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or regulatory enforcement could also result in interpretations of the law that require us to change our business practices or otherwise |
increase our costs and harm our business. We may not maintain sufficient, or any, insurance coverage to cover the types of claims that |
could be asserted. If a successful claim were brought against us, it could expose us to significant liability. If |
we are unable to protect our intellectual property rights, our reputation and brand could be impaired and we could lose customers. We |
regard our patents, trademarks, trade secrets and similar intellectual property as important to our success. We rely on patent, trademark |
and copyright law, and trade secret protection, and confidentiality and/or license agreements with employees, customers, partners and |
others to protect our proprietary rights. We cannot be certain that we have taken adequate steps to protect our proprietary rights, especially |
in countries where the laws may not protect our rights as fully as in the United States. In addition, our proprietary rights may be infringed |
or misappropriated, and we could be required to incur significant expenses to preserve them. In the past we have filed litigation to |
protect our intellectual property rights. The outcome of such litigation can be uncertain, and the cost of prosecuting such litigation |
may have an adverse impact on our earnings. We have patent and trademark registrations for several patents and marks. However, any registrations |
may not adequately cover our intellectual property or protect us against infringement by others. Effective patent, trademark, service |
mark, copyright and trade secret protection may not be available in every country in which our products and services may be made available |
online. We also currently own or control a number of Internet domain names and have invested time and money in the purchase of domain |
names and other intellectual property, which may be impaired if we cannot protect such intellectual property. We may be unable to protect |
these domain names or acquire or maintain relevant domain names in the United States and in other countries. If we are not able to protect |
our patents, trademarks, domain names or other intellectual property, we may experience difficulties in achieving and maintaining brand |
recognition and customer loyalty. 67 Because |
we are involved in litigation from time to time and are subject to numerous laws and governmental regulations, we could incur substantial |
judgments, fines, legal fees and other costs as well as reputational harm. We |
are sometimes the subject of complaints or litigation from customers, employees or other third parties for various reasons. The damages |
sought against us in some of these litigation proceedings could be substantial. Although we maintain liability insurance for some litigation |
claims, if one or more of the claims were to greatly exceed our insurance coverage limits or if our insurance policies do not cover a |
claim, this could have a material adverse effect on our business, financial condition, results of operations and cash flows. Existing |
or future government regulation could expose us to liabilities and costly changes in our business operations and could reduce customer |
demand for our products and services. We |
are subject to federal and state consumer protection laws and regulations, including laws protecting the privacy of customer non-public |
information and regulations prohibiting unfair and deceptive trade practices, as well as laws and regulations governing businesses in |
general and the Internet and e-commerce and certain environmental laws. Additional laws and regulations may be adopted with respect to |
the Internet. These laws may cover issues such as user privacy, spyware and the tracking of consumer activities, marketing e-mails and |
communications, other advertising and promotional practices, money transfers, pricing, content and quality of products and services, |
taxation, electronic contracts and other communications, intellectual property rights, and information security. Furthermore, it is not |
clear how existing laws such as those governing issues such as property ownership, sales and other taxes, trespass, data mining and collection, |
and personal privacy apply to the Internet and e-commerce. To the extent we expand into international markets, we will be faced with |
complying with local laws and regulations, some of which may be materially different than U.S. laws and regulations. Any such foreign |
law or regulation, any new U.S. law or regulation, or the interpretation or application of existing laws and regulations to our business |
may have a material adverse effect on our business, prospects, financial condition and results of operations by, among other things, |
subjecting us to fines, penalties, damages or other liabilities, requiring costly changes in our business operations and practices, and |
reducing customer demand for our products and services. We may not maintain sufficient, or any, insurance coverage to cover the types |
of claims or liabilities that could arise as a result of such regulation. We |
may be affected by global climate change or by legal, regulatory, or market responses to such change. The |
growing political and scientific sentiment is that global weather patterns are being influenced by increased levels of greenhouse gases |
in the earth’s atmosphere. This growing sentiment and the concern over climate change have led to legislative and regulatory initiatives |
aimed at reducing greenhouse gas emissions which warm the earth’s atmosphere. These warmer weather conditions could result in a |
decrease in demand for auto parts in general. Moreover, proposals that would impose mandatory requirements on greenhouse gas emissions |
continue to be considered by policy makers in the United States. Laws enacted that directly or indirectly affect our suppliers (through |
an increase in the cost of production or their ability to produce satisfactory products) or our business (through an impact on our inventory |
availability, cost of revenues, operations or demand for the products we sell) could adversely affect our business, financial condition, |
results of operations and cash flows. Significant increases in fuel economy requirements or 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 additional expenditures by us or our suppliers. Our inability to respond to |
such changes could adversely impact the demand for our products and our business, financial condition, results of operations or cash |
flows. Possible |
new tariffs that might be imposed by the United States government could have a material adverse effect on our results of operations. Changes |
in U.S. and foreign governments’ trade policies have resulted in, and may continue to result in, tariffs on imports into and exports |
from the U.S., among other restrictions. Throughout 2018 and 2019, the U.S. imposed tariffs on imports from several countries, including |
China. If further tariffs are imposed on imports of our products, or retaliatory trade measures are taken by China or other countries |
in response to existing or future tariffs, we could be forced to raise prices on all of our imported products or make changes to our |
operations, any of which could materially harm our revenue or operating results. Any additional future tariffs or quotas imposed on our |
products or related materials may impact our sales, gross margin and profitability if we are unable to pass increased prices onto our |
customers. 68 Risks |
Related to Our Eyewear Products Business If |
we are unable to successfully introduce new products, develop our brands, and maintain a broad selection of products at competitive prices |
or fail to maintain sufficient inventory to meet customer demands, our revenue could decline. In |
order to expand our business, we must successfully offer, on a continuous basis, a broad selection of products that meet the needs of |
our customers, including by being the first to market with new products. In addition, to be successful, our product offerings must be |
broad and deep in scope, competitively priced, well-made, innovative and attractive to a wide range of consumers. We cannot predict with |
certainty that we will be successful in offering products that meet all of these requirements. Moreover, even if we offer a broad selection |
of products at competitive prices, we must maintain sufficient in-stock inventory to meet consumer demand. If our product offerings fail |
to satisfy our customers’ requirements or respond to changes in customer preferences or we otherwise fail to maintain sufficient |
in-stock inventory, our revenue could decline. The |
price categories of the reader glasses and sunglasses markets in which we compete are particularly vulnerable to changes in fashion trends |
and consumer preferences. Our historical success is attributable, in part, to our introduction of unique designs, interesting patterns, |
and creative marketing, which are perceived to represent an improvement over eyeglasses and accessory products. Our future success will |
depend on our continued ability to develop and introduce such innovative products and continued success in building our brands. If we |
are unable to continue to do so, our future sales could decline, inventory levels could rise, leading to additional costs for storage |
and potential write-downs relating to the value of excess inventory, and there could be a negative impact on production costs since fixed |
costs would represent a larger portion of total production costs due to the decline in quantities produced, which could materially adversely |
affect our results of operations. If |
vision correction alternatives to OTC eyeglasses become more widely available, or consumer preferences for such alternatives increase, |
our profitability could suffer through a reduction of sales of our reader eyewear products, including lenses and accessories. Our |
business could be negatively impacted by the availability and acceptance of vision correction alternatives to OTC or reader eyeglasses, |
such as contact lenses and refractive optical surgery. Increased use of vision correction alternatives could result in decreased use |
of our reader eyewear products, including a reduction of sales of lenses and accessories sold in our retail outlets, which could have |
a material adverse impact on our business, results of operations, financial condition and prospects. Our |
business depends on our ability to build and maintain strong brands. We may not be able to maintain and enhance our brands if we receive |
unfavorable customer complaints, negative publicity, or otherwise fail to live up to consumers’ expectations, which could materially |
adversely affect our business, results of operations and growth prospects. Maintaining |
and enhancing our brands is critical to expanding our base of customers and suppliers. Our ability to maintain and enhance our brand |
depends largely on our ability to maintain customer confidence in our product and service offerings. If customers do not have a satisfactory |
shopping experience, they may seek out alternative offers from our competitors and may not return to our displays and retail sites as |
often in the future, or at all. In addition, unfavorable publicity regarding, for example, our practices relating to privacy and data |
protection, product quality, delivery problems, competitive pressures, litigation or regulatory activity, could seriously harm our reputation. |
Such negative publicity also could have an adverse effect on the size, engagement, and loyalty of our customer base and result in decreased |
revenue, which could adversely affect our business and financial results. In |
addition, maintaining and enhancing these eyeglass product brands may require us to make substantial investments, and these investments |
may not be successful. If we fail to promote and maintain our brands, or if we incur excessive expenses in this effort, our business, |
operating results and financial condition may be materially adversely affected. We anticipate that, as our market becomes increasingly |
competitive, maintaining and enhancing our brands may become increasingly difficult and expensive. Maintaining and enhancing our brands |
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