ALLIANCE ENTERTAINMENT HOLDING CORP

In addition to the risks described below, factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in our Annual Report on Form 10-K for the year ending June 30, 2024, filed with the SEC on September 20, 2024. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Our business is subject to risks associated with the current developments in international trade, including tariffs, which could increase our costs and negatively impact margins and sales. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.

Risks Related to International Trade Policies and Tariffs

We are subject to risks arising from changes in international trade policies, including the imposition of new or increased tariffs on imported goods. These risks are particularly relevant to our gaming and collectibles categories, where a significant portion of our inventory is sourced from foreign suppliers. Tariffs on such goods have increased in recent years, and proposed tariffs as high as 145%—if enacted—could severely limit our ability to source products at commercially viable cost levels, potentially resulting in reduced availability of inventory and lost sales.

Even more moderate tariff increases, in the range of 25% to 50%, could materially increase our cost of goods sold. While we may be able to offset some of these increases through price adjustments, there is no guarantee that market conditions will support such increases without negatively affecting consumer demand. In some cases, higher retail prices could increase revenues, but these effects are uncertain and highly dependent on our ability to maintain price elasticity and competitive positioning in the marketplace.

If we are unable to pass through increased costs or if supply chain disruptions prevent us from sourcing key products, our business, financial condition, results of operations, and cash flows could be materially and adversely affected.