XCel Brands (XELB) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01of our prior loan agreement. In April 2025, we refinanced our debt with a new lender, resulting in the net receipt of approximately $3.0 million of cash after repayment of principal and payment of fees and expenses
2. 02Our financial statements have been prepared assuming that we will continue as a going concern
3. 03Our debt obligations could impair our liquidity and financial condition, and in the event we are unable to meet our debt obligations, we could lose ownership of our trademarks and/or other assets
4. 04We have identified material weaknesses in our internal controls over financial reporting
5. 05A substantial portion of our revenue is concentrated with a limited number of licensees such that the loss of any of such licensees could decrease our revenue and impair our cash flows
6. 06of a joint venture may fail to materialize due to changing business conditions or changes in our business priorities or those of our joint venture partners
7. 07We are dependent on our joint ventures to provide timely and accurate information about their sales and operations, which we rely upon to effectively manage their brands
8. 08The failure of our licensees to adequately produce, market, source, and sell quality products bearing our brand names in their license categories or to pay their obligations under their license agreements could result in a decline in our results of operations
9. 09If our retail customers change their buying patterns, request additional allowances, develop their own private label brands or enter into agreements with national brand manufacturers to sell their products on an exclusive basis, our sales to these customers could be materially adversely affected
10. 10Our business is dependent on continued market acceptance of our brands, our joint venture brands, and any future brands we may acquire directly or through a joint venture, and the products of our licensees
11. 11Use of social media and influencers may materially and adversely affect our reputation or subject us to fines or other penalties
12. 12We do not prescribe what our influencers post, and if we were held responsible for the content of their posts or their actions, we could be fined or forced to alter our practices, which could have an adverse impact on our business
13. 13If we are unable to anticipate and respond to changing customer preferences and shifts in fashion and industry trends in a timely manner, our business, financial condition, and operating results could be harmed
14. 14If major department, mass merchant, and specialty store chains consolidate, continue to close stores, or cease to do business, our business could be negatively affected
15. 15We expect to achieve growth based upon our plans to expand our business under our existing brands and brands we may develop independently or through collaborations or acquire. If we fail to manage our expected future growth, our business and operating results could be materially harmed
16. 16We are dependent upon our Chief Executive Officer and other key executives. If we lose the services of these individuals, we may not be able to fully implement our business plan and future growth strategy, which would harm our business and prospects
17. 17Intense competition in the apparel, fashion, and jewelry industries could reduce our sales and profitability
18. 18Because of the intense competition within our existing and potential wholesale licensees’ markets and the strength of some of their competitors, we and our licensees may not be able to continue to compete successfully
19. 19If our competition for licenses increases, or any of our current licensees elect not to renew their licenses or renew on terms less favorable than today, our growth plans could be slowed and our business, financial condition and results of operations would be adversely affected
20. 20Difficulties with foreign sourcing may adversely affect our business
21. 21Our failure to protect our proprietary rights could compromise our competitive position and decrease the value of our brands

Risks Related to an Investment in Our Securities

1. 22Management exercises significant control over matters requiring shareholder approval, which may result in the delay or prevention of a change in our control
2. 23Our failure to meet the continued listing requirements of the Nasdaq Capital Market could result in a delisting of our common stock, which could negatively impact the market price and liquidity of our common stock and our ability to access the capital markets
3. 24However, there can be no assurance that the minimum bid price for our common stock will continue to stay above $1.00 per share in the future
4. 25No assurance can be given that our stock will not be subject to these “penny stock” rules in the future
5. 26Our common stock has historically been thinly traded, and you may be unable to sell at or near ask prices or at all if you need to sell or liquidate a substantial number of shares at one time
6. 27The market price of our common stock has declined over the past several years and may be volatile, which could reduce the market price of our common stock
7. 28We may issue a substantial number of shares of common stock upon exercise of outstanding warrants and options
8. 29Holders of our common stock may be subject to restrictions on the use of Rule 144 by shell companies or former shell companies
9. 30We do not anticipate paying cash dividends on our common stock
10. 31Provisions of our corporate charter documents could delay or prevent change of control

General Risks

1. 32impact on the Company's business, operating results and financial condition
2. 33A pandemic or outbreak of disease or similar public health threat, such as the COVID-19 pandemic, or fear of such an event, could have a material adverse impact on our business, operating results, and financial condition. The COVID-19 pandemic caused a disruption to our business, beginning in March 2020
3. 34A decline in general economic conditions resulting in a decrease in consumer spending levels and an inability to access capital may adversely affect our business
4. 35Furthermore, changes in the credit and capital markets, including market disruptions, limited liquidity, and interest rate fluctuations, may increase the cost of financing or restrict our access to potential sources of capital for future acquisitions
5. 36Macroeconomic conditions and international trade conditions could adversely impact our business and results of operations
6. 37Changes in U.S. and foreign government administrative policy, including the imposition of or increases in tariffs and changes to existing trade agreements could have a material adverse effect on us
7. 38Extreme or unseasonable weather conditions could adversely affect our business
8. 39Our trademarks and other intangible assets are subject to impairment charges under accounting guidelines
9. 40Changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our results
10. 41We must successfully maintain and/or upgrade our information technology systems
11. 42System security risk issues as well as other major system failures could disrupt our internal operations or information technology services, and any such disruption could negatively impact our revenues, increase our expenses, and harm our reputation
12. 43Changes in laws could make conducting our business more expensive or otherwise change the way we do business
13. 44There are limitations on the liabilities of our directors and executive officers. Under certain circumstances, we are obligated to indemnify our directors and executive officers against liability and expenses incurred by them in their service to us