywe entered into a new credit facility with a syndicate of lenders and Wells Fargo Bank, N.A., as administrative agent for the lenders, letter of credit issuer and swing line lender (the "Credit Agreement"). The financing consists of a seven-year $600On December 31, 2022, $659.4 million first-lien term loan, a five-year $125 million revolvingin principal was outstanding under the credit facility, and a $100 million delayed draw term loan. The Company isfacility. We are required to make quarterly payments of principal plus accrued interest. As of December 31, 2021, $655 million in principal was outstanding under the credit facility, including $600 million for the first-lien term loan, $30 million for the delayed draw term loan, and $25 million under the revolving credit facility. The Credit Agreement imposes various restrictions and contains customary affirmative and restrictive covenants, including, without limitation, certain reporting obligations, and certain limitations on restricted payments;payments, and limitations on liens, encumbrances and indebtedness. In addition, borrowings under the Credit Agreement are jointly and severally guaranteed by the Companyus and certain of its wholly-ownedour wholly owned material subsidiaries and the Company’sour future subsidiaries that become guarantors (collectively the “Loan Parties"). The First Lien Credit Agreement is secured by a first-priority lien on substantially all of the Loan Parties’ assets, in each case subject to certain customary exceptions. If we fail to comply with the covenants or payments specified in the Credit Agreement, the lender could declare an event of default, which would give it the right to declare all borrowings outstanding, together with any accrued and unpaid interest and fees, to be immediately due and payable.

The Credit Agreement places certain conditions on the Company,us including, subject to certain conditions, reductions and exceptions, requiring the Companyus to utilize a portion of itsour and itsour subsidiaries’ cash flow from operations to make payments on itsour and itsour subsidiaries’ indebtedness, reducing the availability of the Company’s and its subsidiaries’ cash flow to fund working capital, capital expenditures, development activity, return capital to the Company’sour stockholders, and other general corporate purposes. The Company’sOur and itsour subsidiaries’ compliance with this conditionthese conditions may limit the Company’sour and itsour subsidiaries’ ability to invest in the ongoing needs of the Company’s and its subsidiaries’ business.business needs. For example, complying with this condition:these conditions:

The Credit Agreement places certain limitations on the Company’sour and certain of itsour subsidiaries’ ability to incur additional indebtedness. However, subject to the certain exceptions and baskets in the Credit Agreement, the Companywe and itsour subsidiaries may incur substantial additional indebtedness under and outside of such credit agreement. The Credit Agreement also limits or prohibits, among other things, and in each case, subject to exceptions, materiality thresholds and baskets, the Company’sour and certain of itsour subsidiaries’ ability to: (a) pay dividends on, redeem or repurchase stock, or make other distributions; (b) incur or guarantee additional indebtedness; (c) sell stock in certain of the Company’sour subsidiaries; (d) create or incur liens; (e) make acquisitions or investments; (f) transfer or sell certain assets or merge or consolidate with or into other companies; (g) make certain payments or prepayments of indebtedness subordinated to the Company’sour obligations under the Credit Agreement; and (h) enter into certain transactions with the Company’sour affiliates.

In addition to the restrictions described above, the Credit Agreement requires the Companyus and certain of itsour subsidiaries to comply with certain other covenants, including a financial maintenance covenant regarding the Company’sour total net leverage ratio on the last day of each fiscal quarter, with step downs to lower total net leverage ratio levels at specified times as set forth therein. Failure to comply with these covenants and certain other provisions of the Credit Agreement, or the occurrence of a change of control, could result in an event of default and an acceleration of the Loan Parties’ obligations under the Credit Agreement or other indebtedness that the Companywe and itsour subsidiaries may incur in the future.

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In February 2023, the Company entered into an amendment to its Credit Agreement which, among other things, increases the consolidated net leverage ratio financial covenant level applicable under the Credit Agreement as of the fiscal quarter ending March 31, 2023 through the fiscal quarter ending March 31, 2024 (the “Covenant Relief Period”), to initially 7.25:1.00, and provides for modified step-down levels for such covenant thereafter. As an ongoing condition to the Covenant Relief Period, the Company also agreed to (i) a minimum liquidity test, (ii) an interest coverage test, (iii) an anti-cash hoarding test at any time revolving loans are outstanding, and (iv) additional reporting obligations. 

If such an event of default and acceleration of the Loan Parties’ obligations occurs, subject to intercreditor agreements agreed to by the lenders, the lenders under the Credit Agreement would have the right to proceed against the collateral the Loan Parties granted to them to secure such indebtedness. If the debt under the Credit Agreement were to be accelerated, the Companywe and itsour subsidiaries may not have sufficient cash or be able to sell sufficient collateral to repay this debt, which would immediately and materially harm the Company’sour and itsour subsidiaries’ business, sales, financial condition and results of operations. The threat of the Company’sour debt being accelerated in connection with a change of control could make it more difficult for the Companyus to attract potential buyers or to consummate a change of control transaction that would otherwise be beneficial to the Company’sour stockholders.

The announced upcoming discontinuance of publishing LIBOR rates may impact the cost or availability of financing for us.

A large portion of our variable rate indebtedness ($655659 million of outstanding principal as ofon December 31, 2021)2022) references the London interbank offered rates ("LIBOR") as a benchmark for establishing the interest rate. LIBOR is expected to be phased out by June 2023. With the expected discontinuation of LIBOR, the U.S. Federal Reserve has begun publishing a Secured Overnight Funding Rate (“SOFR”), an index based on transactions in the Treasury repurchase market. SOFR is a relatively new reference rate and with a limited history, and changes in SOFR have, on occasion, been more volatile than changes in other benchmark or market rates. At this time, it is uncertain whether SOFR or other alternative reference rates may become widely accepted alternatives for LIBOR. Although our LIBOR-based borrowings under the newour existing credit facility contemplate a transition from LIBOR to an alternative index, there is uncertainty as to the nature of alternative reference rates and as to potential changes or other reformsrelating to the replacement of LIBOR with SOFR. The transition may adverselyresult in an adverse impact on our interest expense, in which event our available cash flow for general corporate requirements maybe adversely affected.

The Company’s

Our failure to maintain effective internal controls over financial reporting could harm us.

The Company’s management is responsible for establishing and maintaining adequate internal controls over financial reporting. Internal controls over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”). Under standards established by the Public Company Accounting Oversight Board (“PCAOB”), a deficiency in internal controls over financial reporting exists when the design or operation of a control does not allow management or personnel, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. The PCAOB defines a material weakness as a deficiency, or combination of deficiencies, in internal controls over financial reporting, such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented, or detected and corrected, on a timely basis. The PCAOB defines a significant deficiency as a deficiency, or a combination of deficiencies, in internal controls over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of a registrant’s financial reporting.

As a public company, we are required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which require management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of internal control over financial reporting. As an emerging growth company, our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 until the date we are no longer an emerging growth company. At such time, our independent registered public accounting firm may issue a report that is adverse in the event that it is not satisfied with the level at which our controls are documented, designed or operating.

To comply with the requirements of being a public company, we may need to undertake various actions, such as implementing additional internal controls and procedures and hiring additional accounting or internal audit staff. The efforts required to ensure that we have adequate internal financial and accounting controls and procedures in place to produce accurate financial statements on a timely basis, and to remediate any existing material weakness, are costly and time-consuming, and may need to be re-evaluated frequently. Implementing appropriate changes to our internal controls may take a significant amount of time to complete, including that of directors, officers and employees, and may entail substantial costs in order to modify existing accounting systems.

Additionally, we may experience material weaknesses or significant deficiencies in our internal control over financial reporting in the future. For example, as previously disclosed we identified a material weakness in internal control over financial reporting related to Empower Ltd.’s accounting and reporting of complex financial instruments, including application of ASC 480-10-S99-3A to the Company’s accounting classification of public shares. Remediation efforts can be time-consuming and expensive and can place a significant burden on management, thereby increasing pressure on our financial resources and processes. We may not be successful in making the improvements necessary to remediate the existing or any future material weakness, or in doing so in a timely and cost-effective manner.

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Any failure to maintain internal control over financial reporting, or any failure to fully remediate the existing or any future material weaknesses that may be found to exist, could inhibit our ability to accurately and on a timely basis report our cash flows, results of operations or financial condition in compliance with applicable securities laws. If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our Common Stock and Warrants could decline and we could be subject to sanctions or investigations by NYSE, the SEC or other regulatory authorities. Failure to remediate any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets and negatively impact the price and trading market for our Common Stock and Warrants.

Our disclosure controls and procedures may not prevent or detect all acts of fraud.

Our disclosure controls and procedures are designed to reasonably assure that information required to be disclosed in reports filed or submitted under the Exchange Act is accumulated and communicated to management and is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Our management expects that our disclosure controls and procedures and internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, they cannot provide absolute assurance that all control issues and instances of fraud, if any, within our company have been prevented or detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by an unauthorized override of the controls. The Companydesign of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and we cannot assure that any design will succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

We may acquire or invest in other companies, which itwe may not be able to integrate successfully, and which could divert the Company management’smanagement’s attention, result in dilution to the Company’sour stockholders, and otherwise disrupt the Company’sour operations and harm the Company’sour business, sales, financial condition and results of operations.

The Company's recent

Our growth has depended, and itsour future growth is likely to continue to depend, in part, on itsour acquisition strategy and the successful integration of acquired businesses into itsour existing operations. The Company intendsWe intend to continue to seek acquisition opportunities both to expand into new markets and to enhance itsour position in existing markets. The CompanyWe cannot assure that itwe will be able to successfully integrate acquired businesses into itsour existing operations or expand into new markets. In addition, the Companywe cannot assure that any acquisition, once successfully integrated, will perform as planned, be accretive to earnings, or prove to be beneficial to the Company'sour results of operations or cash flow. Additionally, we may be unable to identify suitable businesses to acquire, which could negatively impact our growth, or we may be unable to complete proposed transactions in a timely matter if we fail to obtain any requisite regulatory approvals.

In the future, the Companywe may acquire or invest in businesses, products, or technologies that the Companywe believe could complement or expand itsour business, enhance itsour capabilities, or otherwise offer growth opportunities. The pursuit of potential acquisitions may divert the attention of management and cause the Companyus to incur various costs and expenses in identifying, investigating, and pursuing suitable acquisitions, whether or not they are consummated.

In any future acquisitions, the Companywe may not be able to successfully integrate acquired personnel, operations, and technologies, or effectively manage the combined business following the acquisition. The success of the Company'sour acquisition strategy is subject to other risks and uncertainties, including:

In addition, an acquisition could adversely impact the Company'sour operating performance as a result of the incurrence of acquisition-related debt, pre-acquisition potential tax liabilities, acquisition expenses, amortization of acquisition-related intangible assets, or possible future impairment of goodwill or intangible assets associated with the acquisitions. Even if an acquisition is integrated successfully, it may fail to realize expected revenues, gross and operating margins, net income and other returns.

The Company

We may also face liability with respect to acquired businesses for violations of environment laws occurring prior to the date of acquisition, which may not be covered by environment insurance secured to mitigate the risk or by indemnification from the sellers of the acquired businesses. The CompanyWe could also incur significant costs, including, but not limited to, remediation costs, natural resources damages, civil or criminal fines and sanctions, and third-party claims, as a result of past or future violations of, or liabilities, associated with environmental laws.

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Most members of the Company’sour management team do not have prior experience in operating a public company.

Most members of the Company’sour management team do not have prior experience in managing a publicly traded company. As such, the management team may encounter difficulties in successfully or effectively managing itsour transition to a public company and in complying with itsour reporting and other obligations under federal securities laws and other regulations and in connection with operating as a public company. Their lack of prior experience in dealing with the reporting and other obligations and laws pertaining to public companies could result thein management of the Company being required to devote significant time to these activities which may result in less time being devoted to the management and growth of the Company. In addition, the Company iswe are hiring additional personnel with the appropriate level of knowledge, experience, and training in the accounting policies, practices or internal controls over financial reporting required of public companies. The CompanyWe may be required to incur significant expense in connection with these efforts.

If the Company’sour goodwill, other intangible assets, or fixed assets become impaired, the Companywe may be required to record a charge to its earnings.

The Company

We may be required to record future impairments of goodwill, other intangible assets, or fixed assets to the extent the fair value of these assets falls below their book value. The Company’sOur estimates of fair value are based on assumptions regarding future cash flows, gross margins, expenses, discount rates applied to these cash flows, and current market estimates of value. Estimates used for future sales growth rates, gross profit performance, and other assumptions used to estimate fair value could cause the Companyus to record material non-cash impairment charges, which could harm the Company’s business, sales,our financial condition and results of operations.

During the third quarter of 2022, we concluded it was necessary to reevaluate goodwill and indefinite-lived intangible assets for impairment after supply chain challenges led to a downward revision of earnings estimates for 2022, which resulted in a decline in our market capitalization. Based on a quantitative assessment in the third quarter of 2022, we identified impairment of $2.4 million on certain indefinite-lived tradenames but did not identify any indicators of goodwill impairment. During the fourth quarter of 2022, we performed our annual impairment test for goodwill, and a quantitative analysis did not identify any indicators of impairment. Based on the annual impairment assessment, the estimated fair value exceeded the carrying value of the reporting unit by 15%. As of December 31, 2022, we concluded it was necessary to reevaluate goodwill for impairment due to a further downward revision of earnings estimates for 2022 and a continued decline in our market capitalization. Accordingly, we performed a qualitative assessment and did not identify any indicators of impairment. Goodwill was $418.1 million as of December 31, 2022, and is considered at higher risk of failing future quantitative impairment tests due to the narrow difference between fair value and carrying value. 

Global climate change and related regulations could negatively affect our business.

The effects of climate change, such as extreme weather conditions, create financial risks to our business. For example, theThe demand for our products may be affected by unseasonableextreme weather conditions.conditions, such as droughts, wildfires and flooding. These types of extreme weather events have and may continue to adversely impact us, our suppliers, our customers and their ability to purchase our products and our ability to timely receive appropriate raw materials to manufacture and transport our products on a timely basis. The effects of climate change could also disrupt our operations by impacting the availability and cost of materials needed for manufacturing and could increase insurance and other operating costs. We could also face indirect financial risks passed through the supply chain and disruptions that could result in increased prices for our products and the resources needed to produce them.

Furthermore, the long-term impacts of climate change, whether involving physical risks (such as extreme weather conditions, drought, or rising sea levels) or transition risks (such as regulatory or technology changes) are expected to be widespread and unpredictable. Certain impacts of physical risk may include: temperature changes that increase the heating and cooling costs at our facilities; extreme weather patterns that affect the production or sourcing of certain components; flooding and extreme storms that damage or destroy our buildings and inventory; and heat and extreme weather events that cause long-term disruption or threats to the habitability of our customers’ communities. Relative to transition risk, certain impacts may include: changes in energy and commodity prices driven by climate-related weather events; prolonged climate-related events affecting macroeconomic conditions with related effects on consumer spending and confidence; stakeholder perception of our engagement in climate-related policies; and new regulatory requirements resulting in higher compliance risk and operational costs.

Climate change is continuing to receive ever increasing attention worldwide, which could lead to additional legislative and regulatory efforts to limitincrease transparency and standardization of reporting of greenhouse gas emissions. For example,emissions, energy policies, and renewable energy usage. Additionally, new federal or state restrictions on emissions of carbon dioxide that may be imposed on vehicles and automobile fuels could adversely affect demand for vehicles, annual miles driven or the products we sell or lead to changes in automotive technology. Compliance with any new or more stringent laws or regulations, or stricter interpretations of existing laws, could require increased capital expenditures to improve our product portfolio to meet such new laws, regulations and standards.

Increasing scrutiny and evolving expectations with respect to our environmental, social and governance (“ESG”) practices may impose additional costs on us or expose us to new or additional risks.

In addition to the increased legislative and regulatory attention to climate change, customer, investor, and employee expectations in ESG have been rapidly evolving and increasing. While we have been committed to continuous improvements to our product portfolio to meet anticipated regulatory standard levels, if customers, regulators or investors demand we increase our greenhouse gas emission or renewable energy disclosures or our ESG initiatives, we may have to implement additional reporting standards and reporting requirements. If we fail to meet customer, investor, or employee expectations, we may be unable to attract or retain our consumer base or talent. Further, there can be no assurance that our commitments will be successful, that our products will be accepted by the market, that proposed regulation or deregulation will not have a negative competitive impact or that economic returns will reflect our investments in new product development.

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The standards by which ESG efforts and related matters are measured are developing and evolving, and we could be criticized for the scope of our initiatives and goals, or lack thereof. If we fail to comply with the evolving customer or investor or employee expectations and standards, or if we are perceived to have failed to adequately respond to such expectations and standards, we may suffer from reputational damage, which could have an adverse impact on our business or financial condition.

Legal, Regulatory and Compliance Risks Related to Our Business

The Company

We may become involved in legal or regulatory proceedings and audits.

The Company’s

Our business requires compliance with many laws and regulations, including labor and employment, sales and other taxes, customs, and consumer protection laws and ordinances that regulate retailers generally and/or govern the importation, promotion, and sale of merchandise, and the operation of stores and warehouse facilities. Failure to comply with these laws and regulations could subject the Companyus to lawsuits and other proceedings, and could also lead to damage awards, fines, and penalties. The CompanyWe may become involved in a number of legal proceedings and audits, including government and agency investigations, and consumer, employment, tort, and other litigation. The outcome of some of these legal proceedings, audits, and other contingencies could require the Companyus to take, or refrain from taking, actions that could harm the Company’sour operations or require the Companyus to pay substantial amounts of money, harming the Company’sour business, sales, financial condition and results of operations. Additionally, defending against these lawsuits and proceedings may be necessary, which could result in substantial costs and diversion of management’s attention and resources, harming the Company’sour business, sales, financial condition and results of operations. Any pending or future legal or regulatory proceedings and audits could harm the Company’sour business, sales, financial condition and results of operations.

The Company

We may become subject to intellectual property claims or lawsuits that could cause itus to incur significant costs or pay significant damages or that could prohibit itus from selling itsour products.

The Company’s

Our competitors also seek to obtain patent, trademark, copyright or other protection of their proprietary rights and designs for automotive products. From time to time, third parties have claimed or may claim in the future that the Company’sour products infringe upon their proprietary rights. The Company evaluatesWe evaluate any such claims and, where appropriate, hashave obtained or sought to obtain licenses or other business arrangements. To date, there have been no significant interruptions in the Company’sour business as a result of any claims of infringement. However, in the future, intellectual property claims could force the Companyus to alter itsour existing products or withdraw them from the market or could delay the introduction of new products.

Various patents have been issued to the Company’sour competitors in the automotive parts industry and these competitors may assert that the Company’sour products infringe their patent or other proprietary rights. If the Company’sour products are found to infringe third-party intellectual property rights, the Companywe may be unable to obtain a license to use such technology, and itwe could incur substantial costs to redesign itsour products, withdraw them from the market, and/or to defend legal actions.

Sales of the Company’sour products by unauthorized retailers or distributors could adversely affect the Company’sour authorized distribution channels and harm the Company’sour reputation.

Some of the Company’sour products may find their way to unauthorized outlets or distribution channels. This “gray market” for the Company’sour products can undermine authorized retailers and foreign wholesale distributors who promote and support the Company’sour products and can injure the Company’sour brands in the minds of itsour customers and consumers. On the other hand, stopping such commerce could result in a potential decrease in sales to those customers who are selling the Company’sour products to unauthorized distributors or an increase in sales returns over historical levels. While the Company haswe have taken some lawful steps to limit commerce of itsour products in the “gray market” in both the United States and abroad, it haswe have not stopped such commerce.

The Company is

We are subject to environmental, health and safety laws and regulations, which could subject the

Companyus to liabilities, increase itsour costs or restrict itsour operations in the future.

The Company’s

Our properties and operations are subject to a number of environmental, health and safety laws and regulations in each of the jurisdictions in which the Company operates,we operate, including, among others, regulations of the California Air Resources Board. These laws and regulations govern, among other things, air emissions, water discharges, handling and disposal of solid and hazardous substances and wastes, soil and groundwater contamination and employee health and safety. The Company’sOur failure to comply with such environmental, health and safety laws and regulations could result in substantial civil or criminal fines or penalties or enforcement actions, including regulatory or judicial orders enjoining or curtailing operations or requiring remedial or corrective measures, installation of pollution control equipment or other actions.

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The CompanyWe may also be subject to liability for environmental investigations and cleanups, including at properties that the Companywe currently or previously owned or operated, even if such contamination was not caused by the Company,us, and the Companywe may face claims alleging harm to health or property or natural resource damages arising out of contamination or exposure to hazardous substances. The CompanyWe may also be subject to similar liabilities and claims in connection with locations at which hazardous substances or wastes the Company haswe have generated have been stored, treated, otherwise managed, or disposed. Environmental conditions at or related to the Company’sour current or former properties or operations, and/or the costs of complying with current or future environmental, health and safety requirements (which have become more stringent and complex over time) could materially adversely affect the Company’sour business, sales, financial condition and results of operations.

Changes in, or any failure to comply with, privacy laws, regulations, and standards may adversely affect theour business.

Company’s business.

Personal privacy and data security have become significant issues in the United States, Europe, and in many other jurisdictions in which the Company operates.we operate. The regulatory framework for privacy and security issues worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future. Furthermore, federal, state, or foreign government bodies or agencies have in the past adopted, and may in the future adopt, laws and regulations affecting data privacy, all of which may be subject to invalidation by relevant foreign judicial bodies.

Industry organizations also regularly adopt and advocate for new standards in this area. In the United States, these include rules and regulations promulgated under the authority of federal agencies and state attorneys general and legislatures and consumer protection agencies, including, but not limited to, the California Consumer Privacy Act (“CCPA”). Internationally, many jurisdictions in which the Company operateswe operate have established their own data security and privacy legal framework with which the Companywe or itsour customers must comply, including, but not limited to, the European General Data Protection Regulation (“GDPR”), which imposes certain privacy-related obligations and potential penalties and risks upon the Company’sour business. In many jurisdictions, enforcement actions and consequences for noncompliance are also rising. In addition to government regulation, privacy advocates and industry groups may propose new and different self-regulatory standards that either legally or contractually apply to the Company.us. Any inability or perceived inability to adequately address privacy and security concerns, even if unfounded, or comply with applicable privacy and data security laws, regulations, and policies, could result in additional cost and liability to the Company,us, damage itsour reputation and adversely affect itsour business.

The Company’sOur insurance policies may not provide adequate levels of coverage against all claims, and the Companywe may incur losses that are not covered by itsour insurance.

The Company maintains

We maintain insurance of the type and in amounts that the Company believes iswe believe are commercially reasonable and that is available to businesses in itsour industry. The Company carriesWe carry various types of insurance, including general liability, auto liability, workers’ compensation, cyber, and excess umbrella, from highly rated insurance carriers. Market forces beyond the Company’sour control could limit the scope of the insurance coverage that the Companywe can obtain in the future or restrict itsour ability to buy insurance coverage at reasonable rates. The CompanyWe cannot predict the level of the premiums that the Companywe may be required to pay for subsequent insurance coverage, the level of any deductible and/or self-insuranceself- insurance retention applicable thereto, the level of aggregate coverage available or the availability of coverage for specific risks. In the event of a substantial loss, the insurance coverage that the Company carrieswe carry may not be sufficient to compensate the Companyus for the losses the Company incurswe incur or any costs the Company iswe are responsible for.

The Company previously identified material weaknesses in its internal control over financial reporting. If we are unable to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results.

We have identified material weaknesses in our internal control over financial reporting related to the accounting for complex financial instruments at Empower Ltd., which existed prior to the Business Combination. During 2021, the Company completed a series of actions that effectively remediated the material weaknesses. Subsequent to the Business Combination on July 16, 2021, and upon filing the 10-Q for the quarterly period ended September 26, 2021, the internal controls over financial reporting of Holley Inc. took the place of the internal controls over financial reporting of Empower Ltd. As a result, the internal control structure of Empower Ltd. is no longer in operation and, instead, the relevant internal control structure after completion of the Business Combination is that of Holley Inc. As of December 31, 2021 management has concluded that its internal control over financial reporting was effective. See Item 9A. – “Controls and Procedures” of this Form 10-K.

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The existence of material weaknesses in internal control over financial reporting could adversely affect our reputation or investor perceptions of us, which could have a negative effect on the trading price of our shares. We can give no assurance that additional material weaknesses or restatements of financial results will not arise in the future due to a failure to maintain adequate internal control over financial reporting or circumvention of these controls, and in the future our controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our financial statements.

The Company may face litigation and other risks as a result of Empower’s restatement of its historical financial statements and related matters.

On April 12, 2021, the Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the SEC together issued a statement regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Statement”). Specifically, the SEC Statement focused on certain settlement terms and provisions related to certain tender offers following a business combination, which terms are similar to those contained in the Warrant Agreement, dated October 6, 2020, between Continental Stock Transfer & Trust Company, as Warrant agent, and Empower (the “Warrant Agreement”). Following the issuance of the SEC Statement, after consultation with Empower’s independent registered public accounting firm, Empower’s management and audit committee concluded that it was appropriate to restate its previously issued audited financial statements as of December 31, 2020 and for the period from August 19, 2020 (inception) through December 31, 2020. As part of the restatement, Empower identified a material weakness in its internal controls over financial reporting.

Subsequent to the filing of Amendment No. 1 to Empower’s Annual Report on Form 10-K/A, based on SEC guidance, we identified a material weakness in Empower’s internal control over financial reporting related to Empower’s application of ASC 480-10-S99-3A to its accounting classification of the Empower Class A Shares. On December 14, 2021, our audit committee and management concluded that Empower’s internal control over financial reporting was not effective as of December 31, 2020, and, accordingly, our audit committee authorized management to restate Empower’s audited financial statements for the year ended December 31, 2020, where we concluded that the control deficiency that resulted in the incorrect classification of Empower Class A Shares constituted a material weakness as of December 31, 2020, resulting in the filing of Amendment No. 2 to Empower’s Annual Report on Form 10-K/A, filed with the SEC on February 4, 2022, and for the quarterly periods ended March 31, 2021 and June 30, 2021, resulting in the filing of Amendment No. 1 to Empower’s Quarterly Report for the period ended March 31, 2021 on Form 10-Q/A, filed with the SEC on February 4, 2022 and the filing of Amendment No. 1 to the Company’s Quarterly Report for the period ended June 30, 2021 on Form 10-Q/A, filed with the SEC on February 4, 2022 . Historically, a portion of the Empower Class A Shares was classified as permanent equity to maintain stockholders’ equity greater than $5 million on the basis that Empower would not redeem its Empower Class A Shares in an amount that would cause its net tangible assets to be less than $5,000,001, as described in Empower’s amended and restated memorandum and articles of association. Pursuant to the Company’s re-evaluation of Empower’s application of ASC 480-10-S99-3A to its accounting classification of Empower Class A Shares, the Company’s management has determined that the Empower Class A Shares include certain provisions that require classification of all Empower Class A Shares as temporary equity regardless of the net tangible assets redemption limitation contained in Empower’s amended and restated memorandum and articles of association.

As a result of such material weaknesses, the restatements, the change in accounting for the Warrants and the A&R FPA, reclassification of Empower Class A Shares, and other matters raised or that may in the future be raised by the SEC, the Company faces potential for litigation or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from the restatement and material weaknesses in Empower’s internal control over financial reporting and the preparation of Empower’s financial statements. As of the date of this annual report, the Company has no knowledge of any such litigation or dispute. However, the Company can provide no assurance that such litigation or dispute will not arise in the future. Any such litigation or dispute, whether successful or not, could have a material adverse effect on the Company’s business, results of operations and financial condition.

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Changes in tax lawslaw or regulation, effective tax rates and unanticipated tax liabilities could adversely affect the Company’sour effective income tax rate and profitability.

The Company is

We are subject to income taxes in the United States (federal and state) and various foreign jurisdictions. The Company’sOur future effective income tax rate could be subject to volatility or adversely affected in the future by a number of factors, including changes in the valuation of deferred tax assets and liabilities, changes in tax laws, and regulations, accounting principles, or their interpretations and application and the outcome of income tax audits in various jurisdictions around the world.thereof. In particular, the Biden administration has proposed increasesU.S. government may enact significant changes to the U.S.taxation of business entities including, among others, an increase in the corporate income tax rate, the imposition of minimum taxes or surtaxes on certain types of income, significant changes to the taxation of income derived from 21%international operations, and an addition of further limitations on the deductibility of business interest. For example, the U.S. government enacted the Inflation Reduction Act which, among other things, imposes a minimum tax on certain corporations with book income of at least $1 billion, subject to 28%certain adjustments, and made other proposals. If anya 1% excise tax on certain stock buybacks and similar corporate actions. Any of these (or similar) proposalsor similar developments or changes in federal, state, or international tax laws or tax rulings could adversely affect our effective tax rate and our operating results. 

We are ultimately enacted into law, in wholealso subject to the continuous examination of our income and other tax returns by the Internal Revenue Service and other tax authorities globally. It is possible that tax authorities may disagree with certain positions we have taken, and an adverse outcome of such a review or in part, theyaudit could have a negative impacteffect on our financial position and operating results. There can be no assurance that the outcomes from such examinations, or changes in tax law or regulation impacting our effective tax rate. We cannot predict the likelihood, timing or substancerates, will not have an adverse effect on our business, financial condition and results of U.S. tax proposals and will continue to monitor the progress of such proposals, as well as other global tax reform initiatives.operations.

Risks Related to Ownership of Our Securities

Certain of the Company’sour stockholders, including the Holley Stockholder and the Sponsor, may have conflicts of interest with other stockholders and may limit yourother stockholders' ability to influence corporate matters.

As of

At December 31, 2021, Holley Parent Holdings, LLC (the2022, the “Holley Stockholder”) andEmpower Sponsor Holdings LLC (the the "Sponsor")(together (together with its affiliates) beneficially own, in the aggregate, approximately 67.8%approximately 55% of our shares of Common Stock, excluding any warrantsWarrants exercisable for Common Stock held by Sponsor or its affiliates (or 69.5%57% inclusive of shares of Common Stock underlying Warrants held by Sponsor and its affiliates). As a result of this concentration of stock ownership, these parties acting together and, in the case of the Holley Stockholder, on its own, have sufficient voting power to effectively control all matters submitted to our stockholders for approval, including director elections and proposed amendments to our certificate of incorporation and bylaws. On July 16, 2021, (the “Closing” and such date, the “Closing Date”), the Company, the Sponsor, certain affiliates of the Sponsor, Investors, the Holley Stockholder and Sentinel Capital Partners V, L.P., Sentinel Capital Partners V-A, L.P. and Sentinel Capital Investors V, L.P., controlling affiliates of the Sentinel InvestorsHolley Stockholder entered into the Stockholders’ Agreement, pursuant to which the Holley Stockholder and the Sponsor have the right to designate nominees for election to the Company’sour board of directors subject to certain beneficial ownership requirements.

In addition, this concentration of ownership may delay or prevent a merger, consolidation or other business combination or change in control of our Companycompany and make some transactions that might otherwise give youstockholders the opportunity to realize a premium over the then-prevailing market price of our securities more difficult or impossible without their support. Because we have opted out of Section 203 of the Delaware General Corporation Law (“DGCL”) regulating certain business combinations with interested stockholders, these parties may transfer their shares of Common Stock and such control of us to a third party, which would not require the approval of our board of directors or other stockholders and may limit the price that investors are willing to pay in the future for shares of our Common Stock. The interests of these parties may not always coincide with our interests as a company or the interests of other stockholders. Accordingly, these parties could cause us to enter into transactions or agreements of which you wouldother stockholders may not approve or make decisions with which youother stockholders would disagree. This concentration of ownership may also adversely affect the trading prices of our securities.

Each of the Holley Stockholder and the Sponsor is in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with the Company.us. The certificate of incorporation provides that none of the Holley Stockholder, the Sponsor, any of their affiliates or any director who is not employed by the Companyus (including any non-employee director who serves as one of the Company’sour officers in both his or her director and officer capacities) or his or her affiliates will have any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which the Company operates.we operate. Each of the Holley Stockholder and the Sponsor also may pursue acquisition opportunities that may be complementary to the Company’sour business and, as a result, those acquisition opportunities may not be available to the Company.us.

Warrants are exercisable for Common Stock, which could increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.

The Company has

On December 31, 2022, we had an aggregateaggregate of 14,666,644 Warrants14,633,311 Warrants issued and outstanding, representing the right to purchase an equivalent amount of shares of Common Stock. The Warrants became exercisable on October 9, 2021. The exercise price of the Warrants is $11.50 per share. To the extent such Warrants are exercised, additional shares of Common Stock will be issued, which will result in dilution to our stockholders and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market or the fact that such Warrants may be exercised could adversely affect the market price of our Common Stock. However, there is no guarantee that the Warrants will ever be in the money prior to their expiration, and as such, the Warrants may expire worthless.

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The Warrants may expire worthless, and the terms of the Warrants may be amended in a manner adverse to a holder if holders of at least 50% of the then-outstanding Warrants approve of such amendment.

The Warrant Agreement provides that the terms of the Warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but it requires the approval by the holders of at least 50% of the then-outstanding Warrants to make any change that adversely affects the interests of the registered holders of the Warrants. Accordingly, we may amend the terms of the Warrants in a manner adverse to a holder if holders of at least 50% of the then-outstanding Warrants approve of such amendment. Although our ability to amend the terms of the Warrants with the consent of at least 50% of the then outstanding Warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the Warrants, shorten the exercise period or decrease the number of Common Stock purchasable upon exercise of a Warrant.

The market price and trading volume of Common Stock and Warrants may be volatile.

Stock markets, including the NYSE, have from time to timetime-to-time experienced significant price and volume fluctuations. Even if an active, liquid and orderly trading market develops and is sustained for Common Stock and Warrants, the market price of Common Stock and Warrants may be volatile and could decline significantly, whether or not any price changes are related to matters specific to the Company.us. In addition, the trading volume in Common Stock and Warrants may fluctuate and cause significant price variations to occur. If the market price of Common Stock and Warrants declines significantly, youstockholders may be unable to resell your shares of Common Stock and Warrants at or above the market price of Common Stock and Warrants. We cannot assure youguarantee that the market price of Common Stock and Warrants will not fluctuate widely or decline significantly in the future in response to a number of factors, including, among others, the following:

In the past, securities class-action litigation has often been instituted against companies following periods of volatility in the market price of their securities. This type of litigation could result in substantial costs and divert the Company’sour management’s attention and resources, which could have a material adverse effect on the Company.us.

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Reports published by analysts, including projections in those reports that differ from our actual results, could adversely affect the market price and trading volume of Common Stock and Warrants.

The market for Common Stock and Warrants depends in part on the research and reports that securities or industry analysts publish about the Companyus or itsour business. Securities research analysts may establish and publish their own periodic projections for Holley. These projections may vary widely and may not accurately predict the results we actually achieve. Our share price may decline if our actual results do not match the projections of these securities research analysts. Similarly, if one or more of the analysts who write reports on us downgrades our stock or publishes inaccurate or unfavorable research about our business, our share price could decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for Common Stock and Warrants could decrease, which might cause the market price and trading volume of our Common Stock and Warrants to decline significantly.

Future sales of our Common Stock and Warrants in the public market could cause our stock price to fall.

The

On December 31, 2022, the Holley Stockholder and the Sponsor (together with its affiliates) beneficially own, in the aggregate, approximately 67.8%55% of our shares of Common Stock, excluding any warrants exercisable for Common Stock held by Sponsor or its affiliates (or 69.5%57% inclusive of shares of Common Stock underlying Warrants held by Sponsor and its affiliates). All shares held by our affiliates are eligible for resale in the public market, subject to applicable securities laws, including the Securities Act. Therefore, unless shares owned by any of our affiliates are registered under the Securities Act, these shares may only be resold into the public markets in accordance with the requirements of an exemption from registration or safe harbor, including Rule 144 and the volume limitations, manner of sale requirements and notice requirements thereof. However, pursuant to the terms the A&RAmended and Restated Registration Rights Agreement, of which the Company entered into with the Sponsor and the Holley Stockholder at the closing of the Business Combination, the Sponsor and the Holley Stockholder have the right to demand that we register their shares under the Securities Act as well as the right to include their shares in any registration statement that we file with the SEC, subject to certain exceptions. The registration statement, which was filed pursuant to these registration rights, and any registration of other shares we may file in the future, enables those securities to be sold in the public market. Any sale by the Holley Stockholder, the Sponsor or other affiliates and stockholders, or any perception in the public markets that such a transaction may occur could cause the market price of our Common Stock and Warrants to decline materially.

The Company is a “controlled company” within the meaning of the NYSE Listed Company Manual and, as a result, qualifies for exemptions from certain corporate governance requirements. If we rely on such exemptions, you will not have the same protections afforded to stockholders of companies that are subject to such requirements.

The Holley Stockholder owns a majority of our Common Stock, meaning that the Company is a controlled company within the meaning of the NYSE corporate governance standards. Under the NYSE rules, a company of which more than 50% of the voting power is held by an individual, company or group of persons acting together is a controlled company and may elect not to comply with certain NYSE corporate governance requirements, including the requirements that:

These requirements will not apply to us as long as we remain a controlled company. We are not utilizing these exemptions; however, if in the future we decide to rely on such exemptions, we may elect not to comply with the foregoing NYSE corporate governance requirements and, if we do, investors in our securities may not have the same protections afforded to stockholders of companies that are subject to all of the NYSE corporate governance requirements.

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The Company may redeem your unexpired Warrants prior to their exercise at a time that is disadvantageous to you,the Warrant holders, thereby making yourthe Warrants worthless.

The Company has

We have the ability to redeem outstanding Warrants at any time prior to their expiration, at a price of $0.01 per Warrant, provided that the last reported sales price of Common Stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) on the trading day prior to the date on which we send the notice of redemption to the Warrant holders. If and when the Warrants become redeemable by the Company, the Companyus, we may not exercise itsour redemption right if the issuance of shares of Common Stock upon exercise of the Warrants is not exempt from registration or qualification under applicable state blue sky laws or it iswe are unable to effect such registration or qualification. The CompanyWe will use itsour best efforts to register or qualify such shares of Common Stock under the blue skyblue-sky laws of the state of residence in those states in which the Warrants were offered. Redemption of the outstanding Warrants could force youstockholders (i) to exercise yourthe Warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) to sell yourthe Warrants at the then-current market price when youstockholders might otherwise wish to hold yourthe Warrants or (iii) to accept the nominal redemption price which, at the time the outstanding Warrants are called for redemption, is likely to be substantially less than the market value of yourthe Warrants. None of the Private Warrants will be redeemable by the Companyus so long as they are held by the Sponsor, or its permitted transferees.

The NYSE may delist the Company’sour securities from trading on its exchange, which could limit stockholders’stockholders’ ability to make transactions in itsour securities and subject the Companyus to additional trading restrictions.

Our Common Stock and Warrants are currently listed on NYSE. We cannot assure you that our securities will continue to be listed on the NYSE. In order to continue listing our securities on the NYSE, the Companywe will be required to maintain certain financial, distribution and stock price levels. Generally, the Companywe will be required to maintain a minimum amount in stockholders’ equity.

If the NYSE delists our securities from trading on its exchange for failure to meet the exchange's continued listing standards or otherwise, and we are not able to list our securities on another national securities exchange, our securities could be quoted on an over-the-counter market, but no assurance of this can be given. If this were to occur, we and our stockholders could face significant material adverse consequences including:

The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Since the Company’sour Common Stock and Warrants are listed on the NYSE, they are covered securities. Although the states are preempted from regulating the sale of itsour securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. Further, if the Company waswe were no longer listed on the NYSE, itsour securities would not be covered securities and itwe would be subject to regulation in each state in which it offers itswe offer our securities.

Future issuances of debt securities and equity securities may adversely affect the Company,us, including the market price of Common Stock and may be dilutive to existing stockholders.

There is no assurance that the Companywe will not incur debt or issue equity ranking senior to Common Stock. Those securities will generally have priority upon liquidation. Such securities also may be governed by an indenture or other instrument containing covenants restricting itstheir operating flexibility. Additionally, any convertible or exchangeable securities that the Company issues in the future may have rights, preferences and privileges more favorable than those of Common Stock. Separately, additional financing may not be available on favorable terms, or at all. Because the Company’sour decision to issue debt or equity in the future will depend on market conditions and other factors beyond the Company’sour control, itwe cannot predict or estimate the amount, timing, nature or success of the Company’sour future capital raising efforts. As a result, future capital raising efforts may reduce the market price of Common Stock and be dilutive to existing stockholders.

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The Company doesWe do not intend to pay cash dividends for the foreseeable future.

The Company

We currently intendsintend to retain itsour future earnings, if any, to finance the further development and expansion of itsour business and doesdo not intend to pay cash dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of the Company’sour board of directors and will depend on itsour financial condition, results of operations, capital requirements, restrictions contained in future agreements and financing instruments, business prospects and such other factors as itsour board of directors deems relevant.

The JOBS Act permits “emerging“emerging growth companies”companies” like us to take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies.

The Company qualifies

We qualify as an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act, as modified by the JOBS Act. As such, we take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies for as long as we continue to be an emerging growth company, including (i) the exemption from the auditor attestation requirements with respect to internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act, (ii) the exemptions from say-on-pay, say-on-frequency and say-on-golden parachute voting requirements and (iii) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. As a result, our stockholders may not have access to certain information they deem important. We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year (a) following the fifth anniversary of our initial public offering, (b) in which we have total annual gross revenue of at least $1.07$1.235 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of the Common Stock and Warrants that are held by non-affiliates exceeds $700 million as of the last business day of our prior second fiscal quarter, and (ii) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the exemption from complying with new or revised accounting standards provided in Section 7(a)(2)(B) of the Securities Act as long as we are an emerging growth company. An emerging growth company can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies, but any such election to opt out is irrevocable. We have elected to avail ourselves of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

We cannot predict if investors will find theour Common Stock and Warrants of the Company less attractive because we will rely on these exemptions. If some investors find theour Common Stock and Warrants of the Company less attractive as a result, there may be a less active trading market for theour Common Stock, and Warrants of the Company and more stock price volatility.

Delaware law and the Company’sour certificate of incorporation and bylaws contain certain provisions, including anti-takeoveranti- takeover provisions that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable.

The certificate of incorporation, bylaws and the DGCL contain provisions that could have the effect of rendering more difficult, delaying, or preventing an acquisition that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of our Common Stock, and therefore depress the trading price of Common Stock. These provisions could also make it difficult for stockholders to take certain actions, including electing directors who are not nominated by the current members of the Company’sour board of directors or taking other corporate actions, including effecting changes in our management. Among other things, the certificate of incorporation and bylaws include provisions regarding:

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These provisions, alone or together, could discourage, delay or prevent hostile takeovers and changes in control, including transactions in which the acquirer may offer a premium price for our Common Stock and Warrants, or changes in the Company’sour board of directors or management.

In addition, our Incentive Plan provides for accelerated vesting of awards that are assumed or substituted in connection with a change in control of the Company as a result of the change in control if a participant experiences a qualifying termination within two years following the change in control, which could discourage, delay or prevent a merger or acquisition at a premium price.

The provisions of the certificate of incorporation requiring exclusive forum in the Court of Chancery of the State of Delaware for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers.

The certificate of incorporation provides that, unless the Company selectswe select or consentsconsent in writing to the selection of an alternative forum, to the fullest extent permitted by the applicable law: (a) the sole and exclusive forum for any complaint asserting any internal corporate claims, to the fullest extent permitted by law, and subject to applicable jurisdictional requirements, shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have, or declines to accept, jurisdiction, another state court or a federal court located within the State of Delaware); and (b) the sole and exclusive forum for any complaint asserting a cause of action arising under the Securities Act of 1933, to the fullest extent permitted by law, shall be the federal district courts of the United States of America. For purposes of the foregoing, “internal corporate claims” means claims, including claims in the right of the Company that are based upon a violation of a duty by a current or former director, officer, employee or stockholder in such capacity, or as to which the DGCL confers jurisdiction upon the Court of Chancery. Any person or entity purchasing or otherwise acquiring any interest in any shares of Common Stock will be deemed to have consented to (i) the personal jurisdiction of the state and federal courts located within the State of Delaware in connection with any action brought in any such court to enforce the certificate of incorporation’s exclusive forum provision (an “FSC Enforcement Action”), and (ii) having service of process made upon such holder of Common Stock in any such FSC Enforcement Action by service upon such holder of Common Stock’s counsel in such action as agent for such holder of Common Stock.

These provisions may have the effect of discouraging lawsuits against the Company’sour directors and officers. The enforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that, in connection with any applicable action brought against the Company,us, a court could find the choice of forum provisions contained in the certificate of incorporation to be inapplicable or unenforceable in such action.

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