SELLER DISCLOSURE SCHEDULES

SELLER DISCLOSURE SCHEDULES
to the Stock Purchase Agreement, dated as of May 20, 2025
by and among
CASCADE RETAIL HOLDINGS INC. a Delaware corporation ("Buyer")
THE SELLING STOCKHOLDERS NAMED THEREIN
and
NOVAMART GLOBAL INC. a Delaware corporation (the "Company")
Prepared by:
Calloway, Brandt & Loewe LLP 600 Travis Street, Suite 4500 Houston, TX 77002 Telephone: (713) 555-2400 Facsimile: (713) 555-2401
Counsel to the Company and the Selling Stockholders
Reviewed and Negotiated by:
Calderwood & Harkness LLP 599 Lexington Avenue, 38th Floor New York, NY 10022 Telephone: (212) 555-7800 Facsimile: (212) 555-7801
Counsel to the Buyer
Stock Purchase Agreement Execution Date: May 20, 2025
Governing Law: State of Delaware
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INTRODUCTORY NOTES AND QUALIFICATIONS
These Seller Disclosure Schedules (these "Disclosure Schedules") are delivered by NovaMart Global Inc., a Delaware corporation (the "Company"), and the Selling Stockholders named in the Stock Purchase Agreement (the "Selling Stockholders"), pursuant to, and form an integral part of, that certain Stock Purchase Agreement, dated as of May 20, 2025 (the "Agreement"), by and among Cascade Retail Holdings Inc., a Delaware corporation ("Buyer"), the Selling Stockholders, and the Company. These Disclosure Schedules are being delivered concurrently with the execution and delivery of the Agreement on May 20, 2025.
Capitalized terms used but not otherwise defined in these Disclosure Schedules shall have the meanings ascribed to such terms in the Agreement. All references herein to "Sections" refer to sections of the Agreement unless otherwise indicated, and all references to "Schedules" refer to schedules of these Disclosure Schedules unless otherwise indicated.
The following qualifications and limitations apply to all disclosures set forth in these Disclosure Schedules:
1.  No Admission of Liability or Materiality. The inclusion of any item, matter, or information in these Disclosure Schedules does not constitute an admission by the Company or any Selling Stockholder that such item, matter, or information is material, that it constitutes or gives rise to a liability of the Company or any Selling Stockholder, or that such item, matter, or information is required to be disclosed under the Agreement. Items and matters may be disclosed herein for informational purposes only, out of an abundance of caution, and without conceding that such disclosure is required by the Agreement or that such item or matter would, individually or in the aggregate, constitute a Material Adverse Effect (as defined in the Agreement).
2.  Cross-References and Deemed Disclosures. Matters disclosed in any one Schedule shall be deemed disclosed with respect to any other Schedule or any other representation or warranty in the Agreement to the extent the relevance of such disclosure to such other Schedule, representation, or warranty is reasonably apparent on the face of such disclosure, regardless of whether a specific cross-reference is made. The Company and the Selling Stockholders have endeavored to include cross-references where appropriate, but the absence of a cross-reference shall not be construed as a limitation on the applicability of any disclosure.
3.  Headings and Section References. The headings and section references contained in these Disclosure Schedules are included for convenience of reference only. Such headings and section references do not limit, define, or otherwise affect the scope or substance of the disclosures set forth herein.
4.  Summaries Qualified by Underlying Documents. Any summary or description of a contract, agreement, plan, instrument, order, judgment, decree, or other document contained in these Disclosure Schedules is qualified in its entirety by reference to the full text of such contract, agreement, plan, instrument, order, judgment, decree, or other document, copies of which have been made available to Buyer and its representatives in the electronic data room (the "Data Room") maintained by the Company and hosted by Calloway, Brandt & Loewe LLP on the Thackeray Solutions platform (Project Horizon). To the extent there is any inconsistency between any summary set forth in these Disclosure Schedules and the terms of the underlying document, the terms of the underlying document shall control.
5.  Dollar Amounts and Share Numbers. Unless otherwise expressly stated to be exact, all dollar amounts and share numbers set forth in these Disclosure Schedules are approximate and have been rounded for ease of presentation. Such approximations shall not be deemed to constitute a breach of any representation or warranty in the Agreement.
6.  Knowledge Qualification. Where information is stated to be to the "Knowledge" of the Company or a Selling Stockholder, such information is provided in accordance with the definition of "Knowledge" set forth in the Agreement.
7.  Data Room Reference. References to the Data Room refer to the electronic data room (Project Horizon) hosted by Calloway, Brandt & Loewe LLP on the Thackeray Solutions platform, as constituted as of 11:59 p.m. Eastern Time on May 19, 2025. A complete USB archive of the Data Room contents as of such date and time has been provided to counsel for Buyer.
8.  Continuing Accuracy. These Disclosure Schedules are delivered as of the date of the Agreement. The Company and the Selling Stockholders undertake to supplement or amend these Disclosure Schedules prior to Closing to the extent required by the Agreement.
SCHEDULE 3.1 — ORGANIZATION, GOOD STANDING, AND QUALIFICATION
Section 3.1(a) — Organization and Good Standing
NovaMart Global Inc. (the "Company") is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, as follows:
The Company's corporate records, including the Second Amended and Restated Certificate of Incorporation, the Amended and Restated Bylaws (adopted November 22, 2019, and most recently amended October 14, 2023), minutes of all meetings and written consents of the Board of Directors and stockholders, and the Company's stock ledger have been made available to Buyer in the Data Room (Folders 1.01 through 1.05).
Section 3.1(b) — Foreign Qualifications
The Company is duly qualified, registered, or otherwise authorized to transact business as a foreign corporation in each of the following jurisdictions, in each case in good standing as of the date hereof. The table below sets forth the jurisdictions of foreign qualification and the primary basis for such qualification:
Copies of all certificates of good standing listed above have been made available in the Data Room (Folder 1.02).
Pending Qualifications / Jurisdictions Under Review:
The Company is currently evaluating whether foreign qualification is required in the following jurisdictions, based on recent business activities, including remote employee presence and expanded logistics operations. As of the date hereof, the Company has not concluded that qualification is required in any of these jurisdictions, but the analysis remains ongoing:
(i) North Carolina — The Company has approximately 12 remote employees residing in North Carolina and has entered into preliminary discussions regarding a potential fulfillment center lease in the Charlotte, North Carolina metropolitan area. No lease has been executed, and no fulfillment center is currently operational in North Carolina.
(ii) Arizona — The Company has approximately 8 remote employees residing in Arizona and has contracted with a third-party logistics provider operating a shared-use facility in Phoenix, Arizona. The Company does not operate any owned or leased facility in Arizona.
(iii) Virginia — The Company has approximately 15 remote employees residing in Virginia. The Company is evaluating whether the presence of these employees, combined with other contacts, constitutes "doing business" in Virginia for purposes of foreign qualification requirements.
The Company has engaged Calloway, Brandt & Loewe LLP to complete the jurisdictional analysis described above, and expects to conclude such analysis within 60 days following the date hereof.
Section 3.1(c) — Subsidiaries
The Company has the following subsidiaries, each of which is wholly owned (directly or indirectly) by the Company:
Each subsidiary is validly existing and in good standing in its respective jurisdiction of formation as of the date hereof. Copies of organizational documents, certificates of good standing, and operating or governance agreements for each subsidiary have been made available in the Data Room (Folder 1.06).
NovaShip Logistics LLC is qualified to do business as a foreign limited liability company in each state in which the Company operates a fulfillment center (California, New Jersey, Georgia, Ohio, Illinois, Pennsylvania, Tennessee, Florida, and Washington), as well as in Texas and New York. NovaMart Payments Inc. holds money transmitter licenses in 38 states and the District of Columbia, and applications are pending in the remaining states where such licensure is required (currently Montana and South Carolina). NovaHome Marketplace LLC does not have separate foreign qualifications, as it conducts all business through the Company's existing qualified infrastructure.
All intercompany agreements between the Company and its subsidiaries have been made available in the Data Room (Folder 1.07), including management services agreements, intercompany license agreements, and cost-sharing arrangements.
SCHEDULE 3.2 — CAPITALIZATION
Section 3.2(a) — Authorized and Outstanding Capital Stock
The authorized, issued, and outstanding capital stock of NovaMart Global Inc. is as follows:
Authorized Capital Stock:
No shares of Preferred Stock have been issued or are outstanding as of the date hereof. The Company previously issued and subsequently converted shares of Series A Preferred Stock (issued in connection with the Company's Series A financing in 2018, led by Ridgeline Equity Partners, LP) and Series B Preferred Stock (issued in connection with the Company's Series B financing in 2019, led by Brindoval Ventures Fund III, LP) into shares of Common Stock in connection with the Company's recapitalization effected on November 22, 2019. All such Preferred Stock was converted into Common Stock on a 1-for-1 basis and no Preferred Stock remains outstanding.
Issued and Outstanding Common Stock:
As of the date hereof, there are 42,500,000 shares of Common Stock issued and outstanding. The shares are held of record as follows:
The shares held by "Other Management and Employee Stockholders" include shares of Common Stock issued upon the exercise of vested stock options under the NovaMart Stock Option Plan (as described in Section 3.2(b) below), as well as shares of restricted stock that have fully vested. A detailed list of all individual stockholders within this category, together with the number of shares held by each, is set forth in Appendix A to this Schedule 3.2 (made available in the Data Room, Folder 2.03).
The Company's stock ledger, maintained by Continental Stocktransfer & Trust, Inc. (the Company's transfer agent), has been made available to Buyer in the Data Room (Folder 2.01) and reflects the foregoing ownership as of the date hereof.
Section 3.2(b) — Options, Warrants, and Other Rights
NovaMart 2017 Equity Incentive Plan (the "Stock Option Plan"):
The Company maintains the NovaMart 2017 Equity Incentive Plan, as amended on March 15, 2020 and further amended on January 8, 2023 (the "Stock Option Plan"). The Stock Option Plan was adopted by the Board of Directors and approved by the stockholders of the Company. A complete copy of the Stock Option Plan, as amended, including the forms of stock option agreement, has been made available in the Data Room (Folder 2.04).
The following table summarizes the Stock Option Plan and outstanding awards as of the date hereof:
Outstanding Stock Options:
The following table sets forth the outstanding stock options under the Stock Option Plan as of the date hereof:
All stock options vest ratably over a four-year period from the grant date, with a one-year cliff for the initial 25% of the shares subject to each option, and monthly vesting thereafter for the remaining 75% of the shares, in each case subject to the option holder's continued employment or service with the Company.
Treatment of Options in the Transaction: Pursuant to Section 2.6 of the Agreement, at the Closing, each outstanding stock option (whether vested or unvested) shall be cancelled and converted into the right to receive a cash payment equal to the product of (a) the number of shares of Common Stock subject to such option and (b) the excess, if any, of the Per Share Purchase Price over the applicable exercise price of such option, less applicable withholding taxes. All unvested options shall accelerate and become fully vested immediately prior to the Closing pursuant to the change of control acceleration provisions of the Stock Option Plan (see Section 7.2 of the Stock Option Plan).
Other Equity Rights:
Other than the stock options described above, there are no outstanding warrants, convertible notes, convertible securities, phantom stock rights, stock appreciation rights, restricted stock units, or other rights to acquire or receive shares of Common Stock or any other equity securities of the Company. The Company has not issued any equity securities or rights that are not described in this Schedule 3.2.
Section 3.2(c) — Stockholder Agreements
The following stockholder and governance agreements are currently in effect with respect to the Company's capital stock:
1. Amended and Restated Stockholders' Agreement
Date: November 22, 2019 (amended April 3, 2021)
Parties: NovaMart Global Inc., Ridgeline Equity Partners, LP, Brindoval Ventures Fund III, LP, Julian Reeves, and Priya Narasimhan
Summary of Key Provisions:
•  Board Representation: Ridgeline Equity Partners, LP has the right to designate two (2) directors to the Company's Board; Brindoval Ventures Fund III, LP has the right to designate one (1) director; Julian Reeves serves as a director by right as CEO; and the four designated directors collectively select one (1) independent director, for a total Board of five (5) directors.
•  Drag-Along Rights: If stockholders holding at least 60% of the outstanding Common Stock (on a fully diluted basis) approve a sale of the Company, all other stockholders are required to participate in such sale on the same terms and conditions, subject to certain protections regarding minimum consideration.
•  Tag-Along Rights: If any stockholder proposes to transfer shares representing 5% or more of the outstanding Common Stock (other than in a drag-along transaction), the remaining stockholders have the right to participate in such transfer on a pro rata basis.
•  Preemptive Rights: Each stockholder has a pro rata right to participate in any new issuance of equity securities by the Company, subject to customary exclusions for employee equity plans, strategic transactions, and issuances in connection with debt financings.
•  Transfer Restrictions: No stockholder may transfer shares except in compliance with the Agreement, subject to customary exceptions for transfers to affiliates, family members, and estate planning vehicles.
•  Protective Provisions: Certain actions by the Company require the affirmative consent of Ridgeline Equity Partners, LP and Brindoval Ventures Fund III, LP, including the issuance of new securities, the incurrence of indebtedness above specified thresholds, changes to the Company's certificate of incorporation or bylaws, entry into material acquisitions or dispositions, and the declaration of dividends.
•  Drag-Along Status: The drag-along provisions are being exercised in connection with the transactions contemplated by the Agreement. Ridgeline Equity Partners, LP and Brindoval Ventures Fund III, LP, holding in aggregate 64.0% of the outstanding Common Stock, have approved the transaction and are exercising the drag-along right with respect to all other stockholders.
A complete copy of the Amended and Restated Stockholders' Agreement, as amended, has been made available in the Data Room (Folder 2.05).
2. Registration Rights Agreement
Date: November 22, 2019
Parties: NovaMart Global Inc., Ridgeline Equity Partners, LP, Brindoval Ventures Fund III, LP, Julian Reeves, and Priya Narasimhan
Summary of Key Provisions:
•  Demand Registration Rights: Ridgeline Equity Partners, LP and Brindoval Ventures Fund III, LP each have the right to demand that the Company file a registration statement under the Securities Act for the resale of their shares, subject to customary limitations (up to three (3) demand registrations for Ridgeline and two (2) for Brindoval, with a minimum aggregate offering price of $25,000,000 per demand).
•  Piggyback Registration Rights: All parties to the agreement have the right to include their shares in any registered offering by the Company, subject to customary cutback provisions.
•  S-3 Registration Rights: Ridgeline and Brindoval have the right to request registration on Form S-3 (or any successor form) once the Company is eligible for such form.
•  Expenses: The Company bears all registration expenses (excluding underwriting discounts, commissions, and transfer taxes).
•  Lock-Up: Each party agrees to customary lock-up restrictions in connection with any underwritten offering.
•  Termination: The Registration Rights Agreement terminates upon the earlier of (a) the fifth anniversary of the agreement and (b) the date on which a party holds less than 1% of the outstanding Common Stock. This agreement will be terminated at Closing pursuant to the Agreement.
A complete copy of the Registration Rights Agreement has been made available in the Data Room (Folder 2.06).
3. Right of First Refusal and Co-Sale Agreement
Date: November 22, 2019
Parties: NovaMart Global Inc., Ridgeline Equity Partners, LP, Brindoval Ventures Fund III, LP, Julian Reeves, and Priya Narasimhan
Summary of Key Provisions:
•  Right of First Refusal: The Company and, secondarily, the investors (Ridgeline and Brindoval) have a right of first refusal with respect to any proposed transfer of shares by the founders (Julian Reeves and Priya Narasimhan).
•  Co-Sale Right: If the Company and the investors decline to exercise their right of first refusal, the investors have the right to participate in the proposed transfer on a pro rata basis.
•  Exempt Transfers: Customary exemptions for transfers to affiliates, family trusts, and for estate planning purposes.
•  Termination: This agreement will be terminated at Closing pursuant to the Agreement.
A complete copy of the Right of First Refusal and Co-Sale Agreement has been made available in the Data Room (Folder 2.07).
4. Voting Agreement
Date: November 22, 2019
Parties: Ridgeline Equity Partners, LP, Brindoval Ventures Fund III, LP, Julian Reeves, and Priya Narasimhan
Summary of Key Provisions:
•  Board Composition: Each party agrees to vote all shares held by such party in favor of the director designees of Ridgeline (two seats), Brindoval (one seat), Julian Reeves as CEO director (one seat), and the jointly selected independent director (one seat).
•  Removal: A designating party may require the removal and replacement of its designee(s) at any time.
•  Termination: The Voting Agreement terminates upon the earliest of (a) the mutual written consent of all parties, (b) the closing of a Qualified IPO (as defined therein), or (c) the consummation of a Sale of the Company (as defined therein). This agreement will be terminated at Closing pursuant to the Agreement.
A complete copy of the Voting Agreement has been made available in the Data Room (Folder 2.08).
SCHEDULE 3.3 — AUTHORITY; NO CONFLICT
Section 3.3(a) — Authorization
The Board of Directors of NovaMart Global Inc. has unanimously adopted resolutions (i) determining that the Agreement and the transactions contemplated thereby are advisable, fair to, and in the best interests of the Company and its stockholders, (ii) approving the execution, delivery, and performance of the Agreement and the consummation of the transactions contemplated thereby, and (iii) recommending that the stockholders of the Company approve and adopt the Agreement and the transactions contemplated thereby. Copies of the resolutions of the Board of Directors, adopted at a duly noticed special meeting held on May 14, 2025, have been made available in the Data Room (Folder 3.01).
The stockholders of NovaMart Global Inc. holding in excess of 64.0% of the outstanding Common Stock (consisting of Ridgeline Equity Partners, LP and Brindoval Ventures Fund III, LP) have approved the transaction. Pursuant to Section 228 of the Delaware General Corporation Law ("DGCL") and the drag-along provisions of the Amended and Restated Stockholders' Agreement, a Written Consent of Stockholders in Lieu of a Meeting is in the process of execution as of the date hereof. Ridgeline Equity Partners, LP and Brindoval Ventures Fund III, LP have executed and delivered their written consents. Written consents are being circulated to, and are expected to be executed by, Julian Reeves, Priya Narasimhan, and the Other Management and Employee Stockholders within five (5) business days following the date hereof, in each case in accordance with the drag-along provisions of the Amended and Restated Stockholders' Agreement. The Company expects that all requisite stockholder approvals will be obtained no later than May 28, 2025.
No other corporate action on the part of the Company is necessary to authorize the execution, delivery, and performance of the Agreement and the consummation of the transactions contemplated thereby.
Section 3.3(b) — No Conflict — Exceptions
The following agreements, instruments, or obligations of the Company could be breached or conflicted with, or could require consent or notice in connection with, the execution and delivery of the Agreement and the consummation of the transactions contemplated thereby:
1.  Change of Control Provisions in Material Contracts. Approximately thirty-four (34) material contracts of the Company contain change of control provisions that may be triggered by the consummation of the transactions contemplated by the Agreement. A comprehensive list of such contracts, together with the nature of the applicable change of control provision and the status of consent or notice, is set forth in Schedule 3.17 (Change of Control Consents and Notices).
2.  Senior Credit Facility — Ashford Savings Bank, N.A. The Company is a borrower under that certain Senior Revolving Credit Agreement, dated as of August 22, 2022, as amended by the First Amendment thereto dated February 10, 2023 and the Second Amendment thereto dated September 15, 2024, among NovaMart Global Inc., as borrower, Ashford Savings Bank, N.A., as administrative agent and lender (the "Senior Credit Facility"). The Senior Credit Facility provides for a $150,000,000 revolving credit facility. As of the date hereof, $87,500,000 in principal amount is outstanding under the Senior Credit Facility. Section 8.01(h) of the Senior Credit Facility provides that a "Change of Control" (as defined therein) constitutes an Event of Default, which would permit the administrative agent and lenders to accelerate all outstanding obligations and terminate the commitments thereunder. The consummation of the transactions contemplated by the Agreement would constitute a Change of Control under the Senior Credit Facility. Pursuant to the terms of the Agreement, the Senior Credit Facility will be repaid in full and terminated at Closing, and all liens securing the obligations thereunder will be released. A payoff letter and lien release documentation will be obtained from Ashford Savings Bank, N.A. prior to or at Closing.
3.  Amended and Restated Stockholders' Agreement. The Amended and Restated Stockholders' Agreement described in Schedule 3.2(c) contains certain protective provisions that require the consent of Ridgeline Equity Partners, LP and Brindoval Ventures Fund III, LP for a sale of the Company. Such consent has been obtained. The drag-along provisions of the Amended and Restated Stockholders' Agreement are being exercised as described in Section 3.3(a) above. The Amended and Restated Stockholders' Agreement will be terminated at Closing.
4.  NovaMart 2017 Equity Incentive Plan. The Stock Option Plan contains change of control acceleration provisions. Pursuant to Section 7.2 of the Stock Option Plan, in the event of a "Change of Control" (as defined therein, which includes a sale of all or substantially all of the Company's capital stock), all outstanding and unvested stock options shall accelerate and become fully vested immediately prior to the effective time of such Change of Control. As described in Schedule 3.2(b) above, all outstanding options will be cashed out at Closing.
Section 3.3(c) — Required Governmental Filings and Consents
The following governmental filings, approvals, or consents are required in connection with the execution and delivery of the Agreement and the consummation of the transactions contemplated thereby:
1.  Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended ("HSR Act"). A Notification and Report Form was filed by both the Company and Buyer with the Federal Trade Commission ("FTC") and the Antitrust Division of the United States Department of Justice ("DOJ") on April 11, 2025 (HSR Tracking Number: 1038-00009). On May 8, 2025, the FTC issued a Request for Additional Information and Documentary Material ("Second Request") to both the Company and Buyer. The Company and Buyer are in the process of responding to the Second Request. The applicable waiting period under the HSR Act has not yet expired or been terminated as of the date hereof. Substantial compliance with the Second Request is expected by the Company within approximately 45 days following the date hereof.
2.  State Filings. Following the Closing, the Company or Buyer, as applicable, may be required to file amendments to the Company's certificate of incorporation and/or foreign qualification certificates with the Secretaries of State of Delaware, Texas, and the other states in which the Company is qualified to do business, to reflect any post-closing name change or other amendments to the Company's organizational documents.
3.  Money Transmitter License Notifications. NovaMart Payments Inc. holds money transmitter licenses in 38 states and the District of Columbia. Change of control notifications or approvals may be required under certain of these licenses in connection with the transactions contemplated by the Agreement. The Company is in the process of identifying which states require pre-closing approval versus post-closing notice. A summary of the applicable requirements by jurisdiction is being compiled and will be supplemented to this Schedule prior to Closing.
4.  No Other Material Governmental Consents. Other than the foregoing, the Company is not aware of any material governmental filing, approval, consent, or authorization required in connection with the execution and delivery of the Agreement or the consummation of the transactions contemplated thereby, except for such filings, approvals, consents, or authorizations, the failure to obtain or make which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
SCHEDULE 3.4 — FINANCIAL STATEMENTS
The following financial statements of the Company have been delivered to Buyer (collectively, the "Financial Statements"):
Audited Financial Statements:
(a) Audited consolidated balance sheet of the Company and its subsidiaries as of December 31, 2022, and the related audited consolidated statements of income, comprehensive income, stockholders' equity, and cash flows for the fiscal year ended December 31, 2022, together with the notes thereto and the report of the Company's independent auditors thereon.
(b) Audited consolidated balance sheet of the Company and its subsidiaries as of December 31, 2023, and the related audited consolidated statements of income, comprehensive income, stockholders' equity, and cash flows for the fiscal year ended December 31, 2023, together with the notes thereto and the report of the Company's independent auditors thereon.
(c) Audited consolidated balance sheet of the Company and its subsidiaries as of December 31, 2024 (the "Most Recent Balance Sheet Date"), and the related audited consolidated statements of income, comprehensive income, stockholders' equity, and cash flows for the fiscal year ended December 31, 2024 (collectively, the "Most Recent Financial Statements"), together with the notes thereto and the report of the Company's independent auditors thereon.
Unaudited Interim Financial Statements:
(d) Unaudited consolidated balance sheet of the Company and its subsidiaries as of March 31, 2025, and the related unaudited consolidated statements of income and cash flows for the three-month period ended March 31, 2025 (the "Interim Financial Statements"). The Interim Financial Statements have been prepared in a manner consistent with the Company's past practices and are subject to normal year-end audit adjustments, none of which are expected to be material.
Complete copies of all Financial Statements have been made available in the Data Room (Folders 4.01 through 4.04).
Summary Financial Data — FY2024 (Audited):
Independent Auditor:
The Company's independent auditor is Hartwell & Keene LLP, 2500 Bee Cave Road, Suite 300, Austin, TX 78746 (a member firm of Hartwell & Keene International). Hartwell & Keene LLP has audited the Company's financial statements for the fiscal years ended December 31, 2022, December 31, 2023, and December 31, 2024. Each audit report was issued without qualification, modification, or emphasis-of-matter paragraph.
Qualifications, Restatements, and Material Adjustments:
The Company has not been required to restate any previously issued financial statements. The Company's independent auditors have not issued any qualified or adverse audit opinions, and have not disclaimed any opinion, with respect to any of the Financial Statements. There are no material adjustments proposed by the Company's independent auditors that have not been reflected in the Financial Statements.
In connection with the audit for FY2023, Hartwell & Keene LLP identified a prior-period immaterial misclassification of certain logistics services revenue between the "Marketplace Take-Rate Revenue" and "Logistics Services Revenue" line items in the FY2022 financial statements. The misclassification, which totaled $3,200,000, was corrected as a reclassification adjustment in the FY2023 audited financial statements and did not affect total revenue, net income, or any balance sheet amounts. This reclassification is described in Note 2(b) to the FY2023 audited financial statements.
Off-Balance-Sheet Arrangements:
Except as disclosed in Note 14 to the Most Recent Financial Statements, the Company does not have any off-balance-sheet arrangements (as such term is contemplated by Item 303(a)(4) of Regulation S-K) that have or are reasonably likely to have a current or future effect on the Company's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to the Company. Note 14 to the Most Recent Financial Statements describes the Company's operating lease commitments (cross-reference to Schedule 3.7(b) hereof) and certain purchase order commitments entered into in the ordinary course of business.
Contingent Liabilities:
Contingent liabilities known to the Company are described in Note 16 to the Most Recent Financial Statements and are cross-referenced to Schedule 3.6 (Undisclosed Liabilities) and Schedule 3.12 (Litigation and Proceedings) of these Disclosure Schedules.
SCHEDULE 3.5 — ABSENCE OF CHANGES
Except as set forth below, since December 31, 2024 (the Most Recent Balance Sheet Date), the Company has conducted its business in the ordinary course of business consistent with past practices, and there has not occurred any event, change, effect, development, condition, or occurrence that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
The following items are disclosed for informational purposes with respect to events, changes, and developments since December 31, 2024:
1.  Capital Expenditures. The Company authorized and commenced a $14,200,000 capital improvement project at the Savannah, Georgia fulfillment center (Facility GA-01), consisting of automation upgrades to the facility's sortation and packaging lines. The project was approved by the Board of Directors on January 28, 2025, and is consistent with the Company's FY2025 capital expenditure budget. Approximately $6,800,000 had been expended on the project as of March 31, 2025, with the remainder expected to be incurred during Q2 and Q3 2025. This capital expenditure is within the ordinary course of the Company's business and consistent with its historical practice of investing in fulfillment center automation.
2.  Material Contract Renewal. On February 15, 2025, the Company renewed the Master Services Agreement with Pinnacle Cloud Solutions Inc. for an additional three-year term commencing April 1, 2025, at a total annual cost of approximately $42,000,000 (a 12% increase from the prior annual cost of $37,500,000), reflecting increased compute, storage, and bandwidth requirements associated with the Company's growing marketplace operations. This renewal was approved by the Board of Directors and is described further in Schedule 3.9 (Material Contracts).
3.  Employee Headcount. Between January 1, 2025 and the date hereof, the Company's total employee headcount increased from approximately 2,325 to approximately 2,400 employees, primarily as a result of seasonal hiring at fulfillment centers and targeted hiring of engineering personnel. No material reductions in force have occurred.
4.  No Changes in Accounting Methods. The Company has not made any material changes to its accounting methods, policies, or practices since December 31, 2024.
5.  Ordinary Course Contract Activity. In the ordinary course of business, the Company has entered into, amended, renewed, or terminated various contracts since December 31, 2024, none of which is material other than the Pinnacle Cloud Solutions Inc. renewal described in item 2 above.
6.  No Dividends or Distributions. The Company has not declared or paid any dividends or other distributions on its capital stock since December 31, 2024.
7.  No Indebtedness. The Company has not incurred any indebtedness other than borrowings under the Senior Credit Facility in the ordinary course of business. As of the date hereof, $87,500,000 in principal amount is outstanding under the Senior Credit Facility, compared to $82,000,000 as of December 31, 2024.
SCHEDULE 3.6 — UNDISCLOSED LIABILITIES
The following liabilities of the Company are known to the Company and are not fully reflected or reserved for on the Most Recent Balance Sheet (the balance sheet as of December 31, 2024) delivered to Buyer:
1.  Accrued Transaction Expenses. The Company has incurred and expects to continue to incur fees and expenses in connection with the transactions contemplated by the Agreement, including legal fees, accounting fees, financial advisory fees, and other transaction-related expenses. As of the date hereof, the Company estimates that the aggregate amount of such transaction expenses will be approximately $22,500,000, comprised of the following:
(a) Calloway, Brandt & Loewe LLP (legal counsel to the Company and Selling Stockholders): estimated $5,200,000
(b) Pemberton Strauss Advisory LLC (financial advisor to the Company): estimated $14,800,000 (inclusive of success fee payable at Closing)
(c) Hartwell & Keene LLP (tax and accounting advisory services): estimated $1,100,000
(d) Other advisors and service providers (including Data Room hosting, regulatory filing fees, and miscellaneous): estimated $1,400,000
Pursuant to the Agreement, all unpaid Company transaction expenses will be deducted from the purchase price at Closing.
2.  Litigation Reserves. The Company has established reserves for certain pending and threatened litigation matters as described in Schedule 3.12 (Litigation and Proceedings). As of the date hereof, aggregate litigation reserves total approximately $4,750,000. Certain of these reserves were established after December 31, 2024 in connection with developments occurring in Q1 2025.
3.  Tax Liabilities. The Company's estimated federal income tax liability for FY2024 is $23,800,000, of which $17,850,000 was paid in quarterly estimated tax payments during FY2024 and the balance of approximately $5,950,000 is expected to be paid with the filing of the Company's FY2024 federal income tax return (due, with extension, on or before October 15, 2025). Additionally, state income and franchise tax liabilities for FY2024, estimated at approximately $8,600,000 in the aggregate across all nexus jurisdictions, remain partially unpaid as of the date hereof. Further details are set forth in Schedule 3.14 (Tax Matters).
4.  Capital Expenditure Commitments. The Company has contractual commitments for the Savannah fulfillment center automation project described in Schedule 3.5 above, with approximately $7,400,000 remaining to be incurred after the date hereof.
5.  Lease Obligations. The Company is obligated under operating leases for its headquarters and 14 fulfillment centers, as described in Schedule 3.7(b). Future minimum lease payments under such leases aggregate approximately $312,000,000 over the remaining lease terms. These obligations are reflected in the notes to the Most Recent Financial Statements but are not recorded as liabilities on the Most Recent Balance Sheet except to the extent of current-period accruals under ASC 842.
6.  Retention Pool Obligations. As described in Schedule 3.15(c), the Company has agreed (pursuant to the terms of the Agreement) to establish a retention pool of $18,000,000 for key employees. This obligation arises solely in connection with the transactions contemplated by the Agreement and did not exist as of the Most Recent Balance Sheet Date.
No other material liabilities are known to the Company that are not reflected in the Most Recent Balance Sheet, disclosed elsewhere in these Disclosure Schedules, or arising in the ordinary course of business since the Most Recent Balance Sheet Date.
SCHEDULE 3.7 — REAL PROPERTY
Section 3.7(a) — Owned Real Property
The Company does not own any real property. Neither the Company nor any of its subsidiaries holds fee simple title to any real property.
Title insurance information is therefore not applicable. The Company's title insurance advisor, Ridgecrest Title Group Inc. (contact: Janet Morales, Underwriter, 3400 Peachtree Road NE, Suite 1200, Atlanta, GA 30326), has been engaged solely in connection with the review of leasehold title matters for certain of the Company's fulfillment center leases and is available to provide certificates of coverage and endorsement information upon request.
Section 3.7(b) — Leased Real Property
The Company leases the following real properties, each of which is leased pursuant to a written lease agreement. Copies of all executed lease agreements, amendments, and related landlord estoppel certificates (to the extent obtained as of the date hereof) have been made available in the Data Room (Folder 7.01).
Headquarters:
Fulfillment Center Leases:
The Company leases fourteen (14) fulfillment centers across nine (9) states. The following table summarizes each fulfillment center lease:
California — 3 Facilities:
New Jersey — 2 Facilities:
Georgia — 2 Facilities:
Ohio — 1 Facility:
Illinois — 1 Facility:
Pennsylvania — 1 Facility:
Tennessee — 1 Facility:
Florida — 2 Facilities:
Washington — 1 Facility:
Summary of Total Leased Premises:
The Company's aggregate leased premises (headquarters plus 14 fulfillment centers) total approximately 5,073,000 square feet, with aggregate annual base rent obligations of approximately $46,918,464 as of FY2025. Future minimum lease payment obligations across all leases aggregate approximately $312,000,000 over the remaining lease terms.
The Company is in compliance with all material terms and conditions of its leases as of the date hereof. The Company has not received any written notice of default under any lease. No landlord has exercised or threatened to exercise any right of termination or recapture under any lease.
Cross-reference to Schedule 3.17 (Change of Control Consents and Notices) for a comprehensive summary of the consent and notice requirements under all leases in connection with the transactions contemplated by the Agreement.
SCHEDULE 3.8 — INTELLECTUAL PROPERTY
Section 3.8(a) — Owned intellectual Property
Patents:
The Company and its subsidiaries own the following United States patents and patent applications:
The Company does not currently hold any foreign patents or patent applications outside the United States. The Company has not filed any Patent Cooperation Treaty ("PCT") applications.
Trademarks:
The Company and its subsidiaries own the following registered trademarks and pending trademark applications:
All required maintenance filings (including Sections 8 and 15 declarations) for the Company's registered U.S. trademarks are current as of the date hereof. The Company's trademark portfolio is managed by Calloway, Brandt & Loewe LLP in coordination with foreign trademark counsel in applicable jurisdictions.
Copyrights:
The Company has the following registered copyrights with the United States Copyright Office:
In addition to the foregoing registrations, the Company claims copyright in all original content published on its websites, mobile applications, marketing materials, and internal documentation, whether or not such works have been formally registered with the U.S. Copyright Office.
Domain Names:
The Company owns the following domain names, all registered through Consolidated Domain Registrar Inc.:
novamart.com; novamart.net; novamart.org; novamart.co; novamart.io; novamartglobal.com; novaship.com; novaship.net; novahome.com; novahome.net; novamarketplace.com; novamarthelp.com; novashiplogistics.com; novamartjobs.com; novamartpay.com
All domain name registrations are current, and the Company has enabled auto-renewal for all domains. WHOIS privacy protection is enabled where available.
Trade Secrets:
The Company maintains the following categories of proprietary and confidential information that constitute trade secrets under applicable law:
(i) Proprietary seller-product matching algorithms and machine learning models developed by the Company's engineering team, used to optimize product search results and seller recommendations on the NovaMart marketplace platform.
(ii) Recommendation engine technology, including collaborative filtering models, user behavior prediction algorithms, and personalization engines that drive product discovery and cross-selling on the platform.
(iii) Logistics optimization technology, including proprietary routing algorithms used by NovaShip Logistics LLC to optimize fulfillment center selection, carrier routing, package consolidation, and last-mile delivery for marketplace orders.
(iv) Seller onboarding and quality scoring models, including proprietary algorithms that evaluate and rank seller performance, product quality, and customer satisfaction metrics.
(v) Pricing and advertising optimization algorithms used in the Company's marketplace advertising platform to deliver targeted advertising to marketplace buyers.
(vi) Data analytics and business intelligence models, including proprietary dashboards and analytical tools used for marketplace performance monitoring, demand forecasting, and strategic planning.
The Company maintains reasonable measures to protect the confidentiality of its trade secrets, including requiring all employees, contractors, and consultants to execute confidentiality and invention assignment agreements, maintaining access controls and need-to-know restrictions on proprietary systems and data, and utilizing encryption and other cybersecurity measures as described in Schedule 3.16.
Section 3.8(b) — Inbound IP Licenses
Technology License Agreement — Arcwave Software LLC:
Open-Source Software:
The Company utilizes range open-source software components in the development and operation of the NovaMart marketplace platform and its internal tools. A comprehensive inventory of material open-source components, including the applicable license for each, has been prepared by the Company's engineering team and has been made available in the Data Room (Folder 8.05). The following is a summary of the principal open-source licenses under which material components are used:
The Company maintains an open-source software policy (the "OSS Policy"), last updated on September 1, 2024, which governs the evaluation, approval, and use of open-source components. All use of GPL-licensed and LGPL-licensed software is reviewed and approved by the Company's General Counsel and VP of Engineering. The Company believes it is in compliance with all material terms of the open-source licenses applicable to its use of open-source software. No claims of non-compliance with open-source license obligations have been received by the Company.
Other Third-Party Software Licenses:
The Company maintains licenses for the following categories of commercial off-the-shelf ("COTS") and software-as-a-service ("SaaS") products:
(i) Quillon Data Systems (enterprise license; annual spend approximately $1,450,000)
(ii) workday HCM (human capital management platform; annual spend approximately $680,000)
(iii) Westvale Health IT (business intelligence and analytics; annual spend approximately $420,000)
(iv) Larkspur Health IT Suite (Jira, confluence; annual spend approximately $310,000)
(v) Pinnacle Solutions (infrastructure monitoring and observability; annual spend approximately $890,000)
(vi) Twilio (communications API; annual spend approximately $1,200,000)
(vii) Kestrel Group (backup payment processing integration; annual spend approximately $250,000)
(viii) Various other SaaS subscriptions with individual annual spend below $200,000
Complete copies of all material third-party software license agreements have been made available in the Data Room (Folder 8.06).
Section 3.8(c) — Outbound IP Licenses
The Company has not granted any exclusive licenses of its intellectual property to any third party. The Company has granted non-exclusive, limited-purpose licenses of certain intellectual property in connection with the following arrangements:
(i) Seller API License. The Company grants each NovaMart marketplace seller a non-exclusive, non-transferable, revocable license to access and use the NovaMart Seller API for the purpose of integrating the seller's inventory management, order processing, and fulfillment systems with the NovaMart marketplace platform. This license is granted pursuant to the NovaMart Seller API Terms of Use, which are accepted by each seller as part of the NovaMart Seller Agreement.
(ii) Advertising Partner Data License. The Company grants Stratton Digital Media Inc. a non-exclusive, limited license to access and use certain anonymized and aggregated marketplace data for the purpose of delivering targeted advertising services on the NovaMart platform, pursuant to the Advertising Revenue Share Agreement described in Schedule 3.9.
(iii) Co-Marketing License. The Company has granted limited, non-exclusive, revocable licenses to use the NOVAMART trademark and design mark to certain co-marketing partners for promotional purposes, subject to the Company's brand guidelines and prior approval of all uses.
Section 3.8(d) — IP Disputes and Claims
The following IP-related disputes and claims are pending or, to the Knowledge of the Company, threatened as of the date hereof:
1.  Vortex Commerce Inc. v. NovaMart Global Inc. On March 3, 2024, Vortex Commerce Inc. ("Vortex") filed a complaint in the United States District Court for the Eastern District of Texas (Case No. 6:24-cv-00312-RWS) alleging that the Company's marketplace platform infringes U.S. Patent No. 9,456,123 (titled "System and Method for Multi-Vendor Shopping Cart Optimization in E-Commerce Environments"). The Company filed an answer and counterclaim for declaratory judgment of non-infringement and invalidity on May 15, 2024. Discovery is ongoing. The Company has engaged patent litigation counsel (Whitaker & Rourke LLP) and intends to vigorously defend the matter. The Company has not established a reserve for this matter. Cross-reference to Schedule 3.12 (Litigation and Proceedings) for additional details.
2.  Trademark Opposition — NovaStar Brands LLC. On August 22, 2024, NovaStar Brands LLC filed a Notice of Opposition with the Trademark Trial and Appeal Board ("TTAB") opposing the Company's pending trademark application for NOVA MARKETPLACE (USPTO App. No. 97/654,321), alleging likelihood of confusion with NovaStar's registered mark NOVASTAR (Reg. No. 6,112,456) in International Class 35. The Company filed an Answer to the Notice of Opposition on October 7, 2024. The parties are currently in the discovery phase of the TTAB proceeding. The Company believes the opposition lacks merit, as the marks are sufficiently dissimilar and the goods and services at issue are distinguishable.
No other IP infringement claims, oppositions, cancellation proceedings, or challenges are pending against the Company, and the Company has not received any written demand letters or cease-and-desist notices alleging IP infringement, other than the matters described above.
SCHEDULE 3.9 — MATERIAL CONTRACTS
The following is a complete list of all "Material Contracts" (as defined in Section 3.9 of the Agreement), organized by category. Copies of all Material Contracts have been made available in the Data Room (Folders 9.01 through 9.08). Unless otherwise noted, each Material Contract is in full force and effect and the Company is not in material breach or default thereunder.
Category A — Customer/Revenue Contracts
1. Advertising Revenue Share Agreement — Stratton Digital Media Inc.
2. Top Seller/Merchant Agreements Exceeding Materiality Threshold:
The Company has entered into enhanced seller agreements (containing customized commission structures, dedicated account management, and/or guaranteed placement terms) with the following marketplace sellers, each of which generated more than $10,000,000 in GMV on the NovaMart platform in FY2024:
(a) GlobalTech Electronics Ltd. (seller ID: NM-S-00142) — FY2024 GMV: $184,000,000; Enhanced Seller Agreement dated Sept. 1, 2021 (amended Jan. 15, 2024); customized take rate of 9.5% (vs. standard 12%); no change of control provision.
(b) HomeStyle Brands Inc. (seller ID: NM-S-00287) — FY2024 GMV: $127,000,000; Enhanced Seller Agreement dated Mar. 15, 2022; customized take rate of 10.0%; no change of control provision.
(c) Summit Outdoor Gear Co. (seller ID: NM-S-00519) — FY2024 GMV: $89,000,000; Enhanced Seller Agreement dated Nov. 1, 2022; customized take rate of 10.5%; no change of control provision.
(d) Luxe Beauty Collective LLC (seller ID: NM-S-00654) — FY2024 GMV: $62,000,000; Enhanced Seller Agreement dated June 1, 2023; customized take rate of 11.0%; no change of control provision.
(e) Prestige Apparel Group Inc. (seller ID: NM-S-00891) — FY2024 GMV: $48,000,000; Enhanced Seller Agreement dated Feb. 1, 2024; customized take rate of 10.0%; termination for convenience upon 90 days' notice; no change of control provision.
Category B — Vendor/Supplier Contracts
3. Master Services Agreement — Pinnacle Cloud Solutions Inc.
4. Logistics Partnership Agreement — Redline Freight Corp.
5. Payment Processing Agreement — PayStream Financial Technologies Inc.
Category C — Technology/License Agreements
6. Technology License Agreement — Arcwave Software LLC
Cross-reference to Schedule 3.8(b) for a detailed description of this agreement. Consent request submitted April 18, 2025; status: pending.
Category D — Real Property Leases
7. Real Property Leases (15 leases — headquarters and 14 fulfillment centers)
Cross-reference to Schedule 3.7(b) for a detailed description of all real property leases. Various consent and notice requirements apply as described therein.
Category E — Financing Agreements
8. Senior Revolving Credit Facility — Ashford Savings Bank, N.A.
Category F — Employment and Compensation Agreements
Cross-reference to Schedule 3.15(b) for a description of employment agreements with Julian Reeves, Priya Narasimhan, Douglas Whitfield, Amanda Trevino, and other senior management. Cross-reference to Schedule 3.2(b) for the NovaMart 2017 Equity Incentive Plan.
Category G — Stockholder and Governance Agreements
Cross-reference to Schedule 3.2(c) for the Amended and Restated Stockholders' Agreement, Registration Rights Agreement, Right of First Refusal and Co-Sale Agreement, and Voting Agreement.
Category H — Other Material Contracts
9. Data Center Colocation Agreement — Tidewater Partners LLC Realty Corp.
10. Insurance Brokerage Agreement — Meridian Insurance Brokers LLC
11–34. Additional Material Contracts:
In addition to the foregoing, the following contracts have been identified as Material Contracts containing change of control provisions or otherwise meeting the materiality threshold under Section 3.9 of the Agreement. A brief description of each is set forth below, and complete copies are available in the Data Room (Folder 9.08):
(11) Office Equipment Lease — Beaumont Industries (copiers, printers for HQ and fulfillment centers); annual spend $340,000; notice required upon CoC.
(12) Telecommunications Services Agreement — Harborline Industries, Inc. (voice, data, internet for all locations); annual spend $1,650,000; notice required upon CoC.
(13) HVAC Maintenance Agreement — Comfort Systems USA Inc. (maintenance for fulfillment centers); annual spend $780,000; notice required upon CoC.
(14) Warehouse Management System License — Manhattan Associates Inc. (WMS software); annual spend $1,900,000; consent required upon CoC; status: pending.
(15) Carrier Management Platform Agreement — project44 Inc. (shipment visibility); annual spend $620,000; notice required upon CoC.
(16) Customer Service Platform Agreement — Cobalt Ridge Solutions (customer support ticketing and chat); annual spend $540,000; notice required upon CoC.
(17) Email Marketing Platform Agreement — Klaviyo Inc.; annual spend $480,000; no CoC provision.
(18) Staffing and Temporary Labor Agreement — Kelly Services Inc. (fulfillment center seasonal staffing); annual spend variable ($8,500,000 in FY2024); notice required upon CoC.
(19) Staffing and Temporary Labor Agreement — Robert Half International Inc. (corporate staffing); annual spend variable ($1,200,000 in FY2024); no CoC provision.
(20) Packaging Materials Supply Agreement — Harborline Holdings; annual spend $4,200,000; no CoC provision.
(21) Packaging Materials Supply Agreement — Penmark Corporation; annual spend $2,100,000; no CoC provision.
(22) Security Services Agreement — Aldermere Data Systems (physical security for fulfillment centers); annual spend $3,400,000; notice required upon CoC.
(23) Janitorial Services Agreement — Northpoint Services Inc. (janitorial for fulfillment centers and HQ); annual spend $1,800,000; no CoC provision.
(24) Benefits Administration Agreement — Ashgrove Solutions (payroll and HR administration); annual spend $1,150,000; notice required upon CoC.
(25) Corporate Travel Management Agreement — Pemberton Data Systems USA LLC; annual spend $420,000; no CoC provision.
(26) Legal Services Engagement Letter — Calloway, Brandt & Loewe LLP (outside general counsel); ongoing engagement; no CoC provision (will continue post-closing at direction of surviving entity).
(27) Accounting and Tax Advisory Engagement Letter — Hartwell & Keene LLP; ongoing engagement; no CoC provision.
(28) Seller Verification Services Agreement — Veriff Inc. (KYC/identity verification for marketplace sellers); annual spend $380,000; no CoC provision.
(29) Content Delivery Network Agreement — Greaves Solutions; annual spend $1,100,000; notice required upon CoC.
(30) A/B Testing and Experimentation Platform — Optimizely Inc.; annual spend $290,000; no CoC provision.
(31) Data Analytics Platform Agreement — Crowne Albany Software; annual spend $2,300,000; consent required upon CoC; status: pending.
(32) Equipment Financing Agreement — Larkspur & Co. Financial Services Inc. (material handling equipment at fulfillment centers); outstanding balance approximately $4,600,000; consent required upon CoC; status: pending.
(33) Sustainability Consulting Agreement — ERM Group Inc. (environmental, social, and governance advisory); annual spend $175,000; no CoC provision.
(34) Managed IT Security Services Agreement — Sundial Industries Holdings Inc. (endpoint detection and response); annual spend $1,450,000; notice required upon CoC.
Summary: Of the approximately 34 Material Contracts listed above, 14 require the counterparty's prior written consent in connection with a change of control of the Company, and 12 require prior written notice. The remaining 8 do not contain change of control provisions. The status of all consent and notice requirements is detailed in Schedule 3.17.
SCHEDULE 3.10 — COMPLIANCE WITH LAWS; PERMITS
Section 3.10(a) — Compliance with Laws
Except as set forth below, to the Knowledge of the Company, the Company and its subsidiaries are, and since January 1, 2020 have been, in compliance in all material respects with all applicable federal, state, and local laws, rules, regulations, ordinances, and orders. The following matters are disclosed:
1.  FTC Consumer Protection Inquiry. In October 2024, the Federal Trade Commission ("FTC") commenced an informal inquiry into the Company's product review and rating practices on the NovaMart marketplace. The FTC issued a Civil Investigative Demand ("CID") to the Company on October 22, 2024, requesting the production of documents and information relating to the Company's policies and procedures for moderating seller-generated product reviews, the Company's use of aggregated and incentivized reviews, and the Company's disclosure practices with respect to sponsored products. The Company has cooperated with the FTC and produced responsive documents on a rolling basis. No formal enforcement action has been commenced, and the FTC has not indicated that it intends to bring an enforcement action. The Company has engaged regulatory counsel (Whitaker & Rourke LLP) to assist with the response. Cross-reference to Schedule 3.12(b) for additional details.
2.  California Attorney General Inquiry. In February 2025, the Office of the California Attorney General sent a letter to the Company requesting information regarding the Company's compliance with the California Consumer Privacy Act ("CCPA") and the California Privacy Rights Act ("CPRA"), including the Company's practices for responding to consumer data deletion requests and opt-out requests for the sale or sharing of personal information. The Company responded to the letter on March 28, 2025, providing a detailed description of its compliance measures. No formal investigation or enforcement action has been commenced. Cross-reference to Schedule 3.12(b) for additional details.
3.  Sales Tax Compliance. In 2022, the Company identified a historical underpayment of sales tax in certain marketplace facilitator jurisdictions due to the miscategorization of certain product categories for sales tax purposes.