CHEROKEE INC.APEX GLOBAL BRANDS INC.

INDEXANNUAL REPORT ON FORM 10-K

FOR THE FISCAL YEAR ENDED FEBRUARY 1, 2020

TABLE OF CONTENTS

As used in this Annual Report, “Cherokee“Apex Global Brands”, the “Company”, “we”, “us” and “our” refer to CherokeeApex Global Brands Inc. and its consolidated subsidiaries, unless the context indicates or requires otherwise.  Additionally, as used herein, “Fiscal 2018”2020” refers to theour fiscal year ending February 1, 2020; “Fiscal 2019” refers to our fiscal year ended February 3, 2018; “Fiscal 2017” refers to the fiscal year ended January 28, 2017; “Fiscal 2016” refers to the fiscal year ended January 30, 2016; and “Fiscal 2015” refers to the fiscal year ended January 31, 2015.2, 2019.

We own the registered trademarks or trademark applications for Cherokee®, Hi-Tec®, Magnum®,50 Peaks®, Interceptor®,Hawk Signature®, Tony Hawk®, Liz Lange®, Completely Me by Liz Lange®, Flip Flop Shops®, Everyday California®, Carole Little®, Saint Tropez-West®, Chorus Line®, All That Jazz®, Sideout®, Sideout Sport®, and others.  Although we do not use the “®”symbol in each instance in which one of our trademarks appears in this Annual Report, this should not be construed as any indication that we will not assert our rights thereto to the fullest extent under applicable law.  All other trademarks, trade names and service marks included in this Annual Report are the property of their respective owners.

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

This Annual Report, our quarterly reports on Form 10‑Q, other filings we make with the Securities and Exchange Commission (the “SEC”), and press releases and other written or oral statements we may make from time to time may contain “forward‑looking statements” within the meaning of the Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  Forward-looking statements are statements other than historical facts that relate to future events or circumstances or our future performance.  The words “anticipates”, “believes”, “estimates”, “plans”, “expects”, “objectives”, “goals”, “aims”, “hopes”, “may”, “might”, “will”, “likely”, “should” and similar words or expressions are intended to identify forward‑looking statements.statements, but the absence of these words does not mean that a statement is not forward-looking.

Forward‑looking statements in this Annual Report include statements about, among other things:

Forward‑looking statements are based on our current views, expectations and assumptions and involve known and unknown risks, uncertainties and uncertaintiesother factors that may cause actual results, performance, achievements or sharestock prices to be materially different from any future results, performance, achievements or sharestock prices expressed or implied by the forward‑looking statements.  Such risks, uncertainties and uncertaintiesother factors include, among others, the risks descriedthose described in Item 1A, “Risk Factors” in this Annual Report.  YouIn addition, we operate in a competitive and rapidly evolving industry in which new risks emerge from time to time, and it is not possible for us to predict all of the risks we may face, nor can we assess the impact of all factors on our business or the extent to which any factor or combination of factors could cause actual results to differ from our expectations.  As a result of these and other potential risks and uncertainties, forward-looking statements should not place undue reliancebe relied on the forward‑looking statements we makeor viewed as predictions of future events because some or all of them may turn out to be wrong.  Forward-looking statements speak only as of the date they are made and, except as required by law, we undertake no obligation to update any of the forward‑looking statements we make to reflect future events andor developments or changes in our expectations or for any other reason.

We qualify all of our forward-looking statements by this cautionary note.

PART PART I

Overview

CherokeeApex Global Brands is a global marketer and manager of a portfolio of fashion and lifestyle brands it owns or represents, licensingthat we own, brands that we create, and brands that we develop for others. Cherokee Inc. changed its name to Apex Global Brands Inc. effective June 27, 2019. Company-owned brands, which are licensed in multiple consumer product categories and retail tiers around the world, include Cherokee, Hi-Tec, Magnum, 50 Peaks, Interceptor, Hawk Signature, Tony Hawk, Liz Lange, Completely Me by Liz Lange, Flip Flop Shops, Everyday California, Carole Little, and Sideout and related trademarks and other brands in multiple consumer product categories and sectors.others.  As part of our business strategy, we also regularly evaluate other brands and trademarks for acquisition into our portfolio.  We believe the strength of our brand portfolio and platform of design, product sourcingdevelopment and marketing capabilities has made us one of the leading global licensors of style focusedstyle-focused lifestyle brands for apparel, footwear, accessories and home products and accessories.products.

We have entered into license agreementslicensing relationships with recognizable retail partners in their respective global locations to provide them with the rights to design, manufacture and sell products bearing our brands, and to provide them access to our proprietary 360-degree platform. We refer to this strategy as our “Direct to Retail” or “DTR”we also have licensing model. We have also entered into wholesale arrangementsrelationships with manufacturers and distributors for the manufacture and sale of products bearing certain of our brands.  We refer to this strategy asAs a brand marketer and manager, we do not directly sell product ourselves.  Rather, we earn royalties when our “Wholesale” licensing model. Further, in connection with our acquisition oflicensees sell licensed products bearing the Flip Flop Shops trademarktrademarks that we own, or when they sell products that we have designed and related assets, we acquired, and became the franchisor under, franchise agreements with franchisees that operate Flip Flop Shops retail stores located worldwide.  In addition, we conduct direct and indirect product sales to select distributors and government entities for our Hi-Tec and Magnum brands.developed.

We provide our licensees with access to our proprietary 360-degree platform and believe that our retail responsiveness processbrand marketing and 360-degree unique value propositionmedia outreach, product design and development capabilities, and growth strategies and tactics have allowed CherokeeApex Global Brands to address the growing power of the consumer and the present and future needs of the wholesalers, distributorsour wholesale and retailers that are selling our portfolio of lifestyle brands.retail business partners and licensees.  Based on consumer research, retail insights and brand insights that we continually measure, evaluate and incorporate into our 360-degree platform, we believe CherokeeApex Global Brands has become a key strategic partner to our licensees.  AsWe believe our licensing partners rely on our vision, which defines the growth potential and trajectories of January 28, 2017, we had 124 continuing license agreements in over 110 countries, 24 of which pertained to the Cherokee brand and 81 of which pertain to the Hi-Tec and Magnum brands.

We create and establish our brands, with a viewthe agility we afford to global scalability by developing marketing strategies and innovative products for each brand and deploying the tools developedthem through our 360-degree capabilities platform.  Our key strengths are exemplified by the following three value pillars, which guide our strategies and which we believe position us to expand our business:

Vision – We deliver our licensee partners a brand vision designed to drive differentiation and a fresh point of view for engaging customers across every touch point and in multiple categories.

Agility – We offer our licensee partners access to our 360-degree platform, which is designed to provide the agility to quickly seize opportunities and integrate new innovations, and the opportunity to realize global, multi-channel, multi-category scale through our portfolio of lifestyle brands and swiftly introduce our branded products.

Scale – We believe the scalabilityplatform capabilities.  As of our brands enables our licensee partners to fully leverage our brands’ physical and digital spaces with multi-category relevancy and with globally recognized brands that drive a seamless customer experience.

We derive revenues primarily from licensing our trademarks to retailers and wholesalers all over the world. Our current licensee relationships cover over 110 countries and over 12,000 retail stores and Ecommerce businesses that includesFebruary 1, 2020, we had 42 continuing license agreements in approximately 144 countries.  These arrangements include relationships with Walmart, Target Corporation (“Target”), Kohl’s Illinois, Inc. (“Kohl’s”), Soriana, Comercial Mexicana, TJ Maxx, Tottus, Pick N Pay, Nishimatsuya Walmart, Big 5, Academy,Arvind, Reliance Retail, Tharanco, Martes Sports, Hi-Tec Europe, Hi-Tec South Africa, JD Sports, Black’s and REI. Our two most significant licenseesLidl, in Fiscal 2017, Fiscal 2016, and Fiscal 2015 were Target and Kohl’s.

addition to regional distributors.

Licensing and Other Selling Models

Direct to Retail

In Direct to Retail licensing, or “DTR” licensing, we grant retailers a “territory” or “channel-specific” license to use our trademarks on certain categories of merchandise.  We collaborate with our licensees’ product development staff and merchandisers on design direction, packaging, marketing and other aspects pertaining to the products sold with our trademarks, and in some cases our licensees modify or expand the designs or create their own designs to suit their seasonal, regional and category needs.  In several cases, the licensee is responsible for designing and manufacturing the merchandise, although many products are subject to our pre‑approved packaging, graphics and quality control standards and many of our licensees’ marketing campaigns are subject to similar oversight.  We plan to continue to solicit new licensees using our Direct to RetailDTR licensing model in new territories and additional product categories as we seek to expand this part of our business.

We believe that the Direct to RetailThe DTR licensing model generally offers each licensee, or retailer, the exclusive right to market multiple categories of products with a recognized brand within their territory, thereby offering our licensees the ability to enhance their marketing strategies and achieve a competitive advantage over competing retailers.  ThisWe believe that this differentiation can also provide the retailer/licensee an opportunity to command a “premium” for our high-equity brand offering over private label price points, which can result in increased profit margins for the licensee, even after royalties have been paid to the licensor.  The licensees generally directly source their own inventory,merchandise, thereby eliminating the licensor’s exposure to inventory and manufacturing risk while allowing the licensees to benefit from large economies of scale.

Many of the world’s largest retailers have successfully introduced, and continue to introduce, new brands based on the DTR licensing model.  Examples of retailers actively participating in the DTR licensing model include Walmart, Target, Carrefour, Kohl’sLidl and C&A, among others.

4

Table of Contents

Our Direct to RetailDTR licensing strategy is premised on the proposition that, for many retailers worldwide, most aspects of the moderately priced apparel, accessory, footwear and home categories, including product development, design, merchandising, sourcing and distribution, can be executed most effectively by these retailers themselves, who typically command significant economies of scale, but also interact daily with their end consumers.  We believe that many of these retailers may be able to obtain higher gross margins on sales and increase store traffic by sourcing, stocking and selling licensed products bearing widely recognized brand names (such as our brands) than by carrying only private label goods or by carrying only branded products obtained from third‑party vendors.  We also believe that many retailers may be able to achieve enhanced profitability with our Direct to RetailDTR licensing model because it allows them to avoid the substantial marketing costs associated with establishing and maintaining an in‑store brand.

Wholesale

We also license our brands to manufacturers and distributors based on wholesale arrangements.  Wholesale licensing arrangements generally involve licensing to manufacturers and distributors that produce andand/or import various categories of apparel, accessory,accessories, footwear and home products under our trademarks and trademarks owned by third parties and sell the licensed products to retailers, which then resell the products to consumers.

Although our strategy has historically been focused primarily on the DTR licensing model, weWe have some historical wholesale licensees with respect to some of our brands and we have recently entered into several new wholesale arrangements for the Cherokee, Hawk Signature and Tony Hawk brands.  In addition, we are primarily relying on a wholesale licensing strategy for global sales of our Hi-Tec, Magnum, 50 Peaks and Interceptor brands.

Design Services

We provide product design and development services for retailers that prefer to sell brands that they own.  We believe these arrangements signal an expansionthat our 360-degree platform provides the key ingredients for retailers to our strategy to increase the sales of products bearing our brands in the United States, including our namesake Cherokee brand, which has been governed by one license agreement using our DTR licensing model.  We believe these wholesale licensing arrangements will help to diversify our sources of revenue, increase our royalty rates through our licensee or other partner relationships and will provide additional avenues to obtain brand recognition and grow our Company, including the opportunity to further expand the reach of our brands into markets where a DTR licensing model may not be the most effective approach. Recently, through our acquisition of the Hi-Tec and Magnum brands in December 2016, we have signed up wholesalers in the U.S., Pan-European and South Africa territories for our Hi-Tec and Magnum brands.

Indirect Product Sales

Since our acquisition of the Hi-Tec and Magnum brands, we have been indirectly selling footwear bearing these brands to certain select wholesalers and government entitiesefficiently produce product ranges that are customerstailored for their target consumers and the retailers’ specific business needs.  Our retail partners can rely on our product development and design capabilities, which are supported by our retail and brand marketing abilities, focusing their resources instead on retail operations.  We expect that together this will lead to increased rates of these brands. In these arrangements, the purchasers of the products place their product orders directly with us, which we then forward to a manufacturer for the manufacturesale, greater sell-through and delivery of the products directly to the original purchaser. As a result, the product purchasers in these arrangements receive products directly from the manufacturer, which is similar to our wholesale licensing relationships and eliminates most inventory and manufacturing risk. We maintain these indirect product sale relationships with a minimal portion of the customers of the Hi-Tec family of footwear brands. This indirect product sales system pre-existed our acquisition of the Hi-Tec and Magnum brands and we do not intend to expand this model to other customers of these brands or to our other brands.  See Item 7, “Management’s Discussion & Analysis—Recent Developments” for further information regarding the Hi-Tec acquisition.

Franchise

Our franchise business involves licensing our Flip Flop Shops brand to third-party franchisees that operateimproved retail stores under this brand name. In our franchising operations, we typically specify the products and services that will be offered by the franchisees and also provide them with an operating system and other operational support. The Flip Flop Shops franchise structure aligns with our strategic plan and business model.  As part of our growth plan for Flip Flop Shops, we intend to expand store inventory to include more Company-owned brands and expand the retail concept through a combination of new retail store locations, shop-in-shops and mobile commerce.  During January 2017 we launched an e-commerce platform for Flip Flop Shops.performance.

Brand Portfolio

Cherokee Global Brands markets brands it owns and brands it represents. Generally, when representing brands, we perform a range of services including product design, product sourcing through third party manufacturers, the creation of marketing assets, solicitation of licensees, contract negotiations and administration and maintenance of license or distribution agreements, among other things. In exchange for our services, we typically receive a certain percentage of the net royalties generated by the brands we represent. Summaries of some of our brands are provided below.

Cherokee

Cherokee is an iconic, American family‑lifestyle brand, offering classic, casual and comfortable products at affordable prices.  Cherokee, which was initially launched as a footwear line in 1973, seeks to produce timeless classics, inspired by vintage Americana while continually being updated to account for modern trends.  After four decades, the Cherokee brand stands for confident, effortless and relaxed American style.  We believe this heritage positions the Cherokee brand for future growth and further international expansion.   Additional categories of Cherokee branded products are sold internationally across multiple age ranges in a wide range of categories, including adult apparel,casual sportswear, sweaters, outerwear, active wear, dresses, denim, swimwear, sleepwear, accessories, home décor, textiles, outdoor furnishings and camping gear.

Key Licensee—Target

Historically, the Cherokee brand’s most significant licensee was Target, which launched the Cherokee brand almost two decades ago as a multi‑category product offering that encompassed kid’s apparel, accessories, footwear and school uniforms (the rights to which we acquired in January 2013). Our relationship with Target covering Cherokee branded products ended in January 2017.

Our former license agreement with Target granted Target exclusive rights to the Cherokee brand in various specified categories of merchandise in the United States. Under this license arrangement, for all of Target’sRoyalty revenues from global sales of Cherokee branded products exceptwere $6.7 million and $9.7 million in Fiscal 2020 and Fiscal 2019, respectively, which accounted for sales32% and 40% of Cherokee branded productsour total royalty revenues in Canada (which ceased asthese years.  Our wholesale distributor licenses offer a resultvariety of Target Canada bankruptcy), sales of Cherokee branded adult products sold on Target’s website and sales of Cherokee branded products in the school uniforms category, Target paid us royalties based on rates that reduced after Target achieved specified cumulative sales volume thresholds during each fiscal year. These royalty rate reductions did not apply

retroactively to Target’s retail sales since the beginning of the applicable fiscal year, but rather applied only to sales made during the applicable fiscal year subsequent to the achievement of the specified sales volume threshold. Our license arrangement with Target governing sales of Cherokee branded adult products sold on Target’s website and Cherokee branded products sold in the school uniforms category provided for a fixed royalty rate based on Target’s net sales of products during each fiscal quarter.

Our license agreement with Target covering sales of most Cherokee branded products in the United States expired on January 31, 2017. Our license agreement with Target covering sales of Cherokee branded products in the school uniforms category will expire at the end of its current term on January 31, 2018, and will continue to generate revenues to Cherokee Global Brands until its expiration.

Royalty revenues from Target’s salescategories of products bearing the Cherokee brand to retailers in the Unites States, excluding sales of Cherokee branded products in Canada and sales of Cherokee branded products in the school uniforms category, were $10.5 million during Fiscal 2017, $14.9 million during Fiscal 2016 and $15.0 million during Fiscal 2015, which accounted for 31%, 43%, and 43%United States.  A large majority of our total royalty revenues duringCherokee brand royalties are now derived from multiple DTR license agreements with various retailers outside the respective periods. Replacing the royalty revenues received from TargetUnited States, many of which have been in place for Cherokee branded products is a significant challenge, and the expiration of this license agreement may have a material adverse effect on our business. See Item 1A, “Risk Factors” for additional information.several years.  

Hi-Tec, Magnum, 50 Peaks and MagnumInterceptor

Founded in 1974 and based in the Netherlands, the Hi-Tec footwear brand seeks to produce quality shoes for a fair price.  Theprice that are “comfortable anywhere”.  Hi-Tec family of footwear brands includes Hi-Tec,is known for its comfortable and lightweight hiking and walking shoes, Magnum, whichand also produces work boot footwear, and several other footwear brands that produce specific-purpose tactical boots, uniform footwear, technical outdoor footwear and various other types of shoes.  These footwear brands are sold in over 110 countries, predominately in the United Kingdom, continental Europe, the United States, Canada, South Africa, South and Central America and Asia through major retailers, independent distributors, licensees and directly to consumers.  Today, theThe Hi-Tec brand is one of the world’s leaders in sports and outdoor footwear.

We acquired the Hi-Tec,  Magnum produces work boot footwear, specific-purpose tactical boots and other associated footwear brands in December 2016.  Before our acquisition, the Hi-Tec brands were operated under a full spectrum distribution model, meaning that one group of affiliated companies owned the brands and manufactured the products.  In connection with our acquisition of these brands, we sold the associated operating assets to certain operating partners and/or distributors and entered into new wholesale licensing arrangements with these operating partners and/or distributors.  Through these transactions and our post-acquisition integration efforts, we are converting the Hi-Tec brands to a branded licensing model.  Going forward, we primarily intend to pursue a wholesale licensing model for these brands.

50 Peaks and Interceptor

uniform footwear.  50 Peaks is a high spec, technical outdoor footwear brand that was born out of the accomplishments of adventurer Adrian Crane, who climbed the 50 highest peaks in each of the 50 states in the USA in a record time of 101 days.  Interceptor is a tactical footwear brand sold internationally, with primary distribution through Walmart U.S.  Hi-Tec and Magnum products are sold throughout the world.  The Interceptor brand is currently sold at Walmart U.S.  We acquiredworld in Europe, the United States, Canada, South Africa, the Middle East, South and Central America, Oceania and Asia.

5

Table of Contents

Royalty revenues from global sales of Hi-Tec, Magnum, 50 Peaks and Interceptor brandsbranded products were $10.5 and $11.6 million in December 2016Fiscal 2020 and Fiscal 2019, respectively, which accounted for 50% and 47% of our total royalty revenues in connection with the Hi-Tec acquisition.  50 Peaks has been a Hi-Tec brand since 1990 and has substantial name brand recognition amongst its customers.those years.  

Hawk Signature and Tony Hawk

Tony Hawk is among the most well‑known athletes in skateboarding history and is the founder of the Hawk Signature and Tony Hawk Signature apparel line. Designedlines.  The Tony Hawk brand is designed for comfort, flexibility and durability the Tony Hawk brand is designed to embodyand it embodies the “skate culture” lifestyle, combining style with performance.  We acquired the TonyThe Hawk Signature and Tony Hawk brands in January 2014, which hashave expanded our presence in the department store and specialty channels of distribution. The brand is exclusively licensed in the United States to Kohl’s, with Tony Hawk clothing and accessories sold in Kohl’s department stores and online. Separate wholesale license agreements are in place to supply Hawk and Tony Hawk

signature apparel in Canada with Walmart Canada and throughout Europe and we intend to secure additional licensees to expand these brands globally.

Licensing revenues for our Hawk Signature and Tony Hawk brands totaled $5.0 millionbranded products are distributed to a variety of retailers in the United States, including specialty, mid-tier, regional, mass market, off-price and $5.0club stores, by several wholesale distributors under license agreements with these distributors.  In addition, we have separate wholesale license agreements with others to supply Hawk Signature and Tony Hawk apparel in China, Japan, South Korea and throughout Europe. Royalty revenues from global sales of Hawk Signature and Tony Hawk branded products were $0.3 and $0.6 million in Fiscal 20172020 and Fiscal 2016,2019, respectively, which represented 15%accounted for 1% and 14%,3% of our total royalty revenues for the respective periods.

Key Licensee—Kohl’s

In connection with our acquisition of the Hawk Signature and Tony Hawk brands in January 2014, Cherokee Global Brands entered into a retail license agreement with Kohl’s. This license agreement, as amended, grants Kohl’s exclusive rights, through July 2017 at which point, the contract converts to a non-exclusive right to sell the Tony Hawk and Tony Hawk Signature apparel brands in various specified categories of merchandise in the United States. The current term of the license agreement, as amended, with Kohl’s continues through January 31, 2018, and obligated Kohl’s to pay Cherokee Global Brands an annual minimum royalty of $4.8 million prior to January 28, 2017 and $4.6 million for the remainder of the term.

Liz Lange and Completely Me by Liz Lange

Liz Lange has gained wide acceptance as a modern “maternity and beyond” designer brand that brings women versatile, comfortable, affordable and flattering style for every stage of pregnancy. Liz Lange maternity apparel debuted in over 1,500 Target stores in the United States in 2002 and continues to be sold exclusively in Target stores in the United States. During 2010, Completely Me by Liz Lange was launched exclusively on the Home Shopping Network in the United States and The Shopping Channel in Canada. The Completely Me brand consists of sophisticated and comfortable casual clothing and sportswear for women. We acquired the Liz Lange brands in September 2012.

Key Licensee—Target

During September 2012, we assumed a license agreement with Target covering sales of Liz Lange branded maternity products in the United States. Pursuant to this agreement, Target pays Cherokee Global Brands a fixed royalty rate based on Target’s net sales of products bearing this brand.  Target has informed us that it has elected to not renew the Liz Lange license agreement, which expires on January 31, 2018 at the end of the current term, Target will continue to pay royalties to Cherokee Global Brands until the expiration of the agreement.  Cherokee Global Brands has entered into a master license agreement with a third party for Liz Lange branded maternity products beginning in Fiscal 2019.

Flip Flop Shops

Flip Flop Shops is an authentic market-leading retail franchise chain devoted to the hottest brands and latest styles of flip flops, casual footwear and accessories.  Flip Flop Shops currently has approximately 72 retail franchise shops in the U.S., Canada, the Caribbean, the Middle East and South Africa. Its locations carry definitive assortments of recognized brands including OluKai, SANUK, Cobian, Havaianas, Quiksilver, ROXY, Reef, and many more.  We acquired the Flip Flop Shop brands in October 2015.those years.  

Everyday California

Crafted in Southern California, Everyday California is designed to embody the California spirit and celebrate living life to the fullest.  From California’s snowcapped mountains to theits sandy shores, Everyday California apparel and accessories for men and women are the perfect match for any journey.  Everyday California was born out of a desire to share the California state of mind and the notion that adventure is just around the corner.We acquired the Everyday California brand in May 2015.

  In addition to the United States, Everyday California is distributed in Mexico and Japan.

Point Cove

Point Cove was created in-house by CherokeeApex Global Brands'Brands' design team in close collaboration with Reliance Trends, a chain of retail stores in India.  The brand was launched in September 2015 and brings a combination of playfulness and sophistication to Reliance Trends stores in key categories, including apparel, accessories and footwear, for kids ages 2-14.  The collection features bold colors that bring the California spirit to India.

Carole Little

Carole Little was founded in 1975 by designer Carole Little through her love for contemporary clothing.  The Carole Little brand became recognized for colorful and unusual prints, soft two‑piece outfits and dresses. The Carole Little branddresses, and has an ageless, independent attitude for the self‑confident woman.

Sideout

Conceived in 1983 by a California volleyball player, the Sideout brand took root at the beach, harnessing the easy spirit of a casual California lifestyle.  Ideal for a game of beach volleyball or a breezy vacation, Sideout products perform in quality, functionality and originality by offering casual, hip and cool clothing, footwear and accessories at affordable prices.

Value Pillars

We are guided by three value pillars that speak to our diverse global partners:

We create and establish our brands on a global basis (scale) via superb marketing (vision), strong execution (agility), innovative products & exceptional leadership.

Our Strategies

Our key business strategies include the following:

360-Degree Platform

As part of our strategy, we provide our licensees with access to our proprietary 360‑degree platform which seamlessly integrates with our licensing model and which we believe is part of the attraction of our brands to our retailers and other licensees. Our 360‑degree platform includes the following:

Organic Growth of Our Business

Organic growth involves introducing new product categories with existing partners and expanding existing brands into new stores and new territories. We are focused on the following organic growth drivers: a larger online presence with our partners in order to capitalize on the growth of digital commerce; enhanced in-store experiences, such as shop-in-shop floor presentations; product category expansion such as new apparel categories, home, sportswear, beauty, athletic, designer, denim, performance and accessories; and growth of our partners’ businesses, including opening new stores or otherwise expanding their operations.

Expand Our Brand Portfolio

We regularly evaluate other brands and trademarks for acquisition into our portfolio. We target style-focused lifestyle brands, such as our recently acquired Hi-Tec, Magnum, 50 Peaks, Interceptor, Everyday California and Flip Flop Shops brands. We evaluate new brand candidates based on their global market potential and product category expansion opportunities, in categories such as home, sportswear, beauty, athletic, designer, denim, performance, footwear, and accessories.

Build New Partner Relationships

As part of our strategy, we evaluate and pursue relationships with new retailers, wholesalers and other licensees in order to expand the reach of our existing brands into new geographic and customer markets and new types of stores and other selling mediums. This strategy also involves diversifying our types of partner relationships to include additional DTR licensees, wholesale licensees and, with our acquisition of the Flip Flop Shops trademark and brand

name, franchisees of this brand. In our efforts to expand our portfolio of licensee partners, we acquired a number of new licensees for our existing brands in a variety of territories in Fiscal 2017, some of which are described below.

During Fiscal 2017, we entered into license agreements with nine wholesale distributors to distribute a variety of categories of products bearing the Cherokee brand within the U.S. to various retailers beginning in Fiscal 2018.  The categories cover a wide range of Cherokee products including men’s and boy’s casual sportswear, sweaters and outerwear; newborn, infant and toddler boys and girls clothing and layette; girl’s active wear, sportswear, dresses, denim, and sweaters; and swimwear and sleepwear.

We entered into three additional license agreements (two during Fiscal 2017 and one during Fiscal 2018) for our Hawk Signature and Tony Hawk brands.  The license agreements are for broad distribution of the brands in the United States for all retail, including specialty, mid-tier, regional, mass market, off-price and club retail.

Royalties and Other Revenues

License Royalties

Our rights to receive royalties for sales of products bearing our brands or products we have developed and designed are set forth in the terms of our license agreements with various retailers and wholesalers.  The royalty rates we receive from our licensees vary depending on the terms of each licensing agreement.  Generally, our DTR license agreements include royalty rates based on a percentage of the retailer’s net sales of licensed products.  Some of our DTR license agreements provide for fixed royalty rates, calculated based on a fixed percentage of retail product sale, and other DTR license agreements provide for royalty rates that may decrease or otherwise fluctuate depending onduring a year as the retailer’s achievement of certain annualretailer achieves sales volume thresholds.  For wholesale license agreements, royalty rates are generally calculated based on a fixed percentage of wholesale sales from the wholesaler to the retailer.retailer or a fixed percentage of manufacturing costs.

6

Table of Contents

In manysome cases, particularly in our DTR licensing arrangements, we require the licensee to guarantee a minimum annual royalty payment to us each year.  Our largest guaranteedyear, although the amount of this minimum annual royalty payment can vary significantly from licensee to licensee and is typically lower for Fiscal 2017, Fiscal 2016 and Fiscal 2015 was from Targetwholesale licensees than for $10.5 million for each period.DTR licensees.  We do not have a significant concentration of fixed minimum payments in any one licensee.  As of January 28, 2017,February 1, 2020, we had contractual rights to receive over $108.8$50.0 million forward‑facing minimum royalty revenues over the next sixten years, excluding any revenues that may be guaranteed in connection with future contract renewals.

Royalties are generally paid within 30 days after a quarterly selling period that has beenas defined in the applicable license agreement.  In order toTo ensure our licensees are reporting and calculating the appropriate royalties, all of our license agreements grant us the right to audit our licensees’ retail sales data for our brandsroyalty reports to validate the amount of sales or purchases reported and royalties paid.

Franchise Fees and Royalties

Franchisees who wish to operate Flip Flop Shops retail locations in the United States enter into a franchise agreement with us that generally provides franchise rights for each location for an initial term of 10 years and typically includes a 10-year renewal provision, subject to certain conditions as specified in the franchise agreement. The agreements provide the franchisee the rights to use the Flip Flop Shops brand name, trademarks and know-how in the operation of a Flip Flop Shops retail store. Franchisees typically pay us an initial franchise fee and royalty fees based on a percentage of gross sales at each retail store.

In certain non-U.S. markets, we may grant a master franchisee exclusivity to develop or sub-franchise a territory for a specified number of new Flip Slop Shops locations in the territory based on a negotiated schedule. In these instances, the master franchisee pays an initial master franchise fee, a per-location opening fee and a royalty fee based on a percentage of gross sales at the retail stores.

Indirect Product Sale Revenues

As described under “LicensingTrademarks and Other Selling Models” above, we maintain indirect product sale relationships with certain select wholesalers, distributors and government entity customers of the Hi-Tec family of footwear brands, until such time that we convert the arrangements to traditional wholesale licensing arrangements. We began recording revenues from these relationships in December 2016 when we acquired these brands. In these arrangements, the retailers and government entities that purchase products submit payments directly to us for their product orders, the pricing of which is typically a preset percentage markup to our cost, and we then remit the cost of these payments to the manufacturer of the purchased products. As a result, a significant portion of our revenues from these indirect product sales is paid out to manufacturers as a cost of the product sales. In Fiscal 2017, we recorded a total of $6.6 million in revenues from these indirect product sales, of which a total of $5.1 million was paid to manufacturers or distributors as a cost of the product sales.Intellectual Property Rights

Trademarks

We hold various trademarks, including Cherokee®, Hi-Tec®, Magnum®, 50 Peaks®, Interceptor®, Hawk Signature®, Tony Hawk®, Liz Lange®, Completely Me by Liz Lange®, Flip Flop Shops®, Everyday California®, Carole Little®, Saint Tropez-West®, Chorus Line®, All That Jazz®, Sideout®, Sideout Sport®, and other, in connection withothers for numerous categories of apparel and other goods.  These trademarks are registered with the United States Patent and Trademark Office, and corresponding government agencies in a number of other countries. Wewe also hold trademarks or trademark applications for each of these brand names and others with similar government agencies in numerousa number of other countries.  Our trademark registrations typically expire after seven to ten years depending on the jurisdiction, although we intend, and expect to be able, to renew these trademarks for as long as we continue to use them.  Our business is dependent upon our trademarks and other intellectual property rights. We monitor on an ongoing basis unauthorized uses of our trademarks, and we monitor unauthorized uses of these trademarks on an ongoing basis.  In addition to trademarks, we also rely primarily upon a combination of trademarks,on know‑how, trade secrets and contractual restrictions to protect our intellectual property rights domestically and internationally. See Item 1A, “Risk Factors” for additional information.

Competition

Royalties paid to us under our licensing agreements are generally based on a percentage of our licensees’ net sales of licensed products. Additionally, franchisees of our Flip Flop Shops brand pay us a percentage of their net sales. Merchandise bearing our Cherokee, Hi-Tec, Magnum, 50 Peaks, Interceptor, Hawk Signature, Tony Hawk, Liz Lange, Completely Me by Liz Lange, Flip Flop Shops, Everyday California, Carole Little,brand names and Sideout brands, all of which are manufacturedgoods that we have developed and sold by both domestic and international wholesalers and retail licensees, as well as merchandise sold by Flip Flop Shops retail shops, are subject to extensive competition by numerous domestic and foreign companies. Such competitorsintense competition.  Competing brands with respect to theour Cherokee brand include Polo Ralph Lauren, Tommy Hilfiger, Liz Claiborne, and private label brands (developed by retailers) such as Faded Glory, Arizona and Route 66.66, and competing brands with respect to the Hi-Tec and Magnum brands include Columbia, Merrell, Keen, North Face, Timberland, Bates, Wolverine and other private label brands.  Our other brands also face competition from these and other numerous brands.  Factors that shape the competitive environment for our brands include quality of garment or accessory construction and design, brand name, style and color selection, price, fashion and other trends, avenue of purchase (including in stores and online), and the manufacturer’s ability to respond quickly to the retailer on a national basis.and consumer demand.

Our business plan in the United States focuses on creating strategic alliances with major retailers and wholesalers for their sale of products bearing our brands through the licensing ofor products that we have developed and designed.  We license our trademarks directly to retailers, engagingand we engage wholesalers to manufacture and distribute products bearing our brands and sell these products to retailers.  We also develop and design products for retailers and entering into franchise relationships with Flip Flop Shops retail store owners.that prefer to sell products bearing their own brand names.  Therefore, our degree of success is dependent on the strength of our brands, consumer acceptance of and desire for our brands, our licensees’ ability to design, manufacture and sell products bearing our brands and our franchisees’licensees’ ability to sell products bearing our or third-party brands,we have developed and designed, all of which is dependent on the ability of us and our licensees and franchisees to respond to ever-changing consumer demands.  In addition, we compete with companies that own other brands and trademarks, as these companies owning established trademarks, which have entered into, and could continue to enter into similar licensing arrangements with retailers and wholesale manufacturerswholesalers in the United States and internationally, includinginternationally.  These arrangements could be with our existing retail and wholesale partners, thereby competing with us for consumer attention and limited floor andor rack space in the same stores in which our branded products are sold, and vying with us for the time and resources of the retailers and wholesale licensees that manufacture and distribute our products.

Seasonality

Our business and performance may be subject to certaindo not reflect significant seasonality trends.  See Item 7, “Management’s Discussion and AnalysisHowever, to the extent royalty revenues grow from our new wholesale licensees, we expect our revenues may shift toward the latter half of Financial Condition and Resultsour fiscal year, which would be consistent with the normal, holiday-based seasonal pattern of Operations,” for additional information.retail sales.

Government Regulations

The Federal Trade Commission and various state laws regulate our Flip Flop Shops franchising activities. For instance, the Federal Trade Commission requires that franchisors make extensive disclosure to prospective franchisees before the execution of a franchise agreement, and several states require registration and disclosure in connection with franchise offerings and sales. In addition, ourOur business practices in international markets are subject to the requirements of the U.S. Foreign Corrupt Practices Act (the “FCPA”) and any applicable foreign anti-bribery laws.  We are also subject to various laws that are generally applicable to businesses in our industry, such as work safety and labor laws that govern certain of our operations and our employee relations.  Our violation of any of these laws could subject us to significant fines, criminal sanctions and other penalties, which could have a material adverse effect on our business and results of operations.

7

Table of Contents

Employees

As of January 28, 2017,February 1, 2020, we employed 123 persons; however, of these employees, 40 are providing transition services for us in connection with our recent acquisition of Hi-Tec and therefore are not expected to remain our employees for the longer term.37 persons.  None of our employees are represented by labor unions, and we believe that our employee relations are satisfactory.

Code of EthicsFinancial Information about Geographic Areas

We have adopted a Code of Business ConductApproximately 77% and Ethics that applies to the Company’s directors, officers, employees and manufacturers that produce products on behalf75% of our licensees. A copy ofrevenues were derived from our Code of Business Conductinternational licensees in Fiscal 2020 and Ethics is filed as an exhibitFiscal 2019, respectively, and we face risks related to this Annual Report.

Segment Information

As a result of the Hi-Tec acquisition, our reportable segments beginning Fiscal 2017 consist of Cherokee Global Brandsthese foreign operations.  See Item 1A, “Risk Factors” for information about these risks, and Hi-Tec, for which our chief-operating decision maker internally evaluates operating performance and financial results. For the year ended January 30, 2016 we considered our business activities to constitute a single segment.  Seesee Note 1213 to our consolidated financial statements included in this Annual Report for information about Cherokee Global Brands and Hi-Tec revenues, long lived assets and othercertain financial information as well as a summary of our revenues and long-lived assets by geographic area.

Also see our consolidated financial statements included in this Annual Report for information about revenues from external customers, a measure of profit and loss and our total assets for our one reportable segment. We face risks attendant to our foreign operations. During Fiscal 2017, approximately 47% of our revenues were derived from our international licensees and franchisees.  We face risks attendant to our foreign operations.  See Item 1A, “Risk Factors”.General Information

Corporate Information and SEC Filings

CherokeeApex Global Brands was incorporated in Delaware in 1988.  Our principal executive offices are located at 5990 Sepulveda Boulevard, Sherman Oaks, California 91411, telephone (818) 908‑9868. We maintain a website with the address at www.apexglobalbrands.comwww.cherokeeglobalbrands.com. We are not including the information contained on, and our website as part of, or incorporating it by reference into, this Annual Report on Form 10‑K.

Nasdaq trading symbol is “APEX”.  We make our annual reports on Form 10‑K, quarterly reports on Form 10‑Q, current reports on Form 8‑K, and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act available free of charge on our website at www.cherokeeglobalbrands.comas soon as reasonably practicable after we file these materials with, or furnish them to, the SEC.

All referencereferences to our website in this Annual Report are inactive textual references, and the contents of our website are not incorporated intoin or otherwise considered part of this Annual Report.

Executive Officers of the Registrant

The table below sets forth certain information with respect to each of our executive officers. We have entered into employment agreements or offers with each of our executive officers, which are included as exhibits to this Annual Report, that establish, among other things, each executive’s term of office. There are no arrangements or understandings between any of our executive officers and any other person pursuant to which such individual was or is selected as an officer of our Company.

Factors that may adversely affect our licensees and franchiseesretailers and their sales of products include, the following, among others: (i) weather, environmental or other conditions that may impact consumer shopping activity in retail stores;the ongoing impacts of COVID-19; (ii) consumer preferences regarding fashion trends and styles, which can be region-dependent and subject to rapid and significant fluctuations; (iii) consumer preferences regarding where to shop; (iv) the growth of online shopping and the ability of our licensees and franchiseesa retailer to market and sell products through these avenues; (v) changes in the availability or cost of capital in light of the financial condition and capital requirements of our licensees and franchisees; (vi) shifts in the seasonality of shopping patterns; (vii) fluctuating retail prices; (viii)(vi) the reputation of or general consumer perceptions about the retailers that sell our brands; (vii) security breaches or other cybersecurity incidents; (viii) shifts in the seasonality of shopping patterns; (ix) weather, environmental or other conditions that may impact consumer shopping activity; (x) changes in the availability or cost of capital in light of a retailer’s financial condition, capital requirements and other factors; (xi) labor strikes or other interruptions that impact supply chains and transport vendors; (x)(xii) the impact of excessexcesses or shortages of retail or manufacturing capacity; (xi)(xiii) changes in the cost of accepting various payment

9

Table of Contents

methods and changes in the rate of utilization of these payment methods; (xii)(xiv) material acquisitions or dispositions; (xiii)(xv) investments in new business strategies; (xiv)(xvi) the success or failure of significant new business ventures or technologies; (xv)(xvii) general business and operational risks, including, among others, the ability to obtain and maintain desirable store locations, litigation risks, departures of key personnel or other employee matters; (xviii) actions taken or omitted to be taken by legislative, regulatory, judicial and other government authorities and officials; (xvi) security breaches; (xvii)(xix) natural disasters, the outbreak of war, acts of terrorism or other significant national or international events; and (xviii)(xx) the other risks discussed in this Item 1A.these risk factors.

We relyhave incurred a significant amount of indebtedness, our level of indebtedness and restrictions under our indebtedness could adversely affect our operations and liquidity, and we are currently in violation of certain financial covenants under our credit facility.

On August 3, 2018, we entered into a senior secured credit facility that provided a $40.0 million term loan, and $13.5 million of subordinated promissory notes.  The credit facility was amended on January 30, 2019 to provide an additional term loan of $5.3 million.  As of February 1, 2020, outstanding borrowings under the term loans were $44.1 million, and outstanding borrowings under subordinated promissory notes were $13.5 million.  The term loans mature in August 2021 and require quarterly principal payments and monthly interest payments based on LIBOR plus a margin.  The subordinated promissory notes mature in November 2021.  Interest is payable monthly on the accuracysubordinated promissory notes, but no periodic amortization payments are required.

The senior secured credit facility imposes various restrictions and covenants regarding the operation of our licensees’business, including covenants that require us to obtain the lender’s consent before we can, among other things and franchisees’ retail sales reports for reporting and collectingsubject to certain limited exceptions: (i) incur additional indebtedness or additional liens on our revenues, and if these reports are untimelyproperty; (ii) consummate acquisitions, dispositions, mergers or incorrect, our revenues could be delayed or inaccurately reportedor collected.

Mostconsolidations; (iii) make any change in the nature of our revenuesbusiness; (iv) enter into transactions with our affiliates; or (v) repurchase or redeem any outstanding shares of our common stock or pay dividends or other distributions, other than stock dividends, to our stockholders.  The senior secured credit facility also imposes financial covenants that set financial standards we are generated from retailers who license our brandsrequired to manufacturemaintain, including the requirement to maintain specified levels of Adjusted EBITDA, as defined in the credit agreement ($9.5 million for the trailing twelve months as of February 1, 2020), and sell products bearing our brands in their stores and on their websites. In addition, we havemaintain a numberminimum cash balance of franchise agreements with franchisees of the Flip Flop Shops brand and we have arrangements with several wholesalers who license our brands$1.0 million.  We are also required to manufacture products bearing our brands and sell these products to retailers. Under our existing agreements, these licensees and franchisees pay us fees based in part onmaintain a borrowing base comprising the value of products sold. We relyour trademarks that exceeds the outstanding balance of the term loan.  If the borrowing base is less than the outstanding term loan at any measurement period, then we would be required to repay a portion of the term loan to eliminate such shortfall.  Further, as collateral for the credit facility, we have granted a first priority security interest in favor of the lender in substantially all of our assets (including trademarks), and our indebtedness is guaranteed by our subsidiaries. If we do not comply with these requirements or if there is a change of control of the Company, it would be an event of default.

Our operating results for the twelve months ended November 2, 2019 and February 1, 2020 resulted in violations of the minimum Adjusted EBITDA covenant, which were events of default.  However, our senior lender has agreed to forbear from enforcing its rights under the senior secured credit facility through July 27, 2020.  Our financial projections indicate that there is a significant risk of further violations of the minimum Adjusted EBITDA covenant or minimum cash covenant beyond the forbearance period agreed to with our senior lender.  If any such future violation or other event of default occurs under the credit facility that is not forborne, cured or waived in accordance with the terms of the credit facility, we would be subject to significant risks, including the right of our lender to terminate its obligations under the credit facility, declare all or any portion of the borrowed amounts then outstanding to be accelerated and due and payable, and/or exercise any other right or remedies it may have under applicable law, including foreclosing on our licenseesand/or our subsidiaries’ assets that serve as collateral for the borrowed amounts.  Furthermore, a default under our term loan agreement would also trigger a default under our subordinated promissory note agreements, which would give those lenders the right to terminate their obligations under the subordinated promissory note agreements and franchisees to accurately reportaccelerate the retail sales in collecting our license and franchise fees, preparing our financial reports, projections and budgets, and directing our sales and marketing efforts. Allpayment of our license and franchise agreements permit us to audit our licensees and franchisees.those promissory notes.  If any of these rights were to be exercised, our licensee or franchisee reports understate the retail sales of products they sell, we may not collectfinancial condition and recognize revenues to which we are entitled on a timely basis or at all, or may endure significant expense to obtain compliance.

We utilize various licensing and selling models in our operations, and our success is dependent on our ability to manage these different models.

In addition to our historical focus onour Direct to Retail licensing model,  we recently commenced franchisecontinue operations with our acquisition of the Flip Flop Shops brand and we intend to grow this business in the future, and we also recently entered into several new licensing arrangements with wholesalers and may seek to enter into additional wholesale arrangements in the future. Even though our pursuits of these wholesale and franchise models may diversify our sources of revenue, these models could themselveswould be unsuccessful and could divert management’s attention and other resources, including time and capital, from our historical focus on our Direct to Retail licensing strategy. As a result, our future success depends in part on our ability to successfully manage these multiple licensing and selling models.

materially jeopardized.  If we are unable to manage our wholesalemeet obligations to lenders and franchise arrangements together with our Directother creditors, we may have to Retail licensing model, then our financial conditionsignificantly curtail or even cease operations.  We are evaluating potential sources of working capital, including the disposition of certain assets, and prospects would be harmed.

Our business is dependent onwe believe that certain provisions of the successCARES Act passed by the U.S. Congress in March 2020 will result in additional liquidity.  We recently received proceeds of $0.7 million from a promissory note issued by one of our Directbanks under the Paycheck Protection Program included in the CARES Act, and the NOL carryback provisions of the CARES Act are expected to Retail licensing model.result in federal refund claims of approximately $8.0 million.  Our plans also include the evaluation of strategic alternatives to enhance shareholder value.  However, there is no assurance that we will be able to execute these plans or continue to operate as a going concern.

Although we have recently commenced franchise operations and have pursued additional wholesale licensing arrangements, we have historically been focused on our Direct to Retail licensing model and it continues to be an important part of our operations. In Direct to Retail licensing, we grant retailers a license to use our trademarks on certain categories of merchandise. We believe the Direct to Retail licensing model has become more widely accepted by many retailers worldwide, and our business plan is based on the continued success of this model with our current licensees and with new retailers we may solicit to license our brands in new territories and additional product categories as we seek to expand this part of our business. However, our expectations regarding the Direct to Retail licensing model10

may turn outAdditionally, even if we are able to be wrong,avoid a further event of default under the credit facility, the amount of our outstanding indebtedness, which is substantial, could have an adverse effect on our operations and liquidity, including by, among other things: (i) making it more difficult for us to pay or refinance our debts as they become due during adverse economic and industry conditions, because we may not growhave sufficient cash flows to make our scheduled debt payments; (ii) causing us to use a larger portion of our cash flows to fund interest and principal payments, thereby reducing the availability of cash to fund working capital, product development, capital expenditures and other business activities; (iii) making it more difficult for us to take advantage of significant business opportunities, such as acquisition opportunities or other strategic transactions, and to react to changes in market or industry conditions; and (iv) limiting our ability to borrow additional monies in the future to fund the activities and expenditures described above and for other general corporate purposes as and when needed, which could force us to suspend, delay or curtail business prospects, strategies or operations.

Our future capital needs may be uncertain, and we may need to raise additional funds in the future, which may not be available when needed, on acceptable terms or at all.

Our capital requirements in future periods may be uncertain and could depend on many factors, including, among others: (i) acceptance of, and demand for, our brands; (ii) the extent to which we invest in our existing brand portfolio or any new brands; (iii) the number and timing of our acquisitions and other strategic transactions; (iv) the costs of developing new brands; (v) the costs associated with our efforts to expand our business; and (vi) the costs of litigation and enforcement activities to protect and defend our trademarks.  We may need to raise additional funds to meet our capital requirements.  However, these or any other necessary funds may not be available when needed, on favorable terms or at all.  If we issue equity or convertible debt securities to raise additional funds, as we anticipate.did with our refinancing of our senior secured credit facility in August 2018 and additional borrowings under our new facility in January 2019, our existing stockholders may experience dilution and the new equity or debt securities may have rights, preferences and privileges senior to those of our existing stockholders.  If we incur additional debt to raise funds, as we did with our senior secured credit facility, we may become over-leveraged, and we may become subject to restrictive financial or operating covenants that could limit our ability to operate our business and expose us to significant risks in the event of any compliance failure.  Moreover, in light of our current level of indebtedness, which is significant, additional debt or potential future retail licensees doequity capital may not perceive our Directbe available on terms we consider advantageous or favorable to Retail licensing modelus.  In addition, we may seek equity and/or debt financing from sources that expose us to be advantageous to them, then they may move away from this model and instead embrace alternatives,additional risks or negative effects, such as, purchasingfor example, obtaining funding from wholesalersrelated parties in transactions that create conflicts of interest between us and the related party, as we did with our arrangement of purchases by certain of our directors, officers and large stockholders of participation interests in our credit facility in December 2017 and the exchange of those participation interests into junior subordinated notes in our new credit facility in August 2018.  Further, we may incur substantial costs in pursuing future capital-raising transactions, including investment banking, legal and accounting fees, printing and distribution expenses and other costs.

If we cannot raise funds when needed, on acceptable terms or manufacturing private label products. Such a change in perception could occur for a variety of reasons, including reasons based on retailers’ beliefs or expectations thatat all, we may not turn outbe able to be accurate.

Ifdevelop or enhance our Direct to Retail licensing model ceases to be attractive to retailers, then we would be unable to continue to pursue this aspect ofbrand portfolio or marketing initiatives, execute our business plan, take advantage of future opportunities, or respond to competitive pressures or customer requirements.  Any of these outcomes may materially harm our business, results of operations and our financial condition and performance could suffer material adverse effects.

Our business has historically been largely dependent on royalties from Target, which no longer sells Cherokee branded products.

Until January 31, 2017, Target had exclusive rights to Cherokee branded products for all product categories in the United States. Royalty revenues from Target’s sales of Cherokee branded products accounted for greater than 35% of our total revenues during each of Fiscal 2017, Fiscal 2016 and Fiscal 2015. However, our license agreement with Target covering sales of most Cherokee branded products in the United States expired on January 31, 2017. Our license agreement with Target covering sales of Cherokee branded products in the school uniforms category will expire at the end of its current term on January 31, 2018, and will continue to generate revenues to us until its expiration.

Replacing the royalty revenues received from Target for Cherokee branded products is a significant challenge, and we might not be successful in doing so. Even though we have entered into arrangements with wholesale licensees for sales of Cherokee branded products in the United States, which became operational at the beginning of Fiscal 2018, any increased revenues we may receive from these new wholesale licensees or any other licensees or franchisees may not be sufficient to offset the lost royalty revenues from Target. If we are not successful in replacing the Target’s royalty revenues with equal or greater royalties from other partners the termination of this license agreement could have a material adverse effect upon our revenues and cash flows.

We acquired the Liz Lange brand in part based upon our expectation that revenues from Target for this brand would grow in future periods, although such revenue growth may never occur. Target has informed us that it has elected to not renew the Liz Lange license agreement, which expires on January 31, 2018 at the end of the current term, Target will continue to pay royalties to Cherokee Global Brands until the expiration of the agreement.  Cherokee Global Brands has entered into a master license agreement with a third party for Liz Lange branded maternity products beginning in Fiscal 2019.condition.

Our wholesale licensing arrangements subject us to a number of risks.

In our wholesale licensing relationships, we license our brands to manufacturers that produce and import various categories of apparel, footwear, home products and accessories under our trademarks and sell the licensed products to retailers. We have some historical wholesale licensees with respect to some of our brands and we have recently entered into several new wholesale arrangements primarily covering our newly acquired Hi-Tec and Magnum brands and sales of products bearing our Cherokee brand in the United States. We believe these arrangements signalconnection with a significant shift in our business strategy, for sales of products bearing the Cherokee brand in the United States, which in the past have been governed byfrom our historical focus on a DTR license agreement.licensing model to a substantially greater focus on wholesale licensing for many of our key brands.  Although we believe these newour wholesale licensing arrangements will helpmay have certain benefits, these arrangements are subject to diversifya number of risks and our sources of revenue and licensee or other partner relationships and will provide additional avenues to obtain brand recognition and grow our Company, these expectationsbeliefs could turn out to be wrong.  If any of these risks occur and we do not achieve the intended or expected benefits of theseour strategy shift toward wholesale arrangements, our results of operations, liquidity and financial condition could be materially adversely affected.  Moreover, we have less experience with the wholesale licensing model than the DTR licensing model and we may find it difficult to develop reliable forecasts and expectations regarding royalty revenues from these arrangements, either of which could harm our business and our operating results.

The terms of our wholesale licensing arrangements differ in certain important ways from the terms of our DTR licensing arrangements.  For instance, the minimum annual royalty obligations under our wholesale licenselicensing arrangements are significantly smaller than the minimum annual royalty obligations in some of our Direct to RetailDTR licensing arrangements, including our former license agreement with Target and our license agreement with Kohl’s.arrangements.  Also, our new wholesale license

agreements for the Cherokee brand and the Hi-Tec and Magnum brands are not subject to reducing royalty rates based on cumulative sales levels, as was our former license agreement with Target for the Cherokee brand.  As we begin to recognize revenues from these new wholesale licensees and toThese different terms could have a material impact on our performance.  For example, the extent we pursue similar wholesale arrangements in the future, their lower minimum royalty obligations and consistent royalty rates of these wholesale licensing arrangements could cause our performance and cash flows to be more strongly influenced by the seasonality of the retail business and thus subject to more material fluctuations between periods, and the lower minimum royalty obligations could also cause our aggregate annual royalty revenues to decline if retail sales volume for our brands decreases and we become dependent uponon minimum royalty obligations.  These effects on our performance could become increasingly significant in future periods, to the extent our new wholesale licensees gain traction over time with new retailers and consumer bases and the proportion of our royalty revenues from these licensees increases, or if we pursue similar wholesale arrangements in the future.

11

Table of Contents

Additionally, in wholesale licensing arrangements, we have limited ability to control various aspects of the manufacturing process, including access to raw materials, the timing of delivery of finished products, the quality of finished products and manufacturing costs.  Our wholesale licensees may not be able to produce finished products of the quality or in the quantities that are sufficient to meet retailer and consumer demand in a timely manner or at all, which could result in an inability to generate revenuerevenues from any such products and loss of retailer confidence in our brands.  Interruptions or delays in the manufacturing process can occur at any time and for a variety of reasons, many of which are outside our control, including, among others, unforecasted spikes in demand, shortages of raw materials, labor disputes, backlogs, insufficient devotion of resources to the manufacture of products bearing our brands, or problems that may arise with manufacturing operations or facilities or our wholesale licensees’ businesses generally.  On the other hand, our wholesale licensees may produce inventory in excess of retailer and consumer demand, in which case over-supply may cause retail prices of products bearing our brands to decline.  Additionally, there may be delays in the manufacturing process over which we may have no control, including shortages of raw materials, labor disputes, backlogs or insufficient devotion of resources to the manufacture of products bearing our brands. Further, we compete with other brand owners for the time and resources of our wholesale distributors,licensees, which could curtail or limit our ability to engage new or maintain relationships with existing wholesale licensee partners on acceptable terms or at all. Interruptions in the supply of products bearing our brands to retailers or lapses in quality could adversely impact our reputation and financial condition.  Further, the unplanned loss of any of our wholesale licensees could lead to inadequate market coverage for retail sales of products bearing our brands, create negative impressions of us and our brands with retailers and consumers, and add downward pricing pressure on prices of products bearing our brands as a result of liquidating a former wholesaler’s inventory of such products.  The occurrence of any of these risks could adversely impact our reputation, performance and financial condition.

RevenuesWe rely on the accuracy of our licensees’ sales reports for reporting and collecting our royalty revenues, and if these reports are untimely or incorrect, our revenues could be delayed or inaccurately reported or collected

Most of our royalty revenues are generated from retailers that manufacture and sell products bearing our Hawk Signaturebrands in their stores and Tony Hawkon their websites, and from wholesalers that manufacture and distribute products bearing our brands largely dependand sell these products to retailers.  In addition, we generate revenues from licensees that sell products that we have developed and designed.  Under our existing agreements, our licensees pay us fees based on Kohl’stheir sales of products or, for Fiscal 2018.some of our wholesale licensees, based on their manufacturing costs.  As a result, we rely on our licensees to accurately report their sales or costs in collecting our license and design fees, preparing our financial reports, projections and budgets and directing our sales and marketing efforts.  Although all of our agreements permit us to audit our licensees, if any of them understate their sales or costs, we may not collect and recognize the royalty revenues to which we are entitled on a timely basis or at all, or we may endure significant expense to obtain compliance.

We utilize various licensing and selling models in our operations, and our success is dependent on our ability to manage these different models.

In January 2014,addition to the DTR licensing model, we acquired the Hawk Signaturealso focus some of our key brands on a wholesale licensing strategy, and Tony Hawk brands. Concurrently with this acquisition, we entered intouse a retail license agreement with Kohl’s, pursuantproduct development and design model for brands owned by others.  Although we believe these various licensing and design models could have certain benefits, these models could themselves be unsuccessful and our beliefs could turn out to which Kohl’s is granted the exclusive right to sell Tony Hawkbe wrong.  Moreover, our pursuit of these different models could divert management’s attention and Hawk-branded apparelother resources, including time and related products in the United States. We agreed to this exclusive licensecapital.  As a result, our future success depends in part on our ability to successfully manage these multiple licensing and design models.  If we are unable to do so, our performance, financial condition and prospects could be materially harmed.

Our business continues to depend in part on the success of our Direct to Retail licensing model.

Our DTR licensing model continues to be an important part of our operations.  We believe the DTR licensing model has become more widely accepted by many retailers worldwide, and our business plan is based uponin part on the success of this model with our expectation that revenues from Kohl’s for theseexisting retail licensees and with new retailers we may solicit to license our brands will growunder this model in future periods, although this expectationnew territories and additional product categories.  However, our beliefs regarding the DTR licensing model may turn out to be wrong, and it may not achieve or sustain increased acceptance or its use by retailers could decline.  If our existing or potential future retail licensees do not perceive the DTR licensing model to be advantageous to them, which could occur for a variety of reasons, they may move away from this model and pursue alternatives, such revenue growthas purchasing from wholesalers or manufacturing private label products.  In that event, this aspect of our business may never occur beyond the $4.6 million minimum annual royalty payment required under the license agreement, as amended.prove unsuccessful and our financial condition and performance could suffer material adverse effects.

12

Table of Contents

The failure of our licensees or franchisees to sell products bearing our brands or that otherwise generate royalties to us,to pay us royalties for such productspursuant to their license agreements with us, or to renew their license or franchisethese agreements with us could result in a decline innegatively affect our results of operations.operations and financial condition.

Our revenues are dependent on royalty payments made to us under our license and franchisedesign services agreements.  Although thesome of our license agreements for our brands in many cases provide for guaranteedguarantee a minimum royalty paymentspayment to us each year, the failure of our licensees or franchisees to satisfy theirthese or the other obligations under their agreements with us, their decision to not renew their agreements with us or their inability to grow or maintain their sales of products bearing our brands or their businesses generally could cause our revenues to suffer.decline.  These events or circumstances could occur for a variety of reasons, many of which are outside our control, including business and operational risks that impact our licensees’ ability to make payments and sell products generally, such as obtaining and maintaining desirable store locations and consumer acceptance and presence; retaining key personnel, including the specific individuals who work on sales and marketing for products bearing our brands; and liquidity and capital resources risks.  Further, while we historically have been dependent on our relationships with Target and Kohl’s, the failure by any of our other key licensees or the concurrent failure by several of our other material licensees or franchisees to meet their financial obligations to us or to renew their respective license or franchise agreements with us could materially and adversely impact our results of operations and our financial condition.

Our acquisition of the Hi-Tec and Magnum brands and conversion of these brands to a new business model is subject to significant risks.

We acquired the Hi-Tec, Magnum and other associated footwear brands in December 2016. Before our acquisition, the Hi-Tec brands were operated under a full spectrum distribution model, meaning that one group of affiliated companies owned the brands and manufactured the products. In connection with our acquisition of these brands, we sold the associated operating assets to certain operating partners and/or distributors and entered into new

wholesale licensing arrangements with these operating partners and/or distributors. Through these transactions and our post-acquisition integration efforts, we are converting the Hi-Tec brands to a branded licensing model. Going forward, we primarily intend to pursue a wholesale licensing model for these brands.

The acquisition of these brands and our conversion of their distribution model to align with our brand licensing model are subject to significant risks, as these brands have not historically been marketed, distributed and sold in this manner and it is uncertain whether this model will be effective for these brands. As a result, we are not able to reliably forecast or predict the impact of these brands on our revenues or other aspects of our results of operations. Further, the roles and responsibilities of the parties in the distribution chain for these products, including our Company, as the licensor of the brands and overseer of high-level marketing strategies, the wholesalers we engage to manufacture and distribute products bearing these brands, and the retailers to which the wholesalers sell these products for ultimate resale to consumers, will be different following our conversion of these brands to our brand licensing model. The wholesalers we have engaged for these brands to date, which consist of former operating partners and/or distributors of these brands, may not be familiar with or accustomed to our brand licensing model and may not be successful in converting their distribution efforts to align with this model. Further, as we make efforts to expand these brands to new geographic and consumer markets, we expect to pursue new arrangements with additional wholesale licensees for these brands. However, as with any effort to expand into new markets, any new wholesalers we may engage in the future for these brands, as well as the retailers and consumers they reach, may not be familiar with the brands and may not accept them. Any such outcome could result in failures to sell products bearing these brands in volumes and at prices that generate expected levels of revenue to us.

Additional risks associated with our acquisition of these brands include, among others, the following: (i) we expect our strategy for these brands to focus on wholesale licensing, and as a result, our efforts to build this brand will be subject to all of the risks associated with wholesale arrangements, including our dependence on third parties that we do not control, our lack of significant experience with wholesale arrangements and the other risks of wholesale licensing discussed elsewhere in these risk factors; (ii) the geographic scope of these brands is more significant than many of our other brands, and as a result, these operations will amplify the risks related to the international scope of our business, including less effective and less predictable protection and enforcement of our intellectual property in some jurisdictions and the other risks associated with our international operations discussed elsewhere in these risk factors; (iii) our conversion of the business model for these brands will require significant efforts, costs and other resources, which will divert attention from our other brands and could cause the performance of our other brands to suffer; and (iv) the acquisition of these brands has already involved significant time and costs, including the cash purchase price for the assets and our other expenses associated with the transaction, which has forced us to increase our debt levels and use significant amounts of cash on-hand and which puts significant pressure on our liquidity, particularly in light of the risks associated with our ability to manage and grow these brands under a new licensing model.

In light of the significance of the risks related to our acquisition of the Hi-Tec, Magnum and associated footwear brands and our efforts to convert their distribution model, we may fail to achieve the intended benefits of our acquisition of these brands and we may never generate sufficient royalty revenues from these brands to recoup their costs. If any of these outcomes were to occur, our performance, financial condition and liquidity could be materially adversely affected.

Our indirect product sales of products bearing the Hi-Tec and Magnum brands involve risks, including certain collection and credit risks and decreased comparability of our operating results.

Since our acquisition of the Hi-Tec and Magnum brands in December 2016, we have been indirectly selling footwear bearing these brands to certain select wholesalers and government entities that are customers of these brands. In these relationships, the purchasers of the products place their product orders directly with us, which we then forward to a manufacturer for the manufacture and delivery of the products directly to the original purchaser. The wholesalers and government entities that purchase products under these arrangements submit payments directly to us for their product orders, the amount of which is typically determined based on a pre-established percentage mark-up to our cost, and we then pay the manufacturer of the purchased products for the cost of the order. As a result, we retain a percentage of the payments made to us by wholesalers and government entities.  In Fiscal 2017, we recorded a total of $6.6 million in

revenues from these indirect product sales, of which a total of $5.1 million was paid to manufacturers or distributors as a cost of the product sales.

Due to the payment structure for these arrangements, a significant portion of our revenues from indirect product sales is paid out to manufacturers as a cost of the product sales. Since the cost portion of these revenues, representing the product cost, are not retained by us, they are recorded as costs of goods sold in our consolidated financial statements and do not significantly increase our operating net income (loss). As a result, for as long as we maintain these indirect product sale arrangements, we may record increased revenues that do not materially increase our operating income (loss). The addition of indirect product sales to our business model, which has historically been exclusively focused on licensing and franchising relationships, could substantially reduce the comparability of our results of operations across periods and render such comparisons less meaningful.

In addition, although the product purchasers in these arrangements receive products directly from the manufacturer, which is similar to our wholesale licensing relationships, our indirect role in these product sales does not completely remove us from certain risks related to the manufacture and delivery of the products. For instance, since we are between the purchaser and the manufacturer in the product payment cycle, the wholesalers and government entities that purchase products under these arrangements may hold us financially responsible for product delivery failures or other similar events. Additionally, since these arrangements place us in direct contact, either through product order placement or receipt or payment of funds, with both the customer and the manufacturer of the products, we may be subject to increased credit risks based on these relationships. Moreover, serving as an intermediary between product customers and product manufacturers with respect to order placement and payment, and our role as such may expose us to additional risks of which we are not presently aware or we may not be able to effectively serve in this role. Further, although we intend to convert these indirect product sale arrangements to traditional direct or wholesale licensing relationships as the existing arrangements expire, the wholesalers and government entities with which we maintain these arrangements may not be amenable to a such a licensing relationship, in which case we could lose these customers or be required to maintain business relationships that would change our present business model. The occurrence of any of these risks could adversely affect our customer relationships and our performance.

Our franchise business exposes us to numerous risks.

In connection with our acquisition of the Flip Flop Shops brand in October 2015, we acquired, and became the franchisor under, a number of franchise agreements with franchisees of this brand. Many of these franchisees maintain one or more Flip Flop Shops retail stores located across the globe, including in the United States, Canada, the Caribbean, the Middle East and South Africa. This new Flip Flop Shops franchise business exposes us to a variety of risks, including, among others, that: (i) we may not be able to find capable and experienced franchisees who can implement the Flip Flop Shops brand concept and strategies we believe are necessary for the future growth of this brand or sell merchandise and operate stores in a manner consistent with our standards and requirements; (ii) even if we are able to attract capable franchise owners, these franchisees may not be able to open new Flip Flop Shops retail stores in a timely manner or manage and maintain them once opened, secure desirable site locations, obtain adequate financing, construct and develop new store locations without delays and attract qualified operating personnel; (iii) the third party brands that are sold at Flip Flop Shops stores could decline in popularity or decide to stop selling their merchandise at some or all of the Flip Flop Shops store locations; (iv) neighborhood or economic conditions or other demographic patterns where existing or new Flip Flop Shops stores are located could decline or otherwise change in a negative way; and (v) our franchise business is subject to complex and varying franchise laws and regulations imposed by the U.S. federal, state and foreign jurisdictions in which we operate, and we may need to devote significant costs and resources in order to learn and comply with these laws and regulations and we may be subject to various penalties, including monetary fines or other sanctions if we fail to comply with these laws and regulations. If any of these risks were to materialize, the reputation of the Flip Flop Shops brand or our other brands could be damaged, sales volume at one or more Flip Flop Shops store locations could decline, existing store locations may close or new may store locations may fail to open at expected rates or at all, the Flip Flop Shops brand name may not grow as we anticipate, or our franchise revenues relating to this brand could be limited, curtailed or reduced, any of which could harm our performance and prospects.

Our business may be negatively impacted by general economic conditions.

Our performance is subject to worldwide economic conditions and the corresponding impact on levels of consumer spending, which may affect our licensees’ and franchisees’ retail sales.  It is difficult to predict future levels of consumer spending, and any such predictions are inherently uncertain.  Many factors affect the level of consumer spending in the apparel industries,industry in which we operate, including, among others, prevailing economic conditions,conditions; levels of employment, salaries and wage rates,rates; energy costs,costs; interest rates,rates; the availability of consumer credit, taxationcredit; tax rates; and consumer confidence in future economic conditions.  Further, the worldwide apparelour industry is heavily influenced by general economic cycles. Purchasescycles, as purchases of apparel, footwear, accessories and accessorieshome products tend to decline in periods of recession or uncertainty regarding future economic prospects, as disposable income typically declines. As a result, during periods of economic uncertainty, slowdown or recession because disposable income typically declines during these periods.  As a result, the risks associated with our business are generally more acute.acute in these periods.  For instance, general uncertainty in U.S. economic, political, regulatory, and market conditions has increased following the results of the 2016 U.S. presidential election due to the unpredictability of the policies and direction of the newcurrent administration, and these uncertainties may result in decreased confidence in the U.S. or global economy and decreased levels of consumer spending.  In addition to decreased consumer spending generally, these periods of uncertainty, slowdown or recession may be accompanied by decreased demand for, or additional downward pricing pressure on, the products carrying our brands.  Accordingly, any prolonged economic slowdown, a lengthy or severe recession or any other negative trend in either the U.S. or the global economy iswould likely to have a material adverse effect on our results of operations, financial condition and business prospects.

We are subject to additional risks associated with the international scope of our operations.

Many of our licensees and franchisees are located outside the United States, asand we franchise our Flip Flop Shops brand and market and license our other brands outside the United States. As a key component of our business strategy, we intendaim to expand our international sales as well as the support we provide our international licensees and franchisees. During Fiscal 2017, approximately 37% of our revenues were derived from our international licensees and franchisees.revenues. In addition, our business associated with our newly acquired Hi-Tec family of footwear brands is managedwe have subsidiaries and operated by our Dutch subsidiary that we formed for the purpose of the acquisition.employees in Amsterdam.

We face numerous risks in doing business outside the United States, including, among others: (i) the ongoing worldwide impacts of COVID-19; (ii) our general lack of experience operating foreign subsidiaries, (ii)subsidiaries; (iii) unusual, unfamiliar or burdensome foreign laws or regulatory requirements, including tax, labor, contract, intellectual property protection and other laws, and unexpected changes to these laws or requirements; (iii)(iv) difficulties complying with the laws of multiple jurisdictions; (iv)(v) uncertainties in some jurisdictions related to developing legal and regulatory systems and standards for economic and business activities, property ownership and the application of contract rights; (v)(vi) tariffs, trade protection measures, import or export licensing requirements, trade embargos, and other trade barriers, about which there is increased uncertainty following the results of the 2016 U.S. presidential election and the trade policies of the newcurrent administration, including withdrawal from the Trans-Pacific Partnership and proposed revision to the North American Free Trade Agreement; (vi)(vii) difficulties in attracting and retaining qualified personnel to conduct our foreign operations or manage our foreign licensees and franchisees; (vii)(viii) challenges relating to labor and employment matters, including differing employment practices and requirements regarding health, safety and other working conditions in foreign jurisdictions; (viii)(ix) competition from foreign companies; (ix)(x) longer accounts receivable collection cycles and difficulties in collecting accounts receivable; (x)receivable from international licensees and franchisees; (xi) less effective and less predictable protection and enforcement of our intellectual property rights in some jurisdictions; (xi)(xii) changes in the political or economic condition of a specific country or region, particularly in emerging markets; (xii)(xiii) potentially adverse tax consequences from the several U.S. and foreign jurisdictions in which we are subject to taxation; and (xiii)(xiv) cultural differences in the conduct of business.  Any one or more of suchthese factors could cause our future international salesrevenues to decline or could cause us to fail to execute on our business strategy involving international expansion.  In addition, our business practices in international markets are subject to the requirements of the Foreign Corrupt Practices ActFCPA and applicable foreign anti-bribery laws, any violation of which could subject us to significant fines, criminal sanctions and other penalties.

Additionally, and because the majority13

Table of ourContents

Our international revenue isroyalty revenues are typically denominated in U.S. dollars,dollars.  However, because our international licensees and franchisees operate in other currencies, fluctuations in the value of the U.S. dollar relative to thethese foreign currencies of our international licensees’ or franchisees’ operations may negativelyhave an impact on our royalty revenues.revenues, which could materially affect our results of operations and cash flows.  The mainprimary foreign currencies we encounter in which our operationslicensees operate are the

Mexican Peso, the EURO, Euro, the Great British Pound, the Mexican Peso, the South African Rand, the Japanese Yen, the Chinese Yuan, the Indian Rupee and the Canadian Dollar.  We do not currently engage in currency hedging activities to limit the risk of exchange rate fluctuations.

WeSome of our licensees have contracts with government entities that are subject to unique risks.

WeSome of our licensees for our Hi-Tec family of footwear brands have, and expect to maintain, long-term contracts with various foreign government entities, which primarily relate to our Hi-Tec family of footwear brands.entities.  In addition to normal business risks, including the other risks discussed in these risk factors, our licensees’ contracts with government entities are often subject to unique risks, some of which are beyond our or their control.  For instance, long-term government contracts and related orders are subject to cancellation if adequate appropriations for subsequent performance periods are not made.  As a result, the termination of funding for a government program supporting any of our licensees’ government contracts could result in a loss of anticipated future revenue attributable torevenues from that contract, which could have a negative impact on our operations.operations because our royalty revenues from the licensee attributable to the government contract would also cease.  In periods of global or local political tension or unrest or decreased spending, these risks could be amplified.  In addition, government entities with which we contract are often able to modify, curtail or terminate contracts with us at their convenience and without prior notice and would only be required to pay for work completed and commitments made at the time of the termination.  Any such modification, curtailment or termination of significant government contracts products bearing our Hi-Tec family of footwear brands could have a material adverse effect on our licensees’ sales of these products, which in turn, could have a material adverse effect on our results of operations and financial condition.

Our business and the success of our products could be harmed if we are unable to maintain the strength of our brands.

Our success to date has been due in large part tois dependent on the strength of our brands.  If we are unable to timely and appropriately respond to changingchanges to consumer demand,preferences and demands, which are subject to significant fluctuations, the strength of our brands may be impaired.  Even if we do react timely and appropriately to these changes, in consumer preferences, consumers may still consider one or more of our brands to be outdated or associate one or more of our brandsassociated with styles that are no longer popular.  In the past, many apparel companies in our industry have experienced periods of rapid growth in sales and earningsrevenues followed by periods of declining sales and losses.  Our business may be similarly affected in the future.

We have identified material weaknesses in our internal control over financial reporting, which could adversely affect our business and reputation and could, if not remediated, result in material misstatements in our financial results.

Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. As disclosed in Item 9A of this Annual Report, management has identified material weaknesses in our internal control over financial reporting. A material weakness is a deficiency or combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our consolidated financial statements will not be prevented or detected on a timely basis. As a result of these material weaknesses, our management concluded that our internal control over financial reporting was not effective as of January 28, 2017. This conclusion could cause investors to lose confidence in the reliability of our reported financial information, which could result in a significant decline in the market price of our common stock. Additionally, our reputation with lenders, retailers, investors, securities analysts and others may be adversely affected. Moreover, these effects could continue even after we have determined that the identified material weaknesses are remediated.

Although we have developed and initiated a remediation plan designed to address the material weaknesses we have identified, this plan may not be fully implemented in a timely or effective manner, the remedial measures included in the plan will involve significant time and costs and will distract management from our core business operations, and these remedial measures could be insufficient to address the material weaknesses. In addition, even if we are successful in strengthening our controls and procedures, these controls and procedures may not be adequate in future periods and additional material weaknesses or significant deficiencies in our internal control could occur or be discovered. If any of these risks were to occur, our consolidated financial statements may contain material misstatements and we could be required to restate our financial results. Any such restatement could lead to substantial additional costs for accounting and legal fees and litigation, significant reputational harm and material declines in our stock price.

Compliance with changing securities laws, regulations and financial reporting standards could increase our costs and pose challenges for our management team, and any compliance failures could materially harm our business.

Existing laws, regulations, listing requirements and other standards relating to corporate governance and public disclosure significantly increase the costs and risks associated with operating as a publicly traded company in the United States. Our management team devotes significant time and financial resources to try to comply with existing and evolving standards for public companies. However, notwithstanding our efforts, we have failed to comply with the SEC’s reporting deadlines applicable to this Annual Report, and it is possible that additional financial and other public reports we are obligated to file in the future also may not be considered timely, accurate or complete. In order to re-establish compliance with our public reporting requirements, we intend to hire additional personnel, engage consultants or other third-party advisors and change our internal practices, standards and policies, which could significantly increase our costs and divert management’s time and attention from revenue-generating activities. In addition, noncompliance with these reporting requirements could subject us to sanctions or investigation by regulatory authorities, such as the SEC, which could involve fines or other penalties, and could also adversely affect our financial results, result in a loss of investor confidence in the reliability of our financial information and other public disclosures and jeopardize the listing of our common stock on the NASDAQ Global Select Market, as described below. If any of these risks were to occur, our business and reputation could be materially adversely affected and the market price of our common stock could materially decline.

Further, the SEC has passed, promulgated or proposed new rules on a variety of subjects, including, for example, with respect to the preparation and filing of financial statements, establishment or disclosure of clawback and hedging policies and disclosure of executive compensation information. The existence of new and proposed laws and regulations relating to financial reporting or other disclosure obligations or that impose additional or more stringent compliance requirements could create uncertainties for public companies, make it more difficult to attract and retain qualified executive officers and members of our Board of Directors, particularly to serve on our audit and compensation committees, and generate significantly increased costs if we are required to add additional accounting or other staff, engage consultants or change our internal practices in order to comply with the new requirements. The occurrence of any of these outcomes could significantly harm our business, financial condition and performance.

We are dependent on our intellectual property rights, especially our trademarks, and we may not be able to successfully protect our rights, or we may become involved in costly legal proceedings regarding our intellectual propertyrelating to these rights or the intellectual property rights of third parties.

Our trademarks are vital to our business.  We hold various trademarks for our brands, including Cherokee, Hi-Tec, Magnum, 50 Peaks, Interceptor, Hawk Signature, Tony Hawk, Liz Lange, Completely Me by Liz Lange, Flip Flop Shops, Everyday California, Carole Little, Sideout and others in connection with apparel, footwear, home and accessories. These trademarks are vital to the success and future growth of our business. These trademarksbrand names, which are registered with the United States Patent and Trademark Office and corresponding government agencies in numerous other countries and weOffice.  We also hold trademarks or trademark applications for these brandsour brand names with similar government agencies in a number of other countries, although the laws of many countries may not protect our intellectual property rights to the same extent as the laws of the United States and, as a result, adequate protection in these jurisdictions may be unavailable or limited. These actions taken by uslimited in spite of our efforts to safeguard these rights.  In addition, our efforts to establish and protect our trademarks and other proprietary rights might not prevent imitation of our brands or products bearing our brands, other infringement of our intellectual property rights, by unauthorized parties or other challenges to our intellectual property ownership, or prevent the loss of licensinglicense or franchise revenuerevenues or other damages caused thereby, including a reductionnegative effects.  Further, any insufficiency in the protection of our trademarks and other intellectual property rights could reduce the value of our licenses thatbrands, which could make it easier for competitorslimit the ability of our licensees and franchisees to capture increasedeffectively compete for market share.  If any of these events occurs,were to occur, our business, prospects, financial condition, results of operations and liquidity could be materially harmed.

In addition, in the future, we may be requireddecide to assert infringement claims against third parties, and one or more parties may assert infringement claims against us.  Any resulting litigation could result in significant expense and divert the efforts of our management and other personnel, whether or not such litigation is determined in our favor.  Further, if any adverse ruling in any such matter occurs, any resulting limitations in our ability to market or license our brands could reduce the value of our licenses and our intellectual property assets and otherwiseour licenses, which could result in limitations on our ability to market and license our brands and have a material adverse effect on our business, financial condition and results of operations.

14

We may become involved in other litigation or government or administrative proceedings that may materially affect us.

From time to time, we may become involved in various legal proceedings relating to matters incidental to the ordinary course of our business, including commercial, employment, class action and other litigation and claims.  We may also be the subject of government and other regulatory investigations, audits and proceedings, including in connection with any claim of our violation of the laws, rules and regulations applicable to our business, such as federal, state and foreign franchise laws, anti-bribery laws and work safety and labor laws, among others.  SuchThese matters can be time-consuming, divert management’s attention and resources and cause us to incurresult in significant legal and other expenses.  Furthermore, because litigation and administrative or government proceedings are inherently unpredictable, any of these proceedings could result in unfavorable outcomes, which could include monetary damages or fines and other sanctions.  Any such result could have a material adverse effect on our business, results of operations or financial condition.

We are dependent on our key management and other personnel.

Our success is highly dependent uponon the continued services of our key executives, consistingincluding of Henry Stupp, our Chief Executive Officer and a member of our board of directors (“Board of Directors”), Howard Siegel, our President and Chief Operating Officer, and Jason Boling, our Chief Financial Officer, as well as certain of our other key employees, including Ed van Wezel, the Chief Executive Officer of our subsidiary that manages our Hi-Tec family of footwear brands, Martin Binnendijk, the President and Chief Operating Officer of our subsidiary that manages our Hi-Tec family of footwear brands, and Brian Curin, the President of our subsidiary that manages our Flip Flop Shops franchise operations.directors.  We have a limitedrelatively small number of employees, and the leadership and experience of Mr. Stupp’sStupp and our other executives’ leadershipexecutives and experience in the apparel licensing industry, Mr. Curin’s expertise in the franchising industry, and Messrs. van Wezel’s and Binnendijk’s experience with our newly acquired Hi-Tec family of footwear brandskey employees are important to the successful implementation of our business and marketing strategy.strategies.  We do not carry key person life insurance covering any of our executives or other employees.  The loss of the services of Mr. Stupp or our other executives or key employees could have a material adverse effect on our business prospects, financial condition, results of operations and liquidity.

We may encounter risks and difficulties in connection with acquisitions or other strategic transactions, and we may not realize the expected benefits fromof these transactions.

We regularly evaluate opportunities to acquire or represent new brands. During our three most recently completed fiscal years,brands, and we have completed threeseveral such acquisitions: our acquisition ofacquisitions during the Everyday California Lifestyle brand in May 2015; our acquisition of the Flip Flop Shops brand in October 2015; and our acquisition of the Hi-Tec and Magnum brands in December 2016.past several years.  We expect to continue to consider opportunities to acquire or make investments in other brands or to engage in other strategic transactions that could enhance our portfolio of products and services or enable us to expand the breadth of ourto new markets.  Our experience integrating acquired assets and businesses is limited, and we may not be successful in realizing the expected benefits from an acquisition.of any acquisition we may pursue.  Our future success depends, in part, uponon our ability to manage an expandedexpanding portfolio of brands, which could involve significantly increased costs and pose substantial challenges for management.

Acquisitions and other strategic transactions can involve numerous risks and potential difficulties, including, among others: (i) problemschallenges assimilating new brands or other assets;assets into our business and our brand licensing model; (ii) problems maintaining and enforcing standards, procedures, controls, policies and information systems; (iii) difficulties and costs in combining the operations and personnel of anyan acquired businessesbusiness with our operations and personnel, including any failure to retain key employees, customers, vendors, manufacturers or other service providers or partners of anyan acquired businesses,business, any failure to convert and integrate acquired assets into our brandedbrand licensing business model, and challenges forecasting revenues and expenses for newly acquired brands;brands or businesses; (iv) significant or unanticipated costs associated with an acquisition, including incurrence of contingent liabilities, amortization charges associated with acquired assets, wirte-offswrite-offs of goodwill or trademarks,intangible assets, capital expenditures and accounting, legal and other transaction expenses; (v) any inability to realize the intended or expected synergies andor other benefits of an acquisition or transaction, particularly if our assumptions about sales, revenues, operating expenses and costs of acquired assets or businesses turn out to be wrong; (vi) diversion of management’s attention from our core business or our existing brand portfolio; (vii) adverse effects on existing business relationships with our partners;relationships; (viii) risks associated with foreign acquisitions or otherwise entering new geographic or

customer markets, such as our acquisition of the Hi-Tec and Magnum brands in December 2016, including regional differences in consumer preferences, branding standards and the general conduct of business, less effective and less predictable protection and enforcement of intellectual property rights in some foreign jurisdictions and the other risks related to doing business outside the United States;States discussed elsewhere in these risk factors; and (ix) risks associated with new types of business arrangements in which we have no or limited prior experience, such as our acquisition of franchise agreements and entry into the franchising business upon our acquisition of the Flip Flop Shops brand in October 2015.experience.  Accordingly, our recent acquisitions as well asand any future strategic transactions that we pursue may not result in the anticipated benefits and could have a material adverse effect on our business, results of operations, financial condition and prospects.

In addition, future acquisitions may require us to obtain additional equity or debt financing, which may not be available when needed, on favorable terms or at all.  If we seek to finance future acquisitions or other strategic transactions by issuing equity or convertible debt securities or by incurring other types of indebtedness, we may experience the risks associated with these transactions that are described elsewhere in these risk factors below. Further, we may seek such financing from sources that expose us to additional risks, such as our receivables funding loan agreement entered into with one of our directors, Mr. Jess Ravich, in December 2016 in connection with our acquisition of the Hi-Tec and Magnum brands, which creates a conflict of interest between us and Mr. Ravich that could have negative effects. Any of these effects could harm our operating results or financial condition.factors.

We have incurred a significant amount of indebtedness to pay the cash consideration for our recent acquisitions. Our level of indebtedness, and restrictions under such indebtedness, could adversely affect our operations and liquidity.15

We entered into a credit facility with Cerberus Business Finance, LLC (“Cerberus”) in December 2016. As of the date of this report, approximately $45.0 million in principal amount is outstanding under our term loan facility with Cerberus. As of the date of this report, we also have $5.0 million outstanding on our revolving credit facility with Cerberus. Our outstanding indebtedness under the Cerberus credit facility is due in December 2021.

The Cerberus credit facility imposes various restrictions and covenants regarding the operation of our business, including covenants that require us to obtain Cerberus’s consent before we can, among other things and subject to certain limited exceptions: (i) incur additional indebtedness or additional liens on our property, (ii) consummate acquisitions, dispositions, mergers or consolidations, (iii) make any change in the nature of our business, (iv) enter into transactions with our affiliates, or (v) repurchase or redeem any outstanding shares of our common stock or pay dividends or other distributions, other than stock dividends, to our stockholders. The Cerberus credit facility also imposes financial covenants that set financial standards we will be required to maintain. Further, as collateral for the Cerberus credit facility, we have granted a first priority security interest in favor of Cerberus in substantially all of our assets (including trademarks), and our indebtedness is guaranteed by our subsidiaries. If an event of default occurs under the credit facility, that is not forborne, or cured or waived in accordance with the terms of the credit facility, Cerberus has the right to terminate its obligations under the credit facility, accelerate the payment on any unpaid balance of the credit facility and exercise any other rights it may have, including foreclosing on our assets that serve as collateral for the loan. We obtained a waiver to this credit facility on April 28, 2017, due the late filing of the Company’s Fiscal 2017 Form 10-K. Our failure to comply with the terms of our indebtedness could have a material adverse effect to our business, financial condition and liquidity.

We may seek to refinance all or a portion of our indebtedness in the future. Any such refinancing would depend on the capital markets and our financial condition at the time, which could affect our ability to obtain attractive refinance terms when desired, or at all.

In addition, our level of indebtedness generally could adversely affect our operations and liquidity, by, among other things: (i) making it more difficult for us to pay or refinance our debts as they become due during adverse economic and industry conditions because we may not have sufficient cash flows to make our scheduled debt payments; (ii) causing us to use a larger portion of our cash flows to fund interest and principal payments, thereby reducing the availability of cash to fund working capital, product development and capital expenditures and other business activities; (iii) making it more difficult for us to take advantage of significant business opportunities, such as acquisition opportunities or other strategic transactions, and to react to changes in market or industry conditions; and (iv) limiting

our ability to borrow additional monies in the future to fund working capital, product development, capital expenditures, brand acquisitions and other general corporate purposes as and when needed, which could force us to suspend, delay or curtail business prospects, strategies or operations.

Our future capital needs may be uncertain and we may need to raise additional funds in the future, and such funds may not be available when needed,  on acceptable terms or at all.

Our capital requirements in future periods may be uncertain and could depend upon many factors, including, among others: acceptance of, and demand for, our brands; the costs of developing new brands; the extent to which we invest in new brands; the number and timing of our acquisitions and other strategic transactions; the costs associated with our expansion, if any; and the costs of litigation and enforcement activities to defend our trademarks. In the future, we may need to raise additional funds, and such funds may not be available when needed, on favorable terms, or at all. If we issue equity or convertible debt securities to raise additional funds, as we did with our public offering of our common stock in December 2016, our existing stockholders would experience dilution and the new equity or debt securities may have rights, preferences, and privileges senior to those of our existing stockholders, and if we incur additional debt to raise funds, as we did with our new credit facility with Cerberus entered into in December 2016, we may become over-leveraged and our ability to operate our business may be restricted by the agreements governing the debt. Further, we may incur substantial costs in pursuing future capital transactions, including investment banking fees, legal fees, accounting fees, printing and distribution expenses and other costs.

Moreover, our late filing of this Annual Report renders us ineligible to register the offer and sale of our securities using a registration statement on Form S-3, and we will not regain such eligibility until we have timely filed our periodic reports with the SEC for 12 consecutive calendar months. We do not know when we will meet this requirement, which depends upon our ability to file our periodic reports on a timely basis in the future. If we seek to raise capital through an offering of our securities while we remain ineligible to use Form S-3, our inability to use this form could limit our financing alternatives, reduce our ability to access capital in a timely manner and increase our transaction costs, any of which could make it more difficult to execute any such transaction successfully and could have an adverse effect on our financial condition.

If we cannot raise funds when needed, on acceptable terms or at all, we may not be able to develop or enhance our products and services, execute our business plan, take advantage of future opportunities, or respond to competitive pressures or unanticipated customer requirements. This may materially harm our business, results of operations and financial condition.

Our strategic and marketing initiatives may not be successful.

In recent periods, weWe have invested significant funds and management time in furtherance of our global strategic and marketing initiatives, which are designed to strengthen our brands, assist our licensees in generating increased sales of products bearing our brands and build value for our stockholders over the long term.  We expect to continue and, in some cases, expand suchthese initiatives in future periods.  While we are hopeful that our efforts in executing on these initiatives will expandgrow our business and build stockholder value, over the long-term, we may not be successful in doing so and suchthese initiatives may not result in the intended or expected benefits.  Any failure by us to execute on our strategic initiatives, or the failure of suchthese initiatives to cause our revenues to grow, could have a materially adverse impact on our operating results and financial performance.

We must successfully maintain and/or upgrade our information technology systems.

We rely on variousSignificant disruptions of information technology systems, includingbreaches of data security, or unauthorized disclosures of sensitive data or personally identifiable information could adversely affect our Enterprise Resource Planning system, to manage our operations, which subjectsbusiness and could subject us to inherent costsliability or reputational damage.

Our business is increasingly dependent on critical, complex, and risks associated with maintaining, upgrading, replacinginterdependent information technology (“IT”) systems, including Internet-based systems, some of which are managed or hosted by third parties, to support business processes as well as internal and changing theseexternal communications. The size and complexity of our IT systems includingmake us potentially vulnerable to IT system breakdowns, malicious intrusion, and computer viruses, which may result in the impairment of our information technology, potential disruptionability to operate our business effectively.

In addition, our systems and the systems of our internal control systems, substantial capital expenditures, demands on management timethird-party providers and delayscollaborators are potentially vulnerable to data security breaches which may expose sensitive data to unauthorized persons or difficulties in upgrading existing systems, transitioning to new systemsthe public. Such data security breaches could lead to the loss of confidential information, trade secrets or integrating new systems into our current systems. If anyother intellectual property, or could lead to the public exposure of these risks were to materialize, our operations could be disrupted and our performance could be harmed.

Our business and operations would suffer in the event of cybersecurity and other system failures.

Despite the implementation of security measures, our internal computer systems and thosepersonal information (including personally identifiable information) of our licenseesemployees, customers, business partners, and franchisees are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, warothers. In addition, the increased use of social media by our employees and telecommunication and electrical failures. Although we have not experienced any such cybersecurity or system failure, accident or breach to date, some of our licensees, including Target, have experienced such events in the past. If such an event were to occur to our internal systems, itcontractors could result in a materialinadvertent disclosure of sensitive data or personal information, including but not limited to, confidential information, trade secrets and other intellectual property.

Any such disruption or security breach, as well as any action by us or our employees or contractors that might be inconsistent with the rapidly evolving data privacy and security laws and regulations applicable within the United States and elsewhere where we conduct business, could result in enforcement actions by U.S. states, the U.S. Federal government or foreign governments, liability or sanctions under data privacy laws that protect personally identifiable information, regulatory penalties, other legal proceedings such as but not limited to private litigation, the incurrence of significant remediation costs, disruptions to our development programs, business operations substantial costs to rectify or correct the failure, if possible, lossand collaborations, diversion of ormanagement efforts and damage to our data or applications, inappropriate disclosure of confidential or proprietary information or the incurrence of other material liabilities. If such events were to occur to our licensees’ or franchisees’ systems, our royalty revenuesreputation, which could be reduced or disrupted due to decreased sales of our branded products as a result of reputational damage, diversion of costs and other resources from selling products bearing our brands or inability of our licensees or franchisees to calculate royalties or generate royalty reports. Any of these events could severely harm our business resultsand operations. Because of operationsthe rapidly moving nature of technology and prospects.the increasing sophistication of cybersecurity threats, our measures to prevent, respond to and minimize such risks may be unsuccessful.

In addition, the European Parliament and the Council of the European Union adopted a comprehensive general data privacy regulation (“GDPR”) in 2016 to replace the current European Union Data Protection Directive and related country-specific legislation. The GDPR took effect in May 2018 and governs the collection and use of personal data in the European Union. The GDPR, which is wide-ranging in scope, will impose several requirements relating to the consent of the individuals to whom the personal data relates, the information provided to the individuals, the security and confidentiality of the personal data, data breach notification and the use of third-party processors in connection with the processing of the personal data. The GDPR also imposes strict rules on the transfer of personal data out of the European Union to the United States, enhances enforcement authority and imposes large penalties for noncompliance, including the potential for fines of up to €20 million or 4% of the annual global revenues of the infringer, whichever is greater.

Changes in our effective tax rates or tax provisions or adverse outcomes resulting from examination of our income tax returns could adversely affect our net income.financial results.

We are subject to income tax in the United States, California and certain other state jurisdictions.  In addition, following our acquisition of the Hi-Tec family of footwear brands, we are also subject to taxation in several foreign jurisdictions, which may have unusual, unfamiliar or particularly burdensome tax laws.  Our new global tax structure could be negatively impacted by various factors, including changes in the tax rates in jurisdictions in which we earn income or changes in tax laws or interpretations of tax laws in the jurisdictions in which we operate, allany of which could impact our future effective income tax rates.  Our effective tax rates could also be adversely affected in the future by changes in the valuation of our deferred tax assets and liabilities.  Any increase in our effective tax rate could adversely affect our future reported financial results or the way in which we conduct our business.

16

Table of Contents

Significant judgment is required in determining our provision for income taxes. Intaxes, as there are many transactions and calculations in the ordinary course of our business therethat involve uncertain tax determinations.  If we are many transactions and calculations where the ultimate tax determination is uncertain. Further, we may be audited by tax authorities, whichthese authorities could evaluate and disagree with our judgments regardingabout our tax provisions.  Although we believe our tax estimates are reasonable, the final determination of tax audits and any related litigationauthorities in the event of such an audit could be expensive to defend and materially different from our historical income tax provisions and accruals.  The results ofAny adverse result in such an audit or related litigation could materially negatively affect our income tax provision net income or cash flowsand results of operations in the period or periods for which thatthe determination is made.  Moreover, any such audits or litigation, regardless of its outcome, could distract management and be expensive to defend, which could negatively affect our results of operations, liquidity and financial condition.

Compliance with securities laws, regulations and financial reporting standards could increase our costs and pose challenges for our management team, and any compliance failures could materially harm our business.

Existing laws, regulations, listing requirements and other standards relating to corporate governance and public disclosure significantly increase the costs and risks associated with operating as a publicly traded company in the United States.  Our management team devotes significant time and financial resources to try to comply with existing and evolving standards for public companies.  Notwithstanding our efforts, it is possible that financial and other public reports we are obligated to file may not be considered timely, accurate or complete, in which case we may be forced to devote additional time and capital resources to further improve our public reporting systems and processes.  In addition, any noncompliance with public reporting requirements could subject us to sanctions or investigation by regulatory authorities, such as the SEC, which could involve fines or other penalties, and could also adversely affect our financial results, result in a loss of investor confidence in the reliability of our financial information and other public disclosures and jeopardize the listing of our common stock on the Nasdaq Capital Market, as described elsewhere in these risk factors.  If any of these risks were to occur, our business and reputation could be materially adversely affected, and the market price of our common stock could materially decline.

Further, the SEC has passed, promulgated or proposed new rules on a variety of subjects, including, for example, preparing and filing financial statements, establishing and disclosing clawback and hedging policies and disclosing additional executive compensation information.  The existence of new and proposed laws and regulations relating to financial reporting or other disclosure obligations or that impose additional or more stringent compliance requirements could create uncertainties for public companies, make it more difficult to attract and retain qualified executive officers and members of our board of directors, particularly to serve on our audit and compensation committees, and generate significantly increased costs if we are required to add additional accounting or other staff, engage consultants or change our internal practices in order to comply with the new requirements.  The occurrence of any of these outcomes could significantly harm our business, financial condition and performance.

Risks Related to Our Common Stock

The trading price of our common stock may be volatile, and shares of our common stock are relatively illiquid.

The trading price of our common stock has been, and is likely to continue to be, subject to material fluctuations.  These fluctuations as a result ofcan be caused by various factors, impacting our business, including, among others: (i) the ongoing impacts of COVID-19; (ii) our financial results; (ii)results and financial condition, including our liquidity; (iii) our ability to maintain compliance with our obligations, including our credit facility; (iv) the successful completion of any acquisition or strategic transaction, including the integration of the acquired assets or businesses into our existing business and realization of the intended or expected synergies and other benefits of the acquisition or transaction; (iii)benefits; (v) any announcements by us, our retail partners or our competitors as applicable, regarding or affecting the retail environment, either domestically or internationally, the reputation of our brands, our existing or any new license agreements and brand representations, or acquisitions, strategic alliances or other transactions; (iv)(vi) recruitment or departure of key personnel; (v)(vii) changes in the estimates ofour financial guidance, if any, expectations for our financial results in the investment community, or changes in the recommendations of any securities analysts that elect to follow our common stock; (vi)(viii) any material weaknesses in our internal control over financial reporting including the material weaknesses we identified as of January 28, 2017 that are described elsewhere in these risk factors, or any failures to comply with applicableour public reporting requirements, as has occurred with this Annual Report and as is described elsewhere in these risk factors; (vii)requirements; (ix) market conditions in the retail industry and the economy as a whole; and (viii)(x) the other risks described in these risk factors.

Further, as a result of our relatively small public float, our common stock may be less liquid, and the trading price for our common stock may be more affected by relatively small volumes of trading, than is the case for the common stock of companies with broader public ownership. Among other things, trading of a relatively small volume of our

17

common shares may have a greater impact on the trading price for our common stock than would be the case if our public float was larger.

We are not currently in compliance with NASDAQ’scertain Nasdaq listing requirements. If we are not able to regain compliance with these requirements, for continued listing, and if NASDAQ does not concur that we have adequately remedied our non-compliance with applicable listing rules, our common stock may be delisted from trading on the NASDAQ Global SelectNasdaq Stock Market, which could have a material adverse effect on us and our stockholders.

On May 3, 2017,June 5, 2018, we received a deficiency letter from The NASDAQthe Nasdaq Stock Market (“NASDAQ”Nasdaq”) indicatingnotifying us that, as a resultbecause the bid price of not filing this Annual Report in a timely manner,our common stock closed below $1.00 per share for 30 consecutive business days, we were notno longer in compliance with NASDAQ Listing Rule 5250(c)(1)Nasdaq’s minimum bid price rule, which is a requirement for continued listing on the NASDAQNasdaq Global Select Market. The deficiency letter indicatedNasdaq’s rules require that we would need to regain compliance with this rule by December 3, 2018.  On December 4, 2018, however, we received a letter from Nasdaq notifying us that our transfer to the Nasdaq Capital Market was approved and that we had been granted an additional 180-day extension period to regain compliance with the minimum bid price rule.  This 180-day period expired on June 3, 2019.  We received another letter from Nasdaq on June 4, 2019 indicating their intent to delist our securities from the Nasdaq Capital Market on June 13, 2019 because we had not achieved the required minimum bid price unless we requested an appeal of this determination.  We filed our appeal on June 6, 2019 and met with the Nasdaq Hearings Panel in August 2019. The Nasdaq Hearings Panel accepted our compliance plan, which resulted in the September 2019 one-for-three reverse stock split described in Note 1 to our condensed consolidated financial statements included in this report.  On October 30, 2019, The Nasdaq Hearings Panel granted our continued listing on Nasdaq subject to further review after December 2, 2019.  On December 11, 2019, we received a letter from Nasdaq informing us that the Nasdaq Hearings Panel determined that we had regained compliance with the minimum bid price rule.  As a result, the Nasdaq Hearings Panel determined that we were in compliance with all applicable listing standards required for listing on The Nasdaq Capital Market.  However, based on our recent bid price history, the Nasdaq Hearings Panel imposed a Hearings Panel monitor pursuant to Nasdaq Listing Rule 5815(d)(4)(A), through December 2, 2020.  On April 3, 2020, we received notice from the Nasdaq indicating that, based upon the Company’s non-compliance with the minimum closing bid price requirement of $1.00 per share, as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Rule”), for the prior 30-consecutive business day period, the Company’s securities were subject to suspension and delisting unless the Company timely requests a hearing before the Nasdaq Hearings Panel. We were not provided the 180-day compliance period typically granted to issuers under Nasdaq Listing Rule 5810(c)(3)(A) because we were already under the jurisdiction of the Nasdaq Hearings Panel.  We filed our appeal on April 10, 2020, which stays any further action by Nasdaq at least pending the ultimate conclusion of the hearing process. On April 16, 2020, Nasdaq announced it was providing temporary relief from the Rule as a result of the COVID-19 pandemic and related extraordinary market conditions.  Compliance requirements will resume on July 1, 2020.  If we have until July 3, 2017not regained compliance with the Rule by the date that compliance requirements resume, the hearings process will resume.  At the hearing, if it becomes necessary, we would expect to submit apresent our plan to regain compliance with NASDAQ’s continued listing standards;the Rule and request an extension within which to do so. The Nasdaq Hearings Panel has the discretion to grant us an extension through no later than September 30, 2020 plus the incremental days of the temporary relief period; however, there can be no assurance that the Nasdaq Hearings Panel will grant our request or that we believe our filing of this Annual Report has resulted in our regainedwill be able to evidence compliance with NASDAQ’s continuedthe applicable listing standards and has eliminatedcriteria within the needperiod of time that may be provided by the Nasdaq Hearing Panel.

If we fail to submit such a compliance plan. Although we believe that, as of our filing of this Annual Report, we are currently in compliance with NASDAQ’s continued listing requirements, we could failcontinue to comply with these requirements againthe minimum bid price rule or with any other Nasdaq requirement in the future. In that case, we would receive additional deficiency letters from NASDAQ andfuture, our common stock could be delisted from trading on the NASDAQ Global Select Market, whichNasdaq.  Such an event could cause our common stock to be classified as a “penny stock,” among other potentially detrimental consequences, and could severely limit the liquidity of our common stock and materially adversely affect the price of our common stock.

We may fail to meet publicly announced financial guidance or other expectations about our business, which would cause our common stock to decline in value.

From time to time, we may provide forward-looking financial guidance regarding our performance.  Any such guidance would be based on our then-current views, expectations and assumptions and could be materially different than our actual results.  Additionally, securities analysts or others in the investment community may publish expectations for our financial results, which also could be materially different than our actual results.  These differences could occur for a variety of reasons, such as, for instance, changes to the assumptions used to forecast or calculate the financial guidance or expectations, or the occurrence of risks related to our performance and our business, including those discussed in these risk factors, among others.  Any failure to meet any financial guidance or expectations regarding our future performance could harm our reputation and cause our stock price to decline.

We may not pay dividends regularly or at all in the future.

The determinationDeterminations regarding the payment of dividends isare subject to the discretion of our Boardboard of Directors, and thereforedirectors.  As a result, we may not pay any dividends in future periods, whether or not we generate sufficient cash to do so.  In addition, pursuant to our credit facility, with Cerberus, subject to limited exceptions, we are prohibited from paying dividends or making other distributions to our stockholders without Cerberus’sour lender’s consent.  As a result, any return on an investment in our common stock may be limited to an appreciation in the value of our common stock.

18

Table of Contents

Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.

The sale by our stockholders of substantial amounts of our common stock in the public market, or the perception that such sales could occur upon the expiration of any statutory holding period, such as under Rule 144 under the Securities Act, or upon expiration of any lock-up periods applicable to outstanding shares, including under the lock-up agreements entered into in connection with our public offering of our common stock in December 2016, or upon our issuance of new shares uponas a result of the exercise of outstanding options or warrants or the vesting of restricted stock units, could cause the market price of our common stock to fall.  The availability for sale of a substantial number of shares of our common stock, whether or not sales have occurred or are occurring, also could make it more difficult for us to raise additional financing through the sale of equity or equity-related securities in the future when needed, on acceptable terms or at all.

Our Certificatecertificate of Incorporationincorporation allows our Boardboard of Directorsdirectors to issue up to 1,000,000 shares of “blank check” preferred stock.

Our Certificatecertificate of Incorporationincorporation allows our Boardboard of Directorsdirectors to issue up to 1,000,000 shares of “blank check” preferred stock without any action by our stockholders.  Subject to the restrictions under our new credit facility, with Cerberus, such shares of preferred stock may be issued on terms determined by our Boardboard of Directorsdirectors in its discretion, and may have rights, privilegespreferences and preferencesprivileges superior to those of our common stock.  For instance, such shares of preferred stock could have liquidation rightspreferences that are senior to the liquidation preferencerights applicable to our common stock, could have superior voting or conversion rights, which could adversely affect the voting power of the holders of our common stock, or could have other terms that negatively impact the voting control or other rights of our common stockholders.  Additionally, the ownership interest of holders of our common stock would be diluted following the issuance of any shares of our preferred stock. Further, the preferred stock could be utilized, under certain circumstances, as a method for discouraging, delaying or preventing a change in control of our Company.Company, even at a time or under circumstances when you or other stockholders may prefer such a change in control.

A small number of our stockholders beneficially own a significant portion of our common stock and therefore are able to exert significant influence over our corporate decisions, including the election of directors and a change of control.  The interests of these stockholders may differ from yours.

A small number of stockholders beneficially own a significant portion of our common stock.  As a result, these parties may be able to influence or control matters requiring approval by our stockholders, including the election of directors and mergers, acquisitions or other extraordinary transactions.  These parties may have interests that differ from ours or yours, and they may vote in ways with which you disagree and that may be adverse to your interests.  This concentration of ownership may also have the effect of delaying, preventing or deterring a change of control of our Company, which could deprive our stockholders of an opportunity to receive a premium for their shares of our common stock as part of a sale of our Company.  Conversely, this concentration of ownership may facilitate a change of control at a time or under circumstances when you and other stockholders may prefer not to sell.  Further, this concentration of ownership could adversely affect the prevailing market price for our common stock.

We may fail to meet publicly announced financial guidance or other expectations about our business, which would cause our common stock to decline in value.

From time to time, we provide forward-looking financial guidance to our investors. Such statements are based on our current views, expectations and assumptions and involve known and unknown risks and uncertainties that may cause actual results, performance, achievements or share prices to be materially different from any future results, performance, achievements or share prices expressed or implied by such statements. Such risks and uncertainties include, among others: changes to the assumptions used to forecast or calculate such guidance; risks related to acquisitions or strategic transactions we may pursue in the future, including the risk that we do not realize the anticipated benefits of any such transaction; and risks related to our performance and our branded licensing business model.

Item 1B.    UNRESOLVEDUNRESOLVED STAFF COMMENTS

Not applicable.

Item 2.    PROPERTIES

We lease an 11,399 square foot office facility in Sherman Oaks, California, which serves as our corporate headquarters.  In February 2016, we exercised our right to renew thisThe lease for an additional five-year term, which began on November 1, 2016 andthis facility will endexpire on October 31, 2021,2024, subject to our option to renew the lease for an additional five years thereafter. Our monthly base rent under this lease is currently $30,663. We also lease a 3,850 square foot office facility in Minneapolis, Minnesota. The current term of this lease ends on June 30, 2018, subject to our option to renew for an additional three-year term, and our monthly base rent under this lease is currently $4,013. Beginning in March 2016, we are no longer occupying our Minnesota office facilities and we entered into an agreement to sublease a portion of such facilities to a third party, pursuant to which we receive $1,886 in monthly rent. We also lease a 2,032 square foot office facility in Huntington Beach, California. The lease for our Huntington Beach office facilities was early terminated and is set to expire in August 2017.  Our monthly base rent under this lease is currently $2,736. These lease agreements include provisions allowing for early termination under certain conditions.

Our Hi-Tec subsidiary, acquired in December 2016, leases a 24,251 square foot office facility in Amsterdam, Netherlands, which serves as Hi-Tec’s corporate headquarters. Our monthly base rent under this lease is currently $36,621 and the lease expires on December 31, 2026. This subsidiary also has a lease in Modesto, California for a 111,992 square foot warehouse, which was used by our licensee, Carolina Footwear, during the transition period. Upon their departure we expect to sublease this location. The current term of this lease ends on September 30, 2024 and the monthly base rent under this lease is currently $43,688.  We also have one office in Tigard, Oregon for 8,123 square feet with a monthly base rent of $13,218 which expires on July 31, 2020.  The Tigard office was used by our licensee, Carolina Footwear, during the transition period.  Upon their departure we expect to sublease this location.

Item 3.    LEGAL PROCEEDINGS

From time to time, we may become involved in various lawsuits and legal proceedings that arise in the ordinary course of our business.  The impact and outcome of litigation, if any, is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that could harm our business.  We are not currently aware of any such legal proceedings or claims to which we are a party or to which our property is subject that we believe will have, individually or in the aggregate, a material effect on our business, financial condition or results of operations.

Item 4.    MINE SAFETY DISCLOSURES

Not applicable.

20

PART IIPART II

Item 5.    MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND  ISSUER PURCHASES OF EQUITY SECURITIES

Market Information, Dividends and Holders

Our common stock trades on the NASDAQ Global SelectNasdaq Capital Market under the trading symbol “CHKE”“APEX”.  The table below sets forth, for each of the fiscal quarters during our two most recently completed fiscal years, the range of the high and low sales prices for our common stock and the cashThere were no dividends declared andor paid per share, if any.during Fiscal 2020 or Fiscal 2019.

As of April 20, 2017,13, 2020, the approximate number of stockholdersholders of record of our common stock was 65.38.  This figure does not include an indeterminable number of beneficial holders whose shares may be held of record by brokerage firms and clearing agencies.

In the future, fromFrom time to time, our Boardboard of Directorsdirectors may, in its discretion, declare cash dividends depending upon Cherokee Global Brands’on our financial condition, results of operations, cash flow, capital requirements, compliance with our senior secured credit facility with Cerberus and other factors deemed relevant by our Boardboard of Directors.directors. See the discussion under “Liquidity and Capital Resources” in Item 7, “Management’s Discussion and Analysis” and Note 107 to ourthe consolidated financial statements included in this Annual ReportItem 8, “Financial Statements” for more information about the restrictions on dividends contained in our credit facility with Cerberus.facility.

Common Stock Performance

The following performance graph shall not be deemed to be “soliciting material” or "filed" for purposes of Section 18 of the Exchange Act, or incorporated by reference into any filing under the Securities Act or the Exchange Act, unless it is specifically incorporated by reference into any such filing. The graph is required by applicable SEC rules and is not intended to forecast or be indicative of possible future performance of our common stock.

Due to the nature of our business, we do not believe that a comparable peer group of publicly‑traded licensing companies exists. As a result, we have compared the return on investment in our common stock to the NASDAQ Composite Index and the S&P 100 Stock Index.

The table and the graph below compare the cumulative total stockholder return on our common stock with the cumulative total return of the NASDAQ Composite Index and the S&P 100 Stock Index for the period commencing January 28, 2012 and ending on January 28, 2017. The data set forth below assumes a $100 investment in our common stock and each index on January 28, 2012 and the reinvestment of all dividends.

Item 6.    SELECTED FINANCIAL DATA

The following selected consolidated financial information has been taken or derived from our auditedconsolidated financial statements.  Our consolidated financial statements for Fiscal 2020 and Fiscal 2019 and for each of the two years ended February 1, 2020 are included in this Annual Report. ThisReport and have been audited by our independent registered public accounting firm.  You should read this information may be subject to factors that affect the comparability of the information and these historical results are not necessarily indicative of results to be expected in the current period or in future periods. This information should be read together with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included in Item 8, “Consolidated Financial Statements and Supplementary Data” in this Annual Report.Statements”.