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For detailed information about certain risk factors that could materially affect our business, financial condition or future results see Risk Factors in Part I, Item 1A of our 2024 10-K and in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended March 30, 2025. Set forth below are an additional risk factor and material changes to an existing risk factor previously disclosed in the 2024 10-K. Other than the risk factors set forth below, there have been no material changes to the risk factors previously disclosed in the 2024 10-K.
International trade disputes and tariffs imposed by the United State and the Form 10-Q for the quarter ended March 30, 2025.
We may not be able to refinance the 2021 Credit Agreement, as and/or other countries governmentsmended, on favorable terms within our anticipated timeframe, or a global trade war could adversely impact all, in order to meet our business.
A predominant portion of the merchandise we sell is originallycurrent and future capital needs.
The 2021 Credit Agreement, as amended, will manufactured in countries other than on August 22, 2025 (the United St"Maturity Dates, including China and Mexico. International trade disputes that "). The Forbearance Period under the Forbearance Agreement, as amended, also expiresult in tariffs and o on August 22, 2025. Although ther protectionist or retal Company is currently negotiatory measures could adversely affect our business, including disruption and cost increases iing a new asset-based revolving credit facility, we may not be able to timely refinance the 2021 Credit Agreement, as amended, on favorable terms, within our established anticipatterns for sourced timeframe, or at all, including odue to our merchandise and increasecurrent financial condition, market volatility and uncertainties in planny resulting our sourcing strategies and forecastinfrom international conflicts or geopolitical tensions, among our marginther factors. For example, on April 4,ailure to repay the indebtedness outstanding under the 2025, a global reciprocal tariff program w1 Credit Agreement, as announcmended, establishing a minimum 10% tariff on most imported goods. Certain country-specific tariffs significantly increased, reaching 145% on Chinese importsby the Maturity Date, without a timely cure, waiver or further extension of the Forbearance Period, would result in and 125% on certain United States goods imported into China. How event of default under the 2021 Credit Agreement, as amended. If an ever, on May 12, nt of default under the 2025, the United State1 Credit Agreement, as amended, occurs and China reached a 90-day agreemenis not cured or waived, the lenders could elect to substantideclare ally reduce these tariffs amounts outstand allow for furing under ther negotiations. These tariffs may be increased in the future or additional tariffs may be imposed on imports from China or o 2021 Credit Agreement, as amended, immediately due and payable and exercise other remedies as set forth in ther countries, including 2021 Credit Agreement, as amended. In additional countries where our products are manufactured or sou, the lenders would have the right to enforced from. The imposition or increase of any such tariffs would likely increase the cost their security interests against the collateral pledged to them, which includes substantially all of our merchandise and negativeassets.
We currently impact our operating results. Although such changes would have implications acrosshave $5.8 million of indebtedness outstanding under the terms of the entire industry, we may fail to effectively2021 Credit Agreement, as amended. In addition, we expect to require adapt to and manage ditional capital in the adjustments in strategy that would be necessary in response to those changfuture to respond to business opportunities, challenges, or unforeseen circumstances. WIf we are working with our current suppliers to mitigunable to refinance the 2021 Credit Agreement, as amended, on favorable terms within our anticipate our exposure to current or potential tariffd timeframe, or at all, our ability to repay our indebtedness under the 2021 Credit Agreement, as and seeking opportunitiesmended, and continue to engage othegrow or suppliers, but there can be no assurance that we willort our business, and respond to business challenges could be able to offset any increased costs or secure osignificantly limited.
We are required to meet ther suppliers. It is also possible one or more of Nasdaq Capital Markets continued listing requirements and othese suppliers r Nasdaq rules, or we may suffer disruptions in their business or experienrisk delisting. Delisting could negatively affect the price significant increases in the cost of their goods orof our common stock, which could make it more difficult for us to servicll securities sold due to factors beyond theiin a future financing or for you to sell our control, includimmon stock.
We are required to meet the continued listing changes in requirements of the imporNasdaq Capital Market and export policiother Nasdaq rules, including tradhose restrictions, new garding director increased tariffs, sanctionsdependence and countersanctions. Further, we may have to increaseindependent committee requirements, minimum share prices for our cu, minimum stomers, which could reduce ckholders' equity and certain other competitiveness of our products and adversentinued listing standards and corporate governance requirements.
We have previously affect sales.
Otherfailed to meet the countries may also change ntinued listing requirements of their business and trade policies in ant Nasdaq Global Market under Nasdaq rules. Specifically, we received a deficipation of or in response toency letter from Nasdaq on February 27, 2025 regarding not being in compliance with the United States and/or othminimum close bid price of $1.00 per countries increased import tariffsshare required for continued listing, and other changes in international trade policy and regulatwe received a deficiency letter on May 21, 2025 regarding not being in compliance with the minimum $10 millions already ena of stockholders' equity required for
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ctontinued orlisting on that may be enacte Nasdaq Global Market. We regained in the future. In addicompliance with these deficiencies through our implementation toof the general uncertaintyReverse Stock Split and overall risk from potential changes in trade laws and policies, as we make business decisions in the face of such uncertainty, we may incorrectly anticipateur transfer to the Nasdaq Capital Market, respectively. While we are currently in compliance with the outcomes, miss out on business opportunities, or fail to effectively adapt our business strategies and manage the adjustcontinued listing requirements of the Nasdaq Capital Market, there can be no guarantee that we will be able to maintain compliance with these requirements that are necessary in responsein the future. If we are unable to those changes. These risks could adversely affect our revenues, reduce our profmaintain compliance with the continued listing requirements of the Nasdaq Capitability, and negatively impact our business.
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