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to or more comprehensive than ours, without infringing our rights. In the event our product catalog is damaged or is stolen, copied or
otherwise replicated to compete with us, whether lawfully or not, we may lose an important competitive advantage and our business could
be harmed. Economic
conditions have had, and may continue to have, an adverse effect on the demand for aftermarket auto parts and could adversely affect
our sales and operating results. Demand
for our products has been and may continue to be adversely affected by general economic conditions. In declining economies, consumers
often defer regular vehicle maintenance and may forego purchases of nonessential performance and accessories products, which can result
in a decrease in demand for auto parts in general. Consumers also defer purchases of new vehicles, which immediately impacts performance
parts and accessories, which are generally purchased in the first six months of a vehicle’s lifespan. In addition, during
economic downturns, some competitors may become more aggressive in their pricing practices, which would adversely impact our gross margin.
Certain suppliers may exit the industry which may impact our ability to procure parts and may adversely impact gross margin as the remaining
suppliers increase prices to take advantage of limited competition. Vehicle
miles driven, vehicle accident rates and insurance companies’ willingness to accept a variety of types of parts in the repair process
have fluctuated and may decrease, which could result in a decline of our revenues and negatively affect our results of operations. We
and our industry depend on the number of vehicle miles driven, vehicle accident rates and insurance companies’ willingness to accept
a variety of types of parts in the repair process. Decreased miles driven reduce the number of accidents and corresponding demand for
parts, and reduce the wear and tear on vehicles with a corresponding reduction in demand for vehicle repairs and parts. If consumers
were to drive less in the future and/or accident rates were to decline, as a result of higher gas prices, increased use of ride-shares,
the advancement of driver assistance technologies, or otherwise, our sales may decline and our business and financial results may suffer. We
will be required to collect and pay more sales taxes, and could become liable for other fees and penalties, which could have an adverse
effect on our business. We
have historically collected sales or other similar taxes only on the shipment of goods to customers in the state of New York. However,
following the U.S. Supreme Court decision in South Dakota v. Wayfair , we are now required to collect sales tax in any state which
passes legislation requiring out-of-state retailers to collect sales tax even where they have no physical nexus. We have historically
enjoyed a competitive advantage to the extent our competitors are already subject to those tax obligations. By collecting sales tax in
additional states, we will lose this competitive advantage as total costs to our customers will increase, which could adversely affect
our sales. Moreover,
if we fail to collect and remit or pay required sales or other taxes in a jurisdiction or qualify or register to do business in a jurisdiction
that requires us to do so or if we have failed to do so in the past, we could face material liabilities for taxes, fees, interest and
penalties. If various jurisdictions impose new tax obligations on our business activities, our sales and net income in those jurisdictions
could decrease significantly, which could harm our business. 65 Higher
wage and benefit costs could adversely affect our business. Changes
in federal and state minimum wage laws and other laws relating to employee benefits could cause us to incur additional wage and
benefit costs. Increased labor costs brought about by changes in minimum wage laws, other regulations or prevailing market conditions
could increase our expenses and have an adverse impact on our profitability. We
face exposure to product liability lawsuits. The
automotive industry in general has been subject to a large number of product liability claims due to the nature of personal injuries
that result from car accidents or malfunctions. As a distributor of auto parts, including parts obtained overseas, we could be held liable
for the injury or damage caused if the products we sell are defective or malfunction regardless of whether the product manufacturer is
the party at fault. While we carry insurance against product liability claims, if the damages in any given action were high or we were
subject to multiple lawsuits, the damages and costs could exceed the limits of our insurance coverage or prevent us from obtaining coverage
in the future. If we were required to pay substantial damages as a result of these lawsuits, it may seriously harm our business and financial
condition. Even defending against unsuccessful claims could cause us to incur significant expenses and result in a diversion of management’s
attention. In addition, even if the money damages themselves did not cause substantial harm to our business, the damage to our reputation
and the brands offered on our websites could adversely affect our future reputation and our brand and could result in a decline in our
net sales and profitability. Business
interruptions in our facilities may affect the distribution of our products and/or the stability of our computer systems, which may affect
our business. Weather,
terrorist activities, war or other disasters, or the threat of them, may result in the closure of one or more of our facilities, or may
adversely affect our ability to timely provide products to our customers, resulting in lost sales or a potential loss of customer loyalty.
 Most of our products are imported from other countries and these goods could become difficult or impossible to bring into the United
States, and we may not be able to obtain such products from other sources at similar prices.  Such a disruption in revenue could
potentially have a negative impact on our results of operations, financial condition and cash flows. We
rely extensively on our computer systems to manage inventory, process transactions and timely provide products to our customers.  Our
systems are subject to damage or interruption from power outages, telecommunications failures, computer viruses, security breaches or
other catastrophic events.  If our systems are damaged or fail to function properly, we may experience loss of critical data and
interruptions or delays in our ability to manage inventories or process customer transactions.  Such a disruption of our systems
could negatively impact revenue and potentially have a negative impact on our results of operations, financial condition and cash flows. Security
threats, such as ransomware attacks, to our IT infrastructure could expose us to liability, and damage our reputation and business. It
is essential to our business strategy that our technology and network infrastructure remain secure and is perceived by our customers
to be secure. Despite security measures, however, any network infrastructure may be vulnerable to cyber-attacks. Information security
risks have significantly increased in recent years in part due to the proliferation of new technologies and the increased sophistication
and activities of organized crime, hackers, terrorists and other external parties, including foreign private parties and state actors.
We may face cyber-attacks that attempt to penetrate our network security, including our data centers, to sabotage or otherwise disable
our network of websites and online marketplaces, misappropriate our or our customers’ proprietary information, which may include
personally identifiable information, or cause interruptions of our internal systems and services. If successful, any of these attacks
could negatively affect our reputation, damage our network infrastructure and our ability to sell our products, harm our relationship
with customers that are affected and expose us to financial liability. We
maintain a comprehensive system of preventive and detective controls through our security programs; however, given the rapidly evolving
nature and proliferation of cyber threats, our controls may not prevent or identify all such attacks in a timely manner or otherwise
prevent unauthorized access to, damage to, or interruption of our systems and operations, and we cannot eliminate the risk of human error
or employee or vendor malfeasance. In
addition, any failure by us to comply with applicable privacy and information security laws and regulations could cause us to incur significant
costs to protect any customers whose personal data was compromised and to restore customer confidence in us and to make changes to our
information systems and administrative processes to address security issues and compliance with applicable laws and regulations. In addition,
our customers could lose confidence in our ability to protect their personal information, which could cause them to stop shopping on
our sites altogether. Such events could lead to lost sales and adversely affect our results of operations. We also could be exposed to
government enforcement actions and private litigation. 66 Failure
to comply with privacy laws and regulations and failure to adequately protect customer data could harm our business, damage our reputation
and result in a loss of customers. Federal
and state and regulations may govern the collection, use, sharing and security of data that we receive from our customers. In addition,
we have and post on our websites our own privacy policies and practices concerning the collection, use and disclosure of customer data.
Any failure, or perceived failure, by us to comply with our posted privacy policies or with any data-related consent orders, U.S. Federal
Trade Commission requirements or other federal, state or international privacy-related laws and regulations could result in proceedings
or actions against us by governmental entities or others, which could potentially harm our business. Further, failure or perceived failure
to comply with our policies or applicable requirements related to the collection, use or security of personal information or other privacy-related
matters could damage our reputation and result in a loss of customers. The regulatory framework for privacy issues is currently evolving
and is likely to remain uncertain for the foreseeable future. Challenges
by OEMs to the validity of the aftermarket auto parts industry and claims of intellectual property infringement could adversely affect
our business and the viability of the aftermarket auto parts industry. OEMs
have attempted to use claims of intellectual property infringement against manufacturers and distributors of aftermarket products to
restrict or eliminate the sale of aftermarket products that are the subject of the claims. The OEMs have brought such claims in federal
court and with the United States International Trade Commission. We have received in the past, and we anticipate we may in the future
receive, communications alleging that certain products we sell infringe the patents, copyrights, trademarks and trade names or other
intellectual property rights of OEMs or other third parties. The
United States Patent and Trademark Office records indicate that OEMs are seeking and obtaining more design patents and trademarks than
they have in the past. In some cases, we have entered into license agreements that allow us to sell aftermarket parts that replicate
OEM patented parts in exchange for a royalty. In the event that our license agreements, or other similar license arrangements are terminated,
or we are unable to agree upon renewal terms, we may be subject to restrictions on our ability to sell aftermarket parts that replicate
parts covered by design patents or trademarks, which could have an adverse effect on our business. Litigation