On May 15, 2026, XPEL, through Harvest Ventures Holding Company, a Texas corporation and wholly-owned subsidiary of the Company (“Harvest”), completed the acquisition of the real property and improvements constituting the Company’s current San Antonio, Texas storage, fabrication and warehouse facility and certain adjoining properties located at 3167 North PanAm Expressway, San Antonio, Texas, 3215 North PanAm Expressway, San Antonio, Texas, 3251 North PanAm Expressway, San Antonio, Texas and 3319 North PanAm Expressway, San Antonio, Texas. Separately, XPEL acquired a 75% interest in a manufacturing facility in China to support the Company's customers in China—where XPEL has invested significantly in its direct go-to-market presence in recent years, including the previously announced acquisition of the Company's Chinese aftermarket distributor in September 2025. As a result of these transactions, the Company is currently manufacturing paint protection film, or PPF, in China and is preparing to manufacture paint protection film ("PPF") in San Antonio. Manufacturing PPF involves additional risks for the Company including the Risk Factors described below. Manufacturing PPF in-house will subject us to significant operational, financial, and execution risks, and we may not realize the anticipated benefits of this strategy. Capital Expenditures and Financial Commitment. Establishing in-house PPF manufacturing capabilities requires substantial capital investment in specialized equipment, facilities, raw material inventory, and personnel. These expenditures will increase our fixed cost base and could strain our liquidity and capital resources. If we are unable to achieve anticipated production volumes or cost efficiencies, or if the market for our products declines, we would likely not recoup these investments, which could materially impair our financial condition and results of operations. Raw Material Sourcing and Supply Chain Risks. Manufacturing PPF requires access to specialized raw materials, including adhesives and other chemical compounds. We could face challenges in securing reliable supplies at favorable prices, and any disruption in the availability of key raw materials, whether due to supplier issues, geopolitical factors, logistics constraints, or otherwise, could interrupt our production and harm our business. 39 Regulatory and Environmental Compliance. The manufacturing of PPF involves the use and handling of chemicals and industrial processes that are subject to extensive environmental, health, and safety regulations at the federal, state, and local levels. We will be required to obtain and maintain various permits and licenses to operate our manufacturing facilities both in the U.S. and China. Compliance with these regulations could require significant expenditures and management attention, and any failure to comply could result in fines, penalties, production shutdowns, or reputational harm. Changes in applicable regulations or the discovery of previously unknown environmental conditions at our facilities could impose additional costs and liabilities. Our manufacturing operations may expose employees, contractors, and nearby communities to health and safety risks. PPF manufacturing involves chemical handling, coating, lamination, drying, curing, cutting, packaging, warehousing, and logistics operations, all of which are occupational concerns Our operations may also involve fire, explosion, toxicity, corrosion, inhalation, dermal exposure, equipment, heat, and mechanical hazards. If we fail to maintain effective health and safety controls, we may experience workplace injuries, occupational illness claims, fires, explosions, chemical releases, regulatory investigations, production interruptions, community complaints, or litigation. We may be required to install ventilation, vapor capture, explosion protection, fire suppression, monitoring systems, containment systems, personal protective equipment, emergency response systems, and medical surveillance programs. These measures may require significant capital and operating expenditures. Any serious incident could also result in regulatory penalties, facility shutdowns, criminal liability for responsible personnel, loss of customer confidence, higher insurance costs, and material adverse effects on our business and reputation. Rising costs and changes in China’s manufacturing environment may reduce the expected benefits of manufacturing in China. China has historically offered supply chain depth, infrastructure, manufacturing scale, and cost advantages. However, companies operating in China face rising labor and operating costs, increased regulatory scrutiny, geopolitical uncertainty, and supply chain concentration risks. China’s labor costs have risen rapidly compared with other emerging markets in recent years. Manufacturers in China may also face increased costs related to energy, environmental controls, waste management, audits, compliance, taxes, and labor regulation. These pressures may reduce the cost savings that justified locating production in China. If our China operations require higher-than-expected spending on wages, utilities, compliance, environmental controls, permits, insurance, testing, logistics, or quality systems, our margins may decline. We may also need to invest in automation, additional training, supplier development, or redundant production capacity to maintain quality and continuity. If lower-cost or lower-risk manufacturing locations become more attractive, competitors with diversified supply chains may achieve better margins or offer more reliable delivery into export markets. We may be unable to relocate production quickly or cost-effectively if our China manufacturing becomes less competitive. Transition and Execution Risks. During the transition period from third-party to in-house manufacturing, we could experience production shortfalls, quality inconsistencies, or supply disruptions as we ramp up our capabilities. If our products fail in the field, we may be required to replace film, reimburse installers, pay labor costs, provide credits, defend claims, or compensate customers. Product failures could also harm relationships with distributors, installers, fleets, dealers, and automotive original equipment manufacturers. Any sustained quality problem could impair our brand, reduce demand, increase warranty reserves, and adversely affect our margins. We could also face challenges in managing parallel operations or in phasing out relationships with existing third-party manufacturers. Any disruption in our ability to supply PPF products to our customers during this period could result in lost sales, customer attrition, and competitive harm. 40