Business Performance and Growth - Xcel Brands generated over 22.6 million and 76.2 million as of December 31, 2024[77]. - The company may require significant additional cash to satisfy working capital requirements and expand operations, which could limit growth potential[76]. - The company has a dependency on a limited number of licensees for revenue, which poses a risk if any of these licensees face financial difficulties[90]. - The company is subject to risks related to its debt obligations, which could impair liquidity and financial condition if not managed properly[79]. - The company has identified material weaknesses in its internal controls over financial reporting as of December 31, 2024, and is developing a remediation plan[85]. Market Environment and Competition - The retail environment is changing, with major retailers consolidating and potentially reducing purchases from the company, impacting sales[112]. - Intense competition in the apparel, fashion, and jewelry industries may lead to pricing pressures and reduced profit margins, impacting the company's sales and profitability[126][128]. - The company faces risks from potential economic downturns, which could adversely affect consumer spending and overall business performance[169]. Operational Challenges - The company is subject to various federal, state, and local regulations, and believes it is in compliance with all applicable laws[68]. - The company faces numerous risks associated with acquisitions, joint ventures, and collaborations, including unanticipated costs and integration challenges[120]. - The company relies significantly on information technology systems, and any failure or security lapse could have a material adverse effect on its operations[185]. - The company has experienced cybersecurity incidents, including an unsuccessful ransomware attack in February 2024, which could disrupt business operations[188]. Employee and Management - The Company had 21 employees as of December 31, 2024, and values its relationship with its employees[67]. - The company is dependent on key executives, including the CEO, for implementing business plans and growth strategies[118]. Stock and Shareholder Matters - As of April 5, 2025, the combined voting power of the company's directors and executive officers was approximately 40% of its voting securities, allowing management significant influence over shareholder matters[143]. - The company does not anticipate paying cash dividends on its common stock in the foreseeable future, planning instead to retain earnings for operations and acquisitions[163]. - The issuance of shares upon exercise of outstanding warrants and options could substantially dilute existing stockholders' percentage ownership[160]. Regulatory and Economic Factors - Changes in U.S. and foreign trade regulations, including tariffs, could have a material adverse effect on the company's operations and financial condition[174]. - The company is subject to changes in U.S. and foreign government administrative policy, which could adversely affect its business and financial condition[176]. - Changes in effective tax rates could adversely affect the company's results, particularly due to the 2017 Tax Cuts and Jobs Act, which may increase taxable income[180]. Real Estate and Lease Agreements - The company has entered into a lease agreement for approximately 12,000 square feet of office space in New York, effective February 29, 2024, expiring in 2031[206]. - The company currently leases approximately 29,600 square feet of office space at a former location, with the lease expiring on October 30, 2027, and has subleased this space to a third party[207].
Xcel(XELB) - 2024 Q4 - Annual Report