FIGS

We currently operate five retail stores across the United States. All of our retail properties are leased by us under lease agreements expected to expire at various dates between 2028 and 2036.

We believe that these facilities are sufficient to meet our current needs and that suitable additional space will be available to accommodate expansion of our operations if needed.

• Shipping is a critical part of our business and changes in, or disruptions to, our shipping arrangements have in the past and may in the future adversely affect our business, financial condition and results of operations.
• If we experience problems with our distribution center’s operational infrastructure, our ability to meet customer expectations, manage inventory, complete sales and achieve objectives for operating efficiencies could be harmed.
• If we are unable to accurately forecast customer demand, manage our inventory and plan for future expenses, our results of operations could be adversely affected.
• Consumer confidence, shopping behavior and spending have been and may continue to be negatively impacted by factors beyond our control, including supply chain disruptions, inflation, tariffs, high interest rates, fear of recession or entry into a recession, geopolitical tensions and military conflicts, and healthcare workforce-related stress, which may adversely affect our business, financial condition and results of operations.
• Our reliance on a limited number of third-party suppliers to provide materials for and produce our products could cause problems in our supply chain and subject us to additional risks.
• Our ability to source and distribute our products, including our ability to do so profitably, is impacted by global trade policy.
• Merchandise returns could harm our business.
• The fluctuating cost and availability of raw materials could cause our business, financial condition and results of operations to suffer.
• The operations of many of our suppliers and manufacturers are subject to additional risks that are beyond our control and that could harm our business, financial condition and results of operations.
• Any failure by us or our suppliers or manufacturers to comply with product safety, labor or other laws, provide safe conditions for our or their workers or use or be transparent about ethical business practices may damage our reputation and brand and harm our business.
• We conduct business in China, which exposes us to risks inherent in doing business there.
• We may be unable to execute on our B2B growth strategy.
• We may be unable to execute on our retail growth strategy.
• Increases in labor costs, including wages, could adversely affect our business, financial condition and results of operations.
• Our sales and profitability may decline if product costs increase or selling prices decrease.
• If we do not successfully optimize, operate and manage the expansion of the capacity of our fulfillment operations, our business, financial condition and results of operations could be harmed.
• If we cannot maintain our culture as we grow, we could lose the innovation, teamwork and passion that we believe contribute to our success and our business may be harmed.
• Our credit agreement contains restrictive covenants that may limit our operating flexibility.
• A downturn in the economy may adversely affect our business.
• We may seek to grow our business through acquisitions of, or investments in, new or complementary businesses, facilities, technologies or products, or through strategic alliances, and the failure to manage these acquisitions, investments or alliances, or to integrate them with our existing business, could adversely affect us.
• Certain of our key operating metrics are subject to inherent challenges in measurement, and any real or perceived inaccuracies in our metrics or the underlying data may cause a loss of investor confidence in such metrics and the market price of our Class A common stock may decline.
• We may incur losses from fraud.
• Our business may be affected by seasonality.
• Risks Related to Information Technology, Cybersecurity and Data Privacy
• System interruptions that impair customer access to our website or other performance failures in our or our third-party vendors’ technology infrastructure could damage our business, reputation and brand and substantially harm our business, financial condition and results of operations.
• We must continue to expand and scale our IT Systems, including our security systems, and our failure to do so could adversely affect our business, financial condition and results of operations.
• Our business may be adversely affected if we are unable to provide our customers a cost-effective shopping platform that is able to respond and adapt to rapid changes in technology.
• Our customer engagement on mobile devices depends upon effective operation with mobile operating systems, networks, and standards that we do not control.
• If proprietary, confidential or sensitive information or personal data about our customers is disclosed, or if we or our third-party providers are subject to real or perceived cyberattacks, our customers may curtail use of our website or mobile app, we may be exposed to liability and our reputation could suffer.
• The actual or perceived failure to comply with federal, state or foreign laws and regulations or our contractual obligations relating to data privacy, data protection, cybersecurity and consumer protection, or the expansion of current
• or the enactment of new laws and regulations relating to data privacy, data protection, cybersecurity and consumer protection, could adversely affect our business and our financial condition.
• Government regulation of the internet and eCommerce is evolving, and unfavorable changes or failure by us to comply with these regulations could substantially harm our business, financial condition and results of operations.
• Some of our software and IT Systems contain open source software, which may pose particular risks to our proprietary applications.
• The use of artificial intelligence could adversely affect our business.
• Risks Related to Intellectual Property
• Any failure or inability to protect or enforce our intellectual property rights could diminish the value of our brand, weaken our competitive position and harm our business, financial condition and results of operations.
• Our fabrics and manufacturing technology may be imitated by our competitors.
• We may incur costs to defend against, face liability for or be vulnerable to intellectual property infringement claims brought against us by others.
• The inability to acquire, use or maintain our marks and domain names for our websites could substantially harm our business, financial condition and results of operations.
• Risks Related to Other Legal, Regulatory and Tax Matters
• We may face exposure to foreign currency exchange rate fluctuations.
• Any failure to comply with trade, anti-corruption and other regulations could lead to investigations or actions by government regulators and negative publicity.
• Changes in tax laws may adversely impact our future financial position and results of operations. Our effective income tax rate could also change as a result of various evolving factors, including changes in the scope of our operations.
• We could be required to collect additional sales taxes that may increase the costs our customers would have to pay for our products and adversely affect our results of operations.
• Our ability to use our net operating loss carryforwards may be limited.
• Risks Related to the Ownership of Our Class A Common Stock
• Our stock price has been volatile and may decline regardless of our operating performance, resulting in substantial losses for investors.
• Our quarterly results of operations have from time to time, and may in the future fluctuate, and if our operating and financial performance in any given period does not meet the guidance that we have provided to the public or the expectations of our investors and securities analysts, the trading price of our Class A common stock may decline.
• Sales, directly or indirectly, of a substantial amount of our Class A common stock in the public markets by our existing security holders may cause the price of our Class A common stock to decline.
• The dual-class structure of our common stock, the voting agreement among us and our co-founders, Heather Hasson and Trina Spear, and certain related persons and trusts, and the stockholders agreement among us, Baron Capital Management, Inc. and BAMCO, may limit or preclude your ability to influence corporate matters, including the election of directors and the approval of any change of control transaction.
• The dual-class structure of our common stock may adversely affect the trading market for our Class A common stock.
• We are a “controlled company” within the meaning of the rules of the New York Stock Exchange and, as a result, qualify for, and from time to time rely on, exemptions from certain corporate governance requirements. You do not have the same protections afforded to stockholders of companies that are subject to such requirements.
• If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business, the price of our Class A common stock and trading volume could decline.
• We do not currently intend to pay dividends for the foreseeable future.
• Delaware law and provisions in our amended and restated certificate of incorporation and amended and restated bylaws could make a merger, tender offer or proxy contest more difficult, limit attempts by our stockholders to replace or remove our current management and depress the market price of our Class A common stock.
• Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the sole and exclusive forum for certain stockholder litigation matters and the federal district courts of the United States are the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or stockholders.
• We cannot guarantee that our share repurchase program will be fully consummated or that it will enhance long-term stockholder value. Share repurchases could also increase the volatility of the trading price of our stock and could diminish our cash reserves.
• General Risk Factors
• Our estimates of market opportunity and forecasts of market growth may prove to be inaccurate, and even if the markets in which we compete achieve the forecasted growth, our business could fail to grow at similar rates, or at all.
• Our results of operations could be adversely affected by natural disasters, public health crises, political crises or other catastrophic events.
• We are subject to periodic disputes, claims and litigation that could result in unexpected expenses and could ultimately be resolved against us.
• Our insurance may not provide adequate coverage against claims.
• We incur significant costs as a result of being a public company, and our management is required to devote substantial time to compliance with our public company responsibilities and corporate governance practices.
• If our estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove to be incorrect, our results of operations could fall below the expectations of our investors and securities analysts, resulting in a decline in the trading price of our Class A common stock.
• Our reported financial results may be negatively impacted by changes in GAAP.
• We are obligated to maintain effective internal control over financial reporting and any failure to maintain effective internal controls may cause investors to lose confidence in the accuracy and completeness of our reported financial information and the market price of our Class A common stock may be negatively affected.
• Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.
• We may require additional capital to support business growth, and this capital might not be available or may be available only by diluting existing stockholders.