Quarterly Report (10-q)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended October 31, 2020.

☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file number 0-18640

APEX GLOBAL BRANDS INC.

(Exact name of registrant as specified in its charter)

Delaware		95-4182437
(State or other jurisdiction of Incorporation or organization)		(IRS employer identification number)

5990 Sepulveda Boulevard, Sherman Oaks, CA		91411
(Address of principal executive offices)		Zip Code

Registrant’s telephone number, including area code (818) 908-9868

Securities registered pursuant to Section 12(b) of the Act: None

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐		Accelerated filer ☐

Non-accelerated filer ☒		Smaller reporting company ☒
		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of December 7, 2020, there were approximately 569,130 shares of the Registrant’s Common Stock outstanding.

APEX GLOBAL BRANDS INC.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION		3

ITEM 1. Financial Statements (unaudited):		3

Condensed Consolidated Balance Sheets October 31, 2020 and February 1, 2020		3

Condensed Consolidated Statements of Operations Three and nine months ended October 31, 2020 and November 2, 2019		4

Condensed Consolidated Statements of Stockholders’ (Deficit) Equity Three and nine months ended October 31, 2020 and November 2, 2019		5

Condensed Consolidated Statements of Cash Flows Nine months ended October 31, 2020 and November 2, 2019		6

Notes to Condensed Consolidated Financial Statements		7

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		13

ITEM 4. Controls and Procedures		20

PART II. OTHER INFORMATION		21

ITEM 1. Legal Proceedings		21

ITEM 1A. Risk Factors		21

ITEM 6. Exhibits		23

SIGNATURES		25

PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

APEX GLOBAL BRANDS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share and per share amounts)

	October 31, 2020			February 1, 2020
Assets
Current assets:
Cash and cash equivalents	$	1,629		$	1,209
Accounts receivable, net		3,927			4,962
Income tax and other receivables		8,876			157
Prepaid expenses and other current assets		1,331			1,431
Total current assets		15,763			7,759
Property and equipment, net		240			319
Intangible assets, net		49,647			59,110
Goodwill		6,752			12,152
Accrued revenue and other assets		3,508			3,582
Total assets	$	75,910		$	82,922
Liabilities and Stockholders’ (Deficit) Equity
Current liabilities:
Accounts payable and other current liabilities	$	6,145		$	6,282
Current portion of long-term debt		60,938			56,044
Deferred revenue—current		1,263			3,551
Total current liabilities		68,346			65,877
Long-term liabilities:
Long-term debt		490			—
Deferred income taxes		8,379			9,515
Long-term lease liabilities		1,159			1,389
Other liabilities		842			794
Total liabilities		79,216			77,575
Commitments and contingencies (Note 7)
Stockholders’ (deficit) equity:
Preferred stock, $.02 par value, 1,000,000 shares authorized, none issued		—			—
Common stock, $.02 par value, 25,000,000 shares authorized, shares issued 569,130 (October 31, 2020) and 557,053 (February 1, 2020)		11			11
Additional paid-in capital		79,139			78,641
Accumulated deficit		(82,456	)		(73,305	)
Total stockholders’ (deficit) equity		(3,306	)		5,347
Total liabilities and stockholders’ (deficit) equity	$	75,910		$	82,922

See notes to condensed consolidated financial statements.

APEX GLOBAL BRANDS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share amounts)

	Three Months Ended						Nine Months Ended
	October 31, 2020			November 2, 2019			October 31, 2020			November 2, 2019
Revenues	$	4,050		$	4,894		$	12,463		$	15,549
Operating expenses:
Selling, general and administrative expenses		2,291			3,193			7,288			10,117
Stock-based compensation		110			153			405			876
Transaction and other costs		654			73			654			284
Restructuring charges		—			138			(97	)		180
Intangible assets and goodwill impairment charges		4,607			5,000			14,407			5,000
Depreciation and amortization		223			232			668			743
Total operating expenses		7,885			8,789			23,325			17,200
Operating loss		(3,835	)		(3,895	)		(10,862	)		(1,651	)
Other (expense) income:
Interest expense		(2,895	)		(2,182	)		(7,507	)		(6,678	)
Other (expense) income, net		(27	)		(59	)		(175	)		2
Total other expense, net		(2,922	)		(2,241	)		(7,682	)		(6,676	)
Loss before income taxes		(6,757	)		(6,136	)		(18,544	)		(8,327	)
(Benefit) provision for income taxes		(788	)		692			(9,393	)		2,026
Net loss	$	(5,969	)	$	(6,828	)	$	(9,151	)	$	(10,353	)
Net loss per share:
Basic loss per share	$	(10.58	)	$	(12.35	)	$	(16.34	)	$	(19.32	)
Diluted loss per share	$	(10.58	)	$	(12.35	)	$	(16.34	)	$	(19.32	)
Weighted average common shares outstanding:
Basic		564			553			560			536
Diluted		564			553			560			536

See notes to condensed consolidated financial statements.

APEX GLOBAL BRANDS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY

(Unaudited)

(In thousands)

	Common Stock
	Shares		Par Value			Additional Paid-in Capital			Accumulated Deficit			Total
Balance, February 1, 2020		557	$	11	$		78,641		$	(73,305	)	$	5,347
Stock-based compensation		—		—			150			—			150
Stock warrants		—		—			32			—			32
Net loss		—		—			—			(1,849	)		(1,849	)
Balance, May 2, 2020		557	$	11	$		78,823		$	(75,154	)	$	3,680
Stock-based compensation		—		—			145			—			145
Equity issuances, net of tax		6		—			—			—			-
Stock warrants		—		—			32			—			32
Net loss		—		—			—			(1,333	)		(1,333	)
Balance, August 1, 2020		563	$	11	$		79,000		$	(76,487	)	$	2,524
Stock-based compensation		—		—			110			—			110
Equity issuances, net of tax		6		—			(3	)		—			(3	)
Stock warrants		—		—			32			—			32
Net loss		—		—			—			(5,969	)		(5,969	)
Balance, October 31, 2020		569	$	11	$		79,139		$	(82,456	)	$	(3,306	)

	Common Stock
	Shares		Par Value			Additional Paid-in Capital			Accumulated Deficit			Total
Balance, February 2, 2019		490	$	10	$		76,917		$	(61,805	)	$	15,122
Stock-based compensation		—		—			208			—			208
Equity issuances, net of tax		42		1			622			—			623
Stock warrants		—		—			28			—			28
Net loss		—		—			—			(2,258	)		(2,258	)
Balance, May 4, 2019		532	$	11	$		77,775		$	(64,063	)	$	13,723
Stock-based compensation		—		—			515			—			515
Equity issuances, net of tax		20		—			—			—			—
Stock warrants		—		—			28			—			28
Net loss		—		—			—			(1,267	)		(1,267	)
Balance, August 3, 2019		552	$	11	$		78,318		$	(65,330	)	$	12,999
Stock-based compensation		—		—			153			—			153
Equity issuances, net of tax		5		—			(21	)		—			(21	)
Stock warrants		—		—			27			—			27
Net loss		—		—			—			(6,828	)		(6,828	)
Balance, November 2, 2019		557	$	11	$		78,477		$	(72,158	)	$	6,330

See notes to condensed consolidated financial statements.

APEX GLOBAL BRANDS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	Nine Months Ended
	October 31, 2020				November 2, 2019
Cash flows from operating activities:
Net loss	$		(9,151	)	$	(10,353	)
Adjustments to reconcile net loss to cash from operating activities:
Depreciation and amortization			668			743
Restructuring charges			(97	)		180
Intangible assets and goodwill impairment charge			14,407			5,000
Amortization of deferred financing costs			2,641			1,755
Interest expense paid in kind			3,296			—
Deferred income taxes and other noncurrent provisions			(1,172	)		1,163
Stock-based compensation and stock warrant charges			501			958
Changes in operating assets and liabilities:
Accounts receivable			1,035			(989	)
Income tax and other receivables			(8,719	)		49
Prepaid expenses and other current assets			100			207
Accrued revenue and other assets			74			(569	)
Accounts payable and other liabilities			44			(2,640	)
Long- term lease liabilities			(230	)		—
Deferred revenue			(2,288	)		2,243
Net cash provided by (used in) operating activities			1,109			(2,253	)
Cash flows from investing activities:
Capital investments			(133	)		(195	)
Net cash used in investing activities			(133	)		(195	)
Cash flows from financing activities:
Proceeds from promissory note payable		735				—
Payments on term loan			(700	)		(950	)
Debt issuance costs			(588	)		(39	)
Issuance of common stock			(3	)		601
Net cash used in financing activities			(556	)		(388	)
Increase (decrease) in cash and cash equivalents			420			(2,836	)
Cash and cash equivalents, beginning of period			1,209			4,284
Cash and cash equivalents, end of period	$		1,629		$	1,448
Cash paid for:
Income taxes	$		738		$	790
Interest	$		1,863		$	4,923
Noncash investing and financing activities:
Interest paid in kind	$		3,296		$	—

See notes to condensed consolidated financial statements.

APEX GLOBAL BRANDS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.	Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statement presentation. Cherokee Inc. changed its name to Apex Global Brands Inc. effective June 27, 2019. These financial statements include the accounts of Apex Global Brands Inc. and its consolidated subsidiaries (the “Company”) and include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the Company’s financial condition and the results of operations for the periods presented. The condensed consolidated financial statements and notes thereto should be read in conjunction with the audited financial statements and notes thereto for the year ended February 1, 2020 included in the Company’s Annual Report on Form 10-K. Interim results are not necessarily indicative of results to be expected for the full year.

Liquidity and Going Concern

The accompanying condensed consolidated financial statements have been prepared on the going concern basis of accounting, which assumes the Company will continue to operate as a going concern and which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. Under the Company’s senior secured credit facility, the Company is required to maintain specified levels of Adjusted EBITDA as defined. The Company’s operating results for the twelve months ended November 2, 2019 and twelve months ended February 1, 2020 resulted in violations of the minimum Adjusted EBITDA covenant, which are events of default, and the valuation report prepared by the Company’s senior secured lender during the first quarter of Fiscal 2021 indicated that the Company’s borrowing base is less than the outstanding term loan balance. Beginning in the first quarter of fiscal 2021, the Company’s business has been materially adversely affected by the effects of the global pandemic of COVID-19 and the related protective public health measures. The Company’s business depends upon purchases and sales of products bearing the Company’s brands by the Company’s licensees, and the prevalence of shelter in place and similar orders in the regions where these products are sold, together with the closure of many retail stores of the Company’s licensees, have resulted in significant declines in the Company’s royalties, which will likely continue for some period of time. In response to the decline in revenues, the Company has implemented cost savings measures, such as pay reductions and employee furloughs among other things.

The Company’s senior lender has agreed to forbear from enforcing its rights under the senior secured credit facility with respect to various defaults through December 31, 2020 or March 31, 2021 if certain milestones are met, and the senior secured credit facility now matures on March 31, 2021 or December 31, 2020 if certain milestones are not met. Beginning with May 1, 2020 and continuing through the term of the forbearance agreement, interest and loan amortization payments are not be paid in cash, other than approximately $85,000 per month beginning on September 1, 2020 and the interest payment due August 1, 2020, but an equivalent amount is added to the principal amount of the term loans to be repaid. During the forbearance period, the Adjusted EBITDA covenant was reduced, the required minimum cash balance to be maintained by the Company was reduced, and the borrowing base requirement was suspended. The Company is required during the forbearance period to evaluate strategic alternatives designed to provide liquidity to repay the term loans under the senior secured credit facility. In exchange for these concessions, the senior lender will receive an additional fee totaling 2% of the outstanding loan balance when the debt is repaid, which together with other exit fees is expected to total approximately $2.5 million. The Company’s Junior Note holders also agreed to accept interest payments in the form of additional principal rather than in cash from April 1, 2020 through January 1, 2021, and payments to the Company’s Junior Notes holders are generally restricted by the forbearance agreement.

Future compliance failures under the senior secured credit facility subjects the Company to significant risks, including the right of its senior lender to terminate its obligations under the senior secured 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 the Company’s and/or its subsidiaries’ assets that serve as collateral for the borrowed amounts. If any of these rights were to be exercised, or if the Company is unable to refinance its senior secured credit facility by the accelerated maturity of March 31, 2021, which could be further accelerated to December 31, 2020 if certain milestones are not met, the Company’s financial condition and ability to continue operations would be materially jeopardized. If the Company is unable to meet obligations to lenders and other creditors, the Company may have to significantly curtail or even cease operations. The Company is evaluating potential sources of working capital and believes that the NOL carryback provisions of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act passed by the U.S. Congress in March 2020 will result in additional liquidity, although the timing of these future cash receipts is uncertain. NOL carryback claims are expected to result in federal income tax refunds of approximately $9.1 million. Management’s plans also include the evaluation of strategic alternatives to refinance its debt or otherwise enhance shareholder value. There is no assurance that the Company will be able to execute these plans. Because of this uncertainty, there is substantial doubt about the Company’s ability to continue as a going concern.

Reverse Stock Split

On September 2, 2020, the Company effected a one-for-ten reverse stock split (the “Reverse Stock Split”) of its common stock. The Reverse Stock Split reduced the number of the Company’s outstanding shares of common stock from approximately 5.6 million shares to approximately 0.6 million shares. Unless the context otherwise requires, all share and per share amounts in these condensed consolidated financial statements have been revised to reflect the Reverse Stock Split including reclassifying an amount equal to the reduction in par value of our common stock to additional paid-in capital.

2.	New Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued a new accounting standard update (“ASU”) to simplify the accounting for income taxes. The new guidance removes certain exceptions for recognizing deferred taxes for investments, performing intra-period allocation and calculating income taxes in interim periods. It also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. This guidance will be effective for the first quarter of the Company’s Fiscal 2023, which will end on January 28, 2023. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements and related disclosures.

3.	Intangible Assets

Intangible assets consists of the following:

	October 31, 2020							February 1, 2020
(In thousands)	Gross Amount		Accumulated Amortization			Net Book Value		Gross Amount		Accumulated Amortization			Net Book Value
Amortizable trademarks	$	30,283		(21,186	)	$	9,097	$	30,153		(20,600	)	$	9,553
Indefinite lived trademarks		40,550		—			40,550		49,557		—			49,557
	$	70,833	$	(21,186	)	$	49,647	$	79,710	$	(20,600	)	$	59,110

Intangible assets include trademarks that are classified as indefinite lived and not subjected to amortization. The Company's revenues have been adversely impacted by the COVID-19 pandemic and its effect on the Company’s licensees. This was identified as an interim impairment indicator for the related indefinite lived trademarks during the preparation of the Company’s interim financial statements for the quarters ended May 2, 2020 and October 31, 2020, and management performed interim impairment tests at those times based on updated cash flow projections and discounted cash flows based on estimated weighted average costs of capital (income approach). The Company determined that the fair values of its Hi-Tec and Magnum trademarks were not in excess of their carrying values, and as a result, an impairment charge of $4.4 million was recorded during the three months ended May 2, 2020 and an additional impairment charge of $4.6 million was recorded during the three months ended October 31, 2020 to adjust these trademarks to their estimated fair value. The forecasted impact of the COVID-19 pandemic on the Company’s future revenues is subject to change as additional information becomes available. Further impairments may be required if management’s revenue forecasts for Hi-Tec and Magnum are further reduced in future reporting periods. The Company has acquired other trademarks that are being amortized over their estimated useful lives, which average 10.0 years with no residual values. Amortization of intangible assets was $0.2 million for both the three months ended October 31, 2020 and November 2, 2019, and $0.6 million and $0.5 million for the nine months ended October 31, 2020 and November 2, 2019, respectively.

The Company’s goodwill arose from the Hi-Tec Acquisition that occurred during Fiscal 2017 and amounted to $16.3 million at that time. Goodwill is tested at least annually for impairment in the Company’s fourth quarter, and because the Company has one reporting unit, the impairment test is based primarily on the relationship between the Company’s market capitalization and the book value of its equity adjusted for an estimated control premium. The annual goodwill impairment test in the fourth quarter of the fiscal year ended February 1, 2020 indicated that the Company’s goodwill was impaired, and an impairment charge of $4.1 million was recorded to reduce goodwill to $12.2 million. The Company’s market capitalization was adversely affected during the three months ended May 2, 2020 as a result of the COVID-19 pandemic. This was identified as an interim impairment indicator for goodwill during the preparation of the Company’s interim financial statements, and management performed an interim impairment test, which indicated that the Company’s goodwill was impaired. Accordingly, an impairment charge of $5.4 million was recorded during the quarter ended May 2, 2020 to reduce goodwill to $6.8 million.

4.	Accounts Payable and Other Current Liabilities

Accounts Payable and other current liabilities consist of the following:

(In thousands)	October 31, 2020		February 1, 2020
Accounts payable	$	3,955	$	2,814
Accrued employee compensation and benefits		164		413
Restructuring plan liabilities		854		1,677
Income taxes payable		306		291
Other liabilities		866		1,087
	$	6,145	$	6,282

5.	Restructuring Plans

The Company incurred restructuring charges in Fiscal 2018 and Fiscal 2017 related to the Hi-Tec Acquisition and its integration into the Company’s ongoing operations (the “Hi-Tec Plan”). Restructuring charges were also incurred during Fiscal 2019 as the Company took additional steps designed to improve its organizational efficiencies by eliminating redundant positions and unneeded facilities, and by terminating various consulting and marketing contracts (the “FY19 Plan”).

Adjustments to, and payments against, the restructuring plan obligations were as follows:

(In thousands)	FY19 Plan			Hi-Tec Plan			Total
Balance, February 1, 2020	$	1,649		$	28		$	1,677
Restructuring charge		(97	)					(97	)
Payments during the period		(714	)		(12	)		(726	)
Balance, October 31, 2020	$	838		$	16		$	854

Debt

On August 3, 2018, the Company entered into a senior secured credit facility, which provided a $40.0 term loan, and $13.5 million of subordinated promissory notes (the “Junior Notes”). The credit facility was amended on January 30, 2019 to provide an additional term loan of $5.3 million. The term loans generally require quarterly principal payments and monthly interest payments based on LIBOR plus a margin. The additional $5.3 million term loan also requires interest of 3.0% payable in kind with such interest being added to the principal balance of the loan. The term loans are secured by substantially all the assets of the Company and are guaranteed by the Company’s subsidiaries. The Junior Notes mature in November 2021, and they are secured by a second priority lien on substantially all of the assets of Company and guaranteed by the Company’s subsidiaries. Interest is generally payable monthly on the Junior Notes, but no periodic amortization payments are required. The Junior Notes are subordinated in rights of payment and priority to the term loans but otherwise have economic terms substantially similar to the term loans. The weighted-average interest rate on both the term loans and Junior Notes at October 31, 2020 was 11.0%.

The term loans are generally subject to a borrowing base and include financial covenants and obligations regarding the operation of the Company’s business that are customary in facilities of this type, including limitations on the payment of dividends. Financial covenants include the requirement to maintain specified levels of Adjusted EBITDA, as defined in the agreement, and maintain a specified level of cash on hand. The Company is required to maintain a borrowing base comprising the value of the Company’s trademarks that exceeds the outstanding balance of the term loans. If the borrowing base is less than the outstanding term loans at any measurement period, then the Company would be required to repay a portion of the term loans to eliminate such shortfall. Events of default include, among other things, the occurrence of a change of control of the Company, and a default under the term loans agreement would also trigger a default under the Junior Notes agreements.

The Company’s operating results for the twelve months ended November 2, 2019 and February 1, 2020 resulted in violations of the minimum Adjusted EBITDA covenant, which are events of default, and the valuation report prepared by the Company’s senior secured lender during the first quarter of Fiscal 2021 indicated that the Company’s borrowing base is less than the outstanding term loan balance. However, the Company’s senior secured lender has agreed to forbear from enforcing its rights under the senior secured credit facility in response to these events of default and borrowing base shortfall, and on December 15, 2020, the senior secured credit facility was amended, and the forbearance agreement was extended through December 31, 2020 or March 31, 2021 if certain milestones are met (the Forbearance Agreement). (See Note 1, Liquidity and Going Concern). In conjunction with the Forbearance Agreement, the senior secured credit facility was amended to (i) reduce the Adjusted EBITDA requirement to $6.5 million during the forbearance period, (ii) reduce the minimum cash requirement to $100,000 during the forbearance period, (iii) defer the quarterly principal payment otherwise due during the forbearance period and (iv) accept interest payments in the form of additional principal rather than in cash during the forbearance period, other than approximately $85,000 per month beginning with September 1, 2020. The Forbearance Agreement requires that a portion of the Company’s federal income tax refunds expected to be received by the Company during the forbearance period be used to pay in cash the interest previously accrued and added to the principal amount of the term loans, and also to pay down a portion of the term loans principal balance. After such federal income tax refunds are received, monthly interest will again be required in cash, and no further interest payment obligations will be deferred and added to the principal amount of the term loans. At the conclusion of the forbearance period, the Adjusted EBITDA requirement, the borrowing base requirement and the minimum cash requirement revert to the original terms of the senior secured credit facility. In exchange for these concessions, the senior lender will receive an additional fee totaling 2% of the outstanding loan balance when the debt is repaid, which together with other exit fees is expected to total approximately $2.5 million. The Forbearance Agreement accelerates the maturity date of the Company’s senior secured credit facility from August 3, 2021 to March 31, 2021 or to December 31, 2020 if certain milestones are not met. As a result of the accelerated maturity, the additional fee and other exit fees are accreting starting September 1, 2020 over the accelerated life of the loans. The Company’s Junior Note holders have agreed to accept interest payments in the form of additional principal rather than in cash from April 1, 2020 through January 1, 2021, and payments to the Junior Notes holders are generally restricted by the September 2020 Forbearance Agreement.

Amounts due under the term loans at October 31, 2020 were $46.1 million, including $45.8 million of principle, unamortized debt issuance costs of $1.3 million and exit fees of $1.6 million. An additional $1.0 million of exit fees are expected to accrete by the maturity date of the term loans. Amounts due under the Junior Notes at October 31, 2020 were $14.6 million, including $14.8 million of principle and associated unamortized debt issuance costs of $0.2 million. As a result of the covenant violations and the short-term nature of the forbearance agreement referred to above, the related debt is reflected as a current obligation in the Company’s October 31, 2020 consolidated balance sheet.

During the three months ended May 2, 2020 the company obtained a Paycheck Protection Program loan under the CARES Act totaling $0.7 million. A substantial portion of this loan is expected to be forgiven under provisions of the CARES Act and related rules implemented by the Small Business Administration. The Paycheck Protection Program loan bears interest at 1.0% per annum for the balance not forgiven, and it matures in April 2022. The unforgiven portion is repayable monthly starting at the earlier of the application for forgiveness or August 2021.

7.	Commitments and Contingencies

The Company indemnifies certain customers against liability arising from third‑party claims of intellectual property rights infringement related to the Company’s trademarks. These indemnities appear in the licensing agreements with the Company’s customers, are not limited in amount or duration and generally survive the expiration of the contracts. The Company is unable to determine a range of estimated losses that it could incur related to such indemnities since the amount of any potential liabilities cannot be determined until an infringement claim has been made.

The Company is involved from time to time in various claims and other matters incidental to the Company’s business, the resolution of which is not presently expected to have a material adverse effect on the Company’s financial position, results of operations or liquidity. Estimated reserves for contingent liabilities, including threatened or pending litigation, are recorded as liabilities in the financial statements when the outcome of these matters is deemed probable and the liability is reasonably estimable.

The Company has non-cancelable operating lease agreements with various expiration dates for office space and equipment. Certain lease agreements include options to renew, which are not reasonably certain to be exercised and therefore are not factored into our determination of the present value of lease obligations.

Operating lease costs are included as a component of selling, general and administrative expense and were $0.1 million and $0.3 million, excluding variable lease costs and sublease income, for the three and nine months ended October 31, 2020. Operating lease costs were $0.1 million and $0.4 million for the three and nine months ended November 2, 2019. Cash paid for operating lease obligations is consistent with operating lease costs for the period.

As of October 31, 2020, the weighted-average remaining lease term is 3.9 years, and the weighted-average IBR is 8.8%. The right-of-use assets as of October 31, 2020 was $1.3 million. Future minimum commitments under non-cancelable operating leases as of October 31, 2020 are as follows:

(In thousands)	Operating Leases
Remainder of Fiscal 2021	$	111
Fiscal 2022		540
Fiscal 2023		425
Fiscal 2024		434
Fiscal 2025		333
Total future minimum lease payments		1,843
Less imputed interest		(283	)
Present value of operating lease liabilities	$	1,560

8.	Revenues and Concentrations of Risk

Revenues by geographic area based upon the licensees’ country of domicile comprise the following:

	Three Months Ended				Nine Months Ended
(In thousands)	October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019
U.S. and Canada	$	1,093	$	1,358	$	3,149	$	4,080
EMEA (1)		1,202		1,143		3,526		3,964
Asia-Pacific		1,003		1,723		3,625		5,261
Latin America		752		670		2,163		2,244
Total	$	4,050	$	4,894	$	12,463	$	15,549
(1) EMEA includes Europe, Middle East and Africa

Long‑lived assets located in the United States and outside the United States amount to $0.1 million and $0.1 million, respectively, at October 31, 2020 and $0.2 million and $0.2 million, respectively, at February 1, 2020.

Deferred revenue totaled $1.6 million and $3.8 million at October 31, 2020 and February 1, 2020, respectively. Revenue recognized in the three and nine months ended October 31, 2020 that was previously included in deferred revenue was $0.7 million and $2.7 million, respectively. Revenue recognized in the three and nine months ended November 2, 2019 that was previously included in deferred revenue was $0.1 million and $1.5 million, respectively.

Two licensees accounted for approximately 31% of accounts receivable at October 31, 2020. Three licensees accounted for approximately 46% and two licensees for approximately 34% of revenues for the three and nine months ended October 31, 2020, respectively. Four licensees accounted for approximately 45% of accounts receivable at February 1, 2020. Two licensees accounted for approximately 29% and 27% of revenues for the three and nine months ended November 2, 2019.

9.	Earnings (Loss) Per Share

Basic earnings (loss) per share (“EPS”) is computed by dividing the net (loss) income attributable to common stockholders by the weighted-average number of common shares outstanding during the period, while diluted EPS additionally includes the dilutive effect of outstanding stock options and warrants as if such securities had been exercised at the beginning of the period. The computation of diluted common shares outstanding excludes outstanding stock options and warrants that are anti‑dilutive.

10.	Taxes on Income

Each reporting period, the Company evaluates the realizability of its deferred tax assets, and in recent years has maintained a full valuation allowance against its deferred tax assets in the United States and the foreign subsidiaries acquired in the Hi-Tec Acquisition. However, the CARES Act allows the Company’s historical net operating loss in Fiscal 2018 to be carried back two years and the Company’s net operating losses for Fiscal 2019, Fiscal 2020 and Fiscal 2021 to be carried back five years. The Company recognized an income tax benefit of $9.4 million in the nine months ended October 31, 2020, which includes the estimated tax refunds expected to result from these carryback claims. The Company continues to maintain a full valuation allowance against its other deferred tax assets. These valuation allowances will be maintained until there is sufficient positive evidence to conclude that it is more likely than not that these other deferred tax assets will be realized.

The Company’s deferred tax liabilities related to its indefinite lived Hi-Tec and Magnum trademarks cannot be used as a source of taxable income to support the realization of the Company’s deferred tax assets. Accordingly, the valuation allowance reserves for the deferred tax assets in these foreign jurisdictions and results in a “naked credit” for these indefinite-lived trademarks. The impairment charges recorded during the nine months ended October 31, 2020 for these indefinite-lived trademarks reduced the naked credit, which resulted in an income tax benefit during the nine months ended October 31, 2020.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

As used in this discussion and analysis, “Apex Global Brands”, the “Company”, “we”, “us” and “our” refer to Apex Global Brands Inc. and its consolidated subsidiaries, unless the context indicates or requires otherwise. Additionally, “Fiscal 2021” refers to our fiscal year ending January 30, 2021, and “Fiscal 2020” refers to our fiscal year ended February 1, 2020. The following discussion and analysis should be read together with the unaudited condensed consolidated financial statements and the related notes included in this report. The information contained in this quarterly report on Form 10‑Q is not a complete description of our business or the risks associated with an investment in our securities. For additional context with which to understand our financial condition and results of operations, refer to management’s discussion and analysis of financial condition and results of operations (“MD&A”) contained in our Annual Report on Form 10‑K, for the fiscal year ended February 1, 2020, which was filed with the Securities and Exchange Commission (“SEC”) on April 30, 2020, as well as the consolidated financial statements and notes contained therein (collectively, our “Annual Report”). In preparing this MD&A, we presume that readers have access to and have read the MD&A in our Annual Report pursuant to Instruction 2 to paragraph (b) of Item 303 of Regulation S‑K. The section entitled “Risk Factors” set forth in Item 1A of our Annual Report and similar disclosures in our other SEC filings discuss some of the important risk factors that may affect our business, results of operations and financial condition.

In addition to historical information, this discussion and analysis contains “forward‑looking statements” within the meaning of the Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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, but the absence of these words does not mean that a statement is not forward-looking. Forward‑looking statements in this discussion and analysis include statements about, among other things, our future financial and operating performance, our future liquidity and capital resources, our business and growth strategies and anticipated trends in our business and our industry. Forward-looking statements are based on our current views, expectations and assumptions and involve known and unknown risks, uncertainties and other factors that may cause actual results, performance, achievements or stock prices to be materially different from any future results, performance, achievements or stock prices expressed or implied by the forward‑looking statements. Such risks, uncertainties and other factors include, among others, those described in Item 1A, “Risk Factors” in this report and in our Annual Report. In 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 be relied on or 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 in this discussion and analysis to reflect future events or developments or changes in our expectations or for any other reason.

Overview

Apex Global Brands is a global marketer and manager of a portfolio of fashion and lifestyle brands that we own, brands that we create, and brands that we elevate for others. Company-owned brands, which are licensed in multiple consumer product categories and retail channels around the world, include Cherokee, Hi-Tec, Magnum, 50 Peaks, Interceptor, Hawk Signature, Tony Hawk, Everyday California, Carole Little, Sideout and 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 development and marketing capabilities has made us one of the leading global licensors of style-focused lifestyle brands for apparel, footwear, accessories and home products.

We have licensing relationships with recognizable retail partners in their global locations to provide them with the rights to design, manufacture and sell products bearing our brands. We refer to this strategy as our “Direct to Retail” or “DTR” licensing model. We also have license agreements with manufacturers and distributors for the manufacture and sale of products bearing our brands, which we refer to as “wholesale” licensing. In addition, we have relationships with other retailers that sell products we have developed and designed. As a brand marketer and manager, we do not directly sell product ourselves. Rather, we earn royalties when our licensees sell licensed products bearing the trademarks that we own or that we have designed and developed.

For certain of our key legacy brands, including Cherokee, Hawk Signature and Tony Hawk, we have shifted our strategy for U.S. sales from DTR licensing to wholesale licensing. In addition, we are primarily pursuing a wholesale licensing strategy for global sales for our Hi-Tec, Magnum, Interceptor and 50 Peaks brands. We believe wholesale licensing arrangements help to diversify our sources of revenue and licensee or other partner relationships, and may provide additional avenues to obtain brand recognition and grow our Company

We derive revenues primarily from licensing our trademarks to retailers and wholesalers all over the world, and we are continually pursuing relationships with new retailers, wholesalers and others 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. As of October 31, 2020, we had 44 continuing license agreements in approximately 144 countries. These arrangements include relationships with Walmart, Soriana, Comercial Mexicana, TJ Maxx, Tottus, Arvind, Reliance Retail, Tharanco, Martes Sports, Hi-Tec Europe, Hi-Tec South Africa, JD Sports, Black’s and Lidl. As of October 31, 2020, we had contractual rights to receive $56.1 million of forward-facing minimum royalty revenues, excluding any revenues that may be guaranteed in connection with future contract renewals.

The terms of our royalty arrangements vary for each of our licensees. We receive quarterly royalty statements and periodic sales and purchasing information from our licensees. However, our licensees are generally not required to provide, and typically do not provide, information that would enable us to determine the specific reasons for period‑to‑period fluctuations in sales or purchases. As a result, we do not typically have sufficient information to determine the effects on our operations of changes in price, volume or mix of products sold.

Recent Developments

COVID-19 Global Pandemic

Our business has been materially adversely affected by the effects of the global pandemic of COVID-19 and the related protective public health measures that generally began in March 2020. Our business depends upon purchases and sales of our branded products by our licensees, and the prevalence of shelter-in-place and similar orders in the regions where our products are sold, together with the closure of many of our licensees’ or their customers’ stores, have resulted in significant declines in our royalties, which will likely continue for some period of time, and various licensees of ours have requested extensions of time for them to pay royalties due to us. We believe the impact of the global pandemic increases the uncertainty around our ability to negotiate future renewals with our licensees on favorable terms. Our licensees manufacture and distribute goods that carry our brands, and the temporary closures of the facilities used by our licensees to perform these functions could cause further or extended declines in sales and royalties. The shelter-in-place orders had been eased in various regions where our products are sold, which lessened the negative effect of the pandemic on our licensees’ businesses and accordingly reduced the negative effect on our royalty revenues and cash flows. However, in recent weeks, shelter-in-place orders and other restrictions have been reinstituted in many parts of the world where the effects of the pandemic have worsened, which we anticipate will extend the adverse effects of the pandemic on our financial results. The extent and duration of these new shelter-in-place orders and other restrictions is uncertain.

In response to the decline in revenues, we have implemented cost savings measures, including pay reductions, employee furloughs and other measures. We can provide no assurance that these cost savings measures will not cause our business operations and results to suffer. Our current forecasts indicate that we will generally be able to maintain our profit margins as a result of these efforts, even though the amount of anticipated profit is lower. It is not possible to predict with certainty the impact that the shelter-in-place orders and other business restrictions will have on our licensees and, therefore, our royalty revenues in the future. The ultimate impact will be greater the longer these restrictions remain in place.

The decline and anticipated decline in our revenues also exposes us to the risk that we will remain non-compliant with the covenants in our credit facility, which creates risk that our lender will exercise its rights to accelerate the amounts payable and foreclose on our assets. For further information, refer to the credit facilities and CARES Act benefits section below under the caption, Liquidity and Capital Resources.

We have not been designated as an essential business, and therefore our offices in Sherman Oaks, California and Amsterdam in the Netherlands have been closed. However, the nature of the work performed by our employees does not require us to assemble in our facilities, and we have successfully implemented work-from-home strategies using technologies that we generally had in place before the onset of the pandemic. These strategies may result in inefficiencies and lost opportunities, but they are not expected to materially affect our internal control over financial reporting. In previous years, we have successfully implemented cloud-based accounting systems that provide for remote access. We are also unable to travel to meetings with our licensees or their customers, which historically has been an important component of our business strategy. Our use of video conferencing technologies has been expanded and has proven effective, yet business opportunities may be diminished or lost due to the lack of in-person contact.

In March 2020, the federal government passed the CARES Act, which has several provisions that have been, and are expected to be, beneficial to us. In April 2020, we received a $0.7 million loan under the Paycheck Protection Program that is being implemented by the Small Business Administration and numerous commercial banks across the country. We anticipate that a substantial portion of this loan will be forgiven based on the amount we incur for payroll, rent and utilities in the weeks following the grant date of the loan. The portion of the loan that is not forgiven will bear interest at 1.0% per annum and will mature April 2022.

The CARES Act also modified federal income tax regulations related to the carryback of net operating losses. We incurred net operating losses in Fiscal 2018, Fiscal 2019, Fiscal 2020, and thus far in Fiscal 2021, which can be carried back either two or five years to receive refunds of federal income taxes previously paid. Our current estimate of federal income tax refunds available to us is approximately $9.1 million, which is subject to change, and is expected to be received in various installments as our carryback claims and amended returns are received and processed by the Internal Revenue Service. The timing of such refunds cannot be assured.

Revenue Overview

We typically enter into license agreements with retailers and wholesalers for a certain brand in specific product categories over explicit territories, which can include one country or groups of countries and territories. Our revenues by geographic territory are as follows:

	Three Months Ended								Nine Months Ended
(In thousands, except percentages)	October 31, 2020				November 2, 2019				October 31, 2020				November 2, 2019
U.S. and Canada	$	1,093	26.9	%	$	1,358	27.7	%	$	3,149	25.2	%	$	4,080	26.3	%
EMEA		1,202	29.7	%		1,143	23.4	%		3,526	28.3	%		3,964	25.5	%
Asia-Pacific		1,003	24.8	%		1,723	35.2	%		3,625	29.1	%		5,261	33.8	%
Latin America		752	18.6	%		670	13.7	%		2,163	17.4	%		2,244	14.4	%
Total	$	4,050	100.0	%	$	4,894	100.0	%	$	12,463	100.0	%	$	15,549	100.0	%

United States and Canada. Our wholesale licensees in the United States experienced sales decreases, and hence our royalty revenues decreased, during the three and nine months ended October 31, 2020 from the impact of the various shelter-in-place orders related to the COVID-19 pandemic. Furthermore, a substantial portion of our royalty revenues in the U.S. and Canada come from wholesale license arrangements for the sale of footwear bearing our Hi-Tec, Magnum and Interceptor brands. Our royalty revenues from these categories have decreased in comparison to the prior year as our licensees adapt to the new tariff and retail environment.

EMEA. Sales of products by our licensees that operate in Europe, the Middle East and Africa were negatively affected by shelter-in-place orders related to the COVID-19 pandemic, which had a corresponding negative impact on our royalty revenues during the three and nine months ended October 31, 2020.

Asia-Pacific. Our Cherokee licensee in Japan opted to not renew their license at the end of Fiscal 2020. This resulted in a decrease in our royalty revenues during the three and nine months ended October 31, 2020 and is expected to result in lower royalty revenues for the full year of Fiscal 2021.

Latin America. Our royalty revenues in Latin America resulted primarily from our Cherokee Brand and Everyday California licensees in Mexico, Peru and Chile. Our Hi-Tec and Magnum brands are also distributed in various other countries in Latin America.

Sales of products by most of our licensees are being negatively affected by the numerous shelter-in-place orders related to the COVID-19 pandemic, which have depressed wholesale and retail sales of footwear, apparel and related accessories. This had a corresponding negative impact on our royalty revenues in the three and nine months ended October 31, 2020. This trend is expected to continue into future quarters until the shelter-in-place orders are lifted and consumer demand is restored to pre-pandemic levels.

Results of Operations

The table below contains certain information about our continuing operations from our condensed consolidated statements of operations along with other data and percentages. Historical results are not necessarily indicative of results to be expected in future periods.

	Three Months Ended											Nine Months Ended
(In thousands, except percentages)	October 31, 2020					November 2, 2019						October 31, 2020						November 2, 2019
Revenues:
Cherokee	$	827		20.4	%	$	1,485		30.3		%	$	2,586		20.7		%	$	4,918		31.7		%
Hi-Tec, Magnum, Interceptor and 50 Peaks		2,339		57.8	%		2,481		50.7		%		7,012		56.4		%		7,760		49.9		%
Hawk		94		2.3	%		68		1.4		%		302		2.4		%		241		1.5		%
Other brands		790		19.5	%		860		17.6		%		2,563		20.6		%		2,630		16.9		%
Total revenues		4,050		100.0	%		4,894		100.0		%		12,463		100.0		%		15,549		100.0		%
Operating expenses:
Selling, general and, administrative expenses		2,291		56.6	%		3,193		65.2		%		7,288		58.4		%		10,117		65.0		%
Stock-based compensation		110		2.7	%		153		3.1		%		405		3.2		%		876		5.6		%
Transaction and other costs		654		16.1	%		73		1.5		%		654		5.2		%		284		1.8		%
Restructuring charges		—		—	%		138		2.8		%		(97	)	(0.8	)	%		180		1.2		%
Intangible assets and goodwill impairment charges		4,607		113.8	%		5,000		102.2		%		14,407		115.6		%		5,000		32.2		%
Depreciation and amortization		223		5.5	%		232		4.7		%		668		5.4		%		743		4.8		%
Total operating expenses		7,885		194.7	%		8,789		179.5		%		23,325		187.1		%		17,200		110.6		%
Operating loss		(3,835	)	-94.7	%		(3,895	)	(79.5	)	%		(10,862	)	-87.2		%		(1,651	)	(10.6	)	%
Interest and other expense, net		(2,922	)	-72.1	%		(2,241	)	(45.8	)	%		(7,682	)	-61.6		%		(6,676	)	(43.0	)	%
Loss before income taxes		(6,757	)	-166.8	%		(6,136	)	(125.3	)	%		(18,544	)	-148.8		%		(8,327	)	(53.6	)	%
(Benefit) provision for income taxes		(788	)	-19.5	%		692		14.2		%		(9,393	)	-75.4		%		2,026		13.0		%
Net loss	$	(5,969	)	-147.4	%	$	(6,828	)	(139.5	)	%	$	(9,151	)	-73.4		%	$	(10,353	)	(66.6	)	%
Non-GAAP data:
Adjusted EBITDA⁽¹⁾	$	1,759				$	1,701					$	5,175					$	5,432

⁽¹⁾

We define Adjusted EBITDA as net income before (i) interest expense, (ii) other (income) expense, net, (iii) (benefit) provision for income taxes, (iv) depreciation and amortization, (v) intangible assets and goodwill impairment charges (vi) restructuring charges, (vii) transaction and other costs and (viii) stock-based compensation charges. Adjusted EBITDA is not defined under generally accepted accounting principles (“GAAP”) and it may not be comparable to similarly titled measures reported by other companies. We use Adjusted EBITDA, along with GAAP measures, as a measure of profitability, because Adjusted EBITDA helps us compare our performance on a

consistent basis by removing from our operating results the impact of our capital structure, the effect of operating in different tax jurisdictions, the impact of our asset base, which can differ depending on the book value of assets and the accounting methods used to compute depreciation, amortization and impairments, and the cost of acquiring or disposing of businesses and restructuring our operations. We believe it is useful to investors for the same reasons. Adjusted EBITDA has limitations as a profitability measure in that it does not include the interest expense on our long-term debt, non-operating income or expense items, our provision for income taxes, the effect of our expenditures for capital assets and certain intangible assets, or the costs of acquiring or disposing of businesses and restructuring our operations, or our non-cash charges for stock-based compensation and stock warrants. A reconciliation from net loss from continuing operations as reported in our condensed consolidated statement of operations to Adjusted EBITDA is as follows:

	Three Months Ended						Nine Months Ended
(In thousands)	October 31, 2020			November 2, 2019			October 31, 2020			November 2, 2019
Net loss	$	(5,969	)	$	(6,828	)	$	(9,151	)	$	(10,353	)
(Benefit) provision for income taxes		(788	)		692			(9,393	)		2,026
Interest expense		2,895			2,182			7,507			6,678
Other expense (income), net		27			59			175			(2	)
Depreciation and amortization		223			232			668			743
Intangible asset impairment charge		4,607			5,000			14,407			5,000
Restructuring charges		—			138			(97	)		180
Transaction and other costs		654			73			654			284
Stock-based compensation		110			153			405			876
Adjusted EBITDA	$	1,759		$	1,701		$	5,175		$	5,432

Three and Nine Months Ended October 31, 2020 Compared to Three and Nine Months Ended November 2, 2019

The decrease in royalty revenues in the three and nine months ended October 31, 2020 compared to the three and nine months ended November 2, 2019 was primarily due to the decrease in sales by our licensees related to the COVID-19 shelter-in-place orders and the non-renewal of our Cherokee license in Japan.

Selling, general and administrative expenses decreased 28% to $2.3 million in the three months ended October 31, 2020 from $3.2 million in the three months ended November 2, 2019 and decreased 28% to $7.3 million in the nine months ended October 31, 2020 from $10.1 million in the nine months ended November 2, 2019. These ongoing expenses include payroll, employee benefits, marketing, sales, legal, rent, information systems and other administrative costs that are part of our current operations. These decreases reflect the impact of cost-savings measures undertaken in response to the COVID-19 pandemic and related shortfall in revenues, and the impact of our restructuring plans that are continuing in Fiscal 2021.

Stock-based compensation in the three and nine months ended October 31, 2020 was $0.1 million and $0.4 million, respectively, and comprises charges related to stock options, board compensation and restricted stock grants. Transaction and other costs includes amounts related to the forbearance agreement with our senior secured lender, along with other legal costs, and amounted to $0.7 million in the three months ended October 31, 2020.

We own various trademarks that are considered to have indefinite lives, while others are being amortized over their estimated useful lives. We also have furniture, fixtures and other equipment that are being amortized over their useful lives. In connection with the first and third quarters of Fiscal 2021, our royalty revenues were re-projected in consideration of the estimated negative impact on our licensee’s sales from the COVID-19 pandemic and related shelter-in-place orders. These re-projections indicated that the fair values of our Hi-Tec and Magnum indefinite-lived trademarks were not in excess of their carrying values. As a result, a non-cash impairment charge of $4.4 million was recorded in the three months ended May 2, 2020, and a non-cash impairment charge of $4.6 million was recorded in the three months ended October 31, 2020, to adjust these trademarks to their estimated fair value. The forecasted impact of the COVID-19 pandemic on our future revenues is subject to change as additional information becomes available. Further impairments may be required if our revenue forecasts for our indefinite-lived trademarks are further reduced in future reporting periods.

Our assessment of the fair value of goodwill is based primarily on the relationship between our market capitalization and the book value of our equity. Our market capitalization was adversely affected during the first quarter of Fiscal 2021 because of the COVID-19 pandemic. As a result of this impairment indicator, we performed an interim impairment test, which indicated that our goodwill was impaired. As a result, we recorded a $5.4 million non-cash impairment charge in the three months ended May 2, 2020 to reduce the book value of goodwill.

Interest expense was $2.9 million in the three months ended October 31, 2020 compared to $2.2 million in the three months ended November 2, 2019, and $7.5 million in the nine months ended October 31, 2020 compared to $6.7 million in the nine months ended November 2, 2019. The increase in interest expense compared to the prior year is primarily due to incremental forbearance and other exit fees. Our term loans and Junior Notes are based on LIBOR, but we are not benefitting from declining LIBOR rates because our interest rates are subject to a 2.0% LIBOR floor.

We reported an income tax benefit of $0.8 million and an income tax benefit of $9.4 million in the three and nine months ended October 31, 2020, respectively, compared to income tax provisions of $0.7 million and $2.0 million in the three and nine months ended November 2, 2019. Congress passed the CARES Act during the three months ended May 2, 2020, which changed the federal regulations regarding the carryback of net operating losses. Our Fiscal 2018 net operating loss can now be carried back two years, and our net operating losses in Fiscal 2019, Fiscal 2020 and Fiscal 2021 can be carried back five years. We estimate these carryback claims will result in refunds of approximately $9.1 million of previously paid federal income taxes, the majority of the benefit of which was recognized during the three months ended May 2, 2020. The timing of these future cash receipts is uncertain since it is based on when the Internal Revenue Service processes our refund claims and amended returns. Even though we generated pretax losses in the three and nine months ended November 2, 2019, we did not recognize tax benefits during those periods, but we recorded income tax provisions, primarily as a result of deferred tax valuation allowances.

Our net loss was $6.0 million and $9.2 million in the three and nine months ended October 31, 2020 compared to a net loss $6.8 million and $10.4 million in the three and nine months ended November 2, 2019. Our Adjusted EBITDA increased 3% to $1.8 million in the three months ended October 31, 2020 from $1.7 million in the three months ended November 2, 2019, and decreased 5% to $5.2 million in the nine months ended October 31, 2020 from $5.4 million in the nine months ended November 2, 2019.

Liquidity and Capital Resources

We generally finance our working capital needs and capital investments with operating cash flows, term loans and subordinated promissory notes. On August 3, 2018, we entered into a $40.0 million term loan and $13.5 million of subordinated promissory notes, and on January 30, 2019, we obtained an incremental $5.3 million term loan. On December 31, 2019 we issued a $0.3 million subordinated promissory note to our former landlord as partial consideration for an early lease termination.

Cash Flows

Our operating activities provided $1.1 million of cash in the nine months ended October 31, 2020, compared to using $2.3 million in the nine months ended November 2, 2019. This $3.4 million increase in cash provided by operating activities resulted primarily from not paying a portion of our interest expense in cash. Rather, $3.3 million was paid in kind and added to the principal balance of our long-term debt.

Our investing activities used $0.1 million of cash to fund trademark investments in the nine months ended October 31, 2020 compared to $0.2 million in the nine months ended November 2, 2019.

We received $0.7 million from the proceeds of a promissory note as part of the Paycheck Protection Program of the CARES Act in the first quarter of Fiscal 2021, which was used to fund payroll expenses, employee benefits, rent and utilities. We used $1.3 million of cash in the nine months ended October 31, 2020 to make a principal payment on our term loan and pay for certain costs related to the forbearance agreement with our senior secured lender. The principal payments on our term loan in the nine months ended November 2, 2019 was substantially offset by $0.6 million of cash received from the exercise of stock warrants.

Credit Facilities and CARES Act Benefits

On August 3, 2018, we replaced our previous credit facility with a combination of a new senior secured credit facility, which provided a $40.0 million term loan, and $13.5 million of subordinated secured promissory notes. On January 30, 2019, the credit facility was amended to provide an additional $5.3 million term loan. The term loans generally require quarterly principal payments and monthly interest payments based on LIBOR plus a margin. The additional $5.3 million term loan also requires interest of 3.0% payable in kind with such interest being added to the principal balance of the loan. The term loans are secured by substantially all of our assets and are guaranteed by our subsidiaries. The subordinated promissory notes mature in November 2021, and they are secured by a second priority lien on substantially all of our assets and guaranteed by our subsidiaries. Interest is generally payable monthly on the subordinated promissory notes, but no periodic amortization payments are required. The subordinated promissory notes are subordinated in rights of payment and priority to the term loan but otherwise have economic terms substantially similar to the term loans. In the first quarter of Fiscal 2021, we borrowed $0.7 under the Paycheck Protection Program of the CARES Act. The Paycheck Protection Program loan bears interest at 1.0% per annum for the balance not forgiven, and it matures in April 2022. We anticipate that a substantial portion of the loan will be forgiven under provisions under the CARES Act based on payments for payroll, rent and utilities during the period subsequent to obtaining the loan.

Excluding the interest of 3% payable in kind on the $5.3 million term loan, the weighted-average interest rate on the term loans, the subordinated promissory notes and the Paycheck Protection Program loan at October 31, 2020 was 11.0%. Including deferred interest payments, outstanding borrowings under the senior secured credit facility were $45.8 million at October 31, 2020, and outstanding subordinated secured promissory notes were $14.8 million. The outstanding Paycheck Protection Program loan was $0.7 million.

The term loans are subject to a borrowing base and include financial covenants and obligations regarding the operation of our business that are customary in facilities of this type, including limitations on the payment of dividends. Financial covenants include the requirement to maintain specified levels of Adjusted EBITDA, as defined in the credit agreement, and maintain a minimum cash balance. We are also required to maintain a borrowing base comprising the value of our trademarks that exceeds the outstanding balance of the term loans. If the borrowing base is less than the outstanding term loans at any measurement period, then we would be required to repay a portion of the term loan to eliminate such shortfall.

Our operating results for the twelve months ended November 2, 2019 and twelve months ended February 1, 2020 resulted in violations of the minimum Adjusted EBITDA covenant, which are events of default, and the valuation report prepared by our senior secured lender during the three months ended May 2, 2020 indicated that our borrowing base was less than the outstanding balance of the term loans. However, our senior lender has agreed to forbear from enforcing its rights under the senior secured credit facility, and on December 15, 2020, the senior secured credit facility was amended, and the forbearance agreement was extended through December 31, 2020 or March 31, 2021 if certain milestones are met. In conjunction with the extended forbearance agreement, the senior secured credit facility was amended to reduce the Adjusted EBITDA requirement from $9.5 million to $6.5 million during the forbearance period and reduce our minimum cash requirement to $100,000 during the forbearance period. The quarterly principal payment due during the extended forbearance period was deferred, and other than approximately $85,000 per month beginning with September 1, 2020, interest payments due during the forbearance period will be paid in the form of additional principal rather than in cash. The extended forbearance agreement requires that a portion of our federal income tax refunds expected to be received during the forbearance period be used to pay in cash the interest previously accrued and added to the principal amount of the term loans, and also to pay down a portion of the term loans principal balance. After such federal income tax refunds are received, monthly interest will again be required in cash, and no further interest payment obligations will be deferred and added to the principal amount of the term loans. At the conclusion of the forbearance period, the Adjusted EBITDA requirement, the borrowing base requirement and the minimum cash requirement revert to the original terms of the senior secured credit facility. In exchange for these concessions, the senior lender will receive an additional fee totaling 2% of the outstanding loan balance when the debt is repaid, which together with other exit fees is expected to total approximately $2.5 million. The extended forbearance agreement accelerates the maturity date of the senior secured credit facility from August 3, 2021 to March 31, 2021 or to December 31, 2020 if certain milestones are not met. As a result of the accelerated maturity, the additional fee and other exit fees are accreting starting September 1, 2020 over the accelerated life of the loans. The Company’s Junior Note holders agreed to accept interest payments in the form of additional principal rather than in cash from April 1, 2020 through January 1, 2021, and payments to the Junior Notes holders are generally restricted by the forbearance agreements. We are required during the forbearance period to evaluate strategic alternatives designed to provide liquidity to refinance the term loans under the senior secured credit facility.

Future compliance failures under our senior secured credit facility would subject us to significant risks, including the right of our senior lender to terminate their obligations under the senior secured 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 they may have under applicable law, including foreclosing on our assets that serve as collateral for the borrowed amounts. If any of these rights were to be exercised, or if we are unable to refinance our senior secured credit facility by the accelerated maturity of March 31, 2021, which could be further accelerated to December 31, 2020 if certain milestones are not met, our financial condition and ability to continue operations would be materially jeopardized. If we are unable to meet our obligations to our lenders and other creditors, we may have to significantly curtail or even cease operations. We are evaluating potential sources of working capital, and we believe that the NOL carryback provisions of the CARES Act will result in additional liquidity, although the timing of these cash inflows is uncertain. Our NOL carryback claims are expected to result in federal income tax refunds of approximately $9.1 million. We estimated that receipt of these tax refunds could range from one to 12 months from the date of this filing. Our plans also include the evaluation of strategic alternatives to refinance our debt or otherwise enhance shareholder value. There is no assurance that we will be able to execute these plans, and because of this uncertainty, there is substantial doubt about our ability to continue as a going concern.

Critical Accounting Policies and Estimates

This MD&A is based upon our condensed consolidated financial statements, which are included in this report. The preparation of these condensed financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Refer to Note 3 of our condensed consolidated financial statements filed herewith regarding our indefinite lived trademarks and goodwill, and our Annual Report on Form 10-K for a discussion of our critical accounting policies and recent accounting pronouncements.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined under Rules 13a‑15(e) and 15d‑15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”), that are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management carried out an evaluation of the effectiveness of our disclosure controls and procedures. Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of October 31, 2020.

Changes in Internal Control over Financial Reporting

During the most recently completed fiscal quarter, no changes in our internal control over financial reporting materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations of Disclosure Controls and Procedures and Internal Control Over Financial Reporting

In designing our disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well-designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of our controls and procedures must reflect that resource constraints exist, and management necessarily applies its judgment in evaluating the benefits of possible controls and procedures relative to their costs. Because of these inherent limitations, our disclosure and internal controls may not prevent or detect all instances of fraud, misstatements or other control issues. In addition, projections of any evaluation of the effectiveness of disclosure or internal controls to future periods are subject to risks, including, among others, that controls may become inadequate because of changes in conditions or that compliance with policies or procedures may deteriorate.

PART II—OTHER INFORMATION

ITEM 1. 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 1A. RISK FACTORS

The occurrence of any of the risks, uncertainties and other factors described in this report, our Annual Report and the other documents we file with the SEC could have a material adverse effect on our business, financial condition, results of operations and stock price, and could cause our future business, financial condition, results of operations and stock price to differ materially from our historical results and the results contemplated by any forward-looking statements we may make herein, in any other document we file with the SEC or in any press release or other written or oral statement we may make. You should carefully consider all of these risks and the other information in this report and the other documents we file with the SEC before making any investment decision with respect to our securities. The risks described are not the only ones we face. The risks described below and elsewhere in this report are not the only ones we face. Additional risks we are not presently aware of or that we currently believe are immaterial may also impair our business, financial condition and results of operations or cause our stock price to decline. The following disclosure only describes our material risks that have undergone material changes since the date on which our Annual Report was filed with the SEC. As a result, you should carefully review Item 1A. “Risk Factors” in our Annual Report for descriptions of additional material risks and uncertainties to which our business and our common stock are subject.

We face risks related to the impact of the COVID-19 pandemic and the related protective public health measures.

In March 2020, the World Health Organization recognized the outbreak of a novel coronavirus, COVID-19, as a pandemic. Our business has been materially adversely affected by the effects of COVID-19 and the related protective public health measures. Our business depends upon purchases and sales of our branded products by our licensees, and the prevalence of shelter-in-place and similar orders in the regions where our products are sold, together with the closure of many of our licensees’ or their customers’ stores, have resulted in significant declines in our royalties, which will likely continue for some period of time. Various licensees of ours have requested extensions of time for them to pay royalties due to us, and we believe the impact of the global pandemic increases the uncertainty around our ability to negotiate future renewals with our licensees on favorable terms. In response to the decline in revenues, we have implemented cost savings measures, including pay reductions, employee furloughs and other measures. We can provide no assurance that these cost savings measures will not cause our business operations and results to suffer. The decline and anticipated decline in our revenues also exposes us to the risk that we will remain non-compliant with the covenants in our credit facility, which creates risk that our lender will exercise its rights to accelerate the amounts payable and foreclose on our assets. Our employees have limited access to our offices and are mostly working remotely, which may result in inefficiencies and lost opportunities. In addition, the responses of the federal, international, state and regional governments to the pandemic, including the shelter-in-place and similar orders and the allocation of healthcare resources to treating those infected with the virus, has caused, and may continue to cause, a significant decline in retail sales, including sales of our branded products by our licensees. Other adverse effects of the pandemic on our business could include disruptions or restrictions on our employees’ ability to travel, as well as temporary closures of the facilities of the manufacturers and distributors of our branded products, which could cause further or extended declines in sales and royalties. In addition, the continued spread of COVID-19, or the occurrence of other epidemics, could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could affect demand for our branded products and further adversely impact our results of operations.

There are numerous uncertainties associated with the coronavirus outbreak, including the number of individuals who will become infected, whether a vaccine or cure that mitigates the effect of the virus will be synthesized, and, if so, when such vaccine or cure will be ready to be used, and the extent of the protective and preventative measures that have been put in place by both governmental entities and other businesses and those that may be put in place in the future. Any, or all, of the foregoing uncertainties could have a material adverse effect on our results of operations, financial position and/or cash flows.

We have 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 October 31, 2020, outstanding borrowings under the term loans were $45.8 million, and outstanding borrowings under subordinated promissory notes were $14.8 million. The term loans generally require quarterly principal payments and monthly interest payments based on LIBOR plus a margin. The subordinated promissory notes mature in November 2021. Interest is generally payable monthly on the subordinated promissory notes, but no periodic amortization payments are required. On April 14, 2020, the company obtained a Paycheck Protection Program loan under the CARES Act totaling $0.7 million. The Paycheck Protection Program loan bears interest at 1.0% per annum for the balance not forgiven, and it matures in April 2022. The unforgiven portion is repayable monthly starting at the earlier of the application for forgiveness or August 2021. We anticipate that a substantial portion of the loan will be forgiven under provisions under the CARES Act based on payments for payroll, rent and utilities during the period subsequent to obtaining the loan.

The senior secured credit facility imposes various restrictions and covenants regarding the operation of our business, including covenants that require us to obtain the lender’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 senior secured credit facility also imposes financial covenants that set financial standards we are required to maintain, including the requirement to maintain specified levels of Adjusted EBITDA, as defined in the credit agreement, and maintain a minimum cash balance. We are also required to maintain a borrowing base comprising the value of our 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 are events of default, and the valuation report prepared by our senior secured lender during the three months ended May 2, 2020 indicated that our borrowing base is less than the outstanding balance of the term loans. However, our senior lender has agreed to forbear from enforcing its rights with respect to certain events of default under the senior secured credit facility, and on December 15, 2020, the senior secured credit facility was amended and the forbearance agreement was extended through December 31, 2020 or March 31, 2021 if certain milestones are met. In conjunction with the extended forbearance agreement, the senior secured credit facility was amended to reduce the Adjusted EBITDA requirement from $9.5 million to $6.5 million during the forbearance period and reduce our minimum cash requirement to $100,000 during the forbearance period. The quarterly principal payment due during the forbearance period was deferred, and other than approximately $85,000 per month beginning with September 1, 2020, interest payments due during the forbearance period will be paid in the form of additional principal rather than in cash. The extended forbearance agreement requires that a portion of our federal income tax refunds expected to be received during the forbearance period be used to pay in cash the interest previously accrued and added to the principal amount of the term loans, and also to pay down a portion of the term loans principal balance. After such federal income tax refunds are received, monthly interest will again be required in cash, and no further interest payment obligations will be deferred and added to the principal amount of the term loans. At the conclusion of the forbearance period, the Adjusted EBITDA requirement, the borrowing base requirement and the minimum cash requirement revert to the original terms of the senior secured credit facility. In exchange for these concessions, the senior lender will receive an additional fee totaling 2% of the outstanding loan balance when the debt is repaid, which together with other exit fees is expected to total approximately $2.5 million. The extended forbearance agreement accelerates the maturity date of the senior secured credit facility from August 3, 2021 to March 31, 2021 or to December 31, 2020 if certain milestones are not met. The Company’s Junior Note holders agreed to accept interest payments in the form of additional principal rather than in cash from April 1, 2020 through January 1, 2021, and

payments to the Junior Note holders are generally restricted by the extended forbearance agreement. We are required during the forbearance period to evaluate strategic alternatives designed to provide liquidity to refinance the term loans under the senior secured credit facility. There is a significant risk that we violate milestone provisions of the extended forbearance agreement. If any such violation or other event of default occurs under the extended forbearance agreement or the underlying 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 and/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 accelerate the payment of those promissory notes. If any of these rights were to be exercised, or if we are unable to refinance our senior secured credit facility by the accelerated maturity of March 31, 2021, which could be further accelerated to December 31, 2020 if certain milestones are not met, our financial condition and ability to continue operations would be materially jeopardized. If we are unable to meet obligations to lenders and other creditors, we may have to significantly curtail or even cease operations. We are evaluating potential sources of working capital, and we believe that certain provisions of the CARES Act passed by the U.S. Congress in March 2020 will result in additional liquidity. We received proceeds of $0.7 million in the first quarter of Fiscal 2021 from a promissory note issued by one of our banks under the Paycheck Protection Program included in the CARES Act, and the NOL carryback provisions of the CARES Act are expected to result in federal refund claims of approximately $9.1 million. Our plans also include the evaluation of strategic alternatives to refinance our debt or otherwise 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.

Additionally, even if we are able to 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 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, 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 common stock was delisted from trading on the Nasdaq Stock Market and is now traded through the OTC Markets Group, which could have a material adverse effect on us and our stockholders.

Since the middle of 2018, we have generally been out of compliance with the listing requirements of the Nasdaq Stock Market. On November 3, 2020, we received a notice from the Nasdaq Hearings Panel that it determined to delist our common stock from The Nasdaq Stock Market due to our compliance history and our delays in meeting previous compliance deadlines imposed by the Panel. As a result of the Panel’s decision, Nasdaq suspended trading of our common stock effective at the open of business on November 5, 2020, and our common stock is now quoted on the Pink Open Market of the OTC Markets Group.

Although we may seek to establish relationships with market makers to provide additional trading opportunities in our common stock, there can be no assurance that a market for our shares will develop, which could severely limit the liquidity of our common stock and materially adversely affect the price of our common stock.

ITEM 6. EXHIBITS

The information required by this Item 6 is set forth on the Exhibit Index that immediately precedes the signature page to this report and is incorporated herein by reference.

EXHIBIT INDEX

Exhibit Number		Description of Exhibit

3.1		Amended and Restated Bylaws of the Company (filed as Exhibit 3.4 to the Company’s Current Report on Form 8-K, filed with the SEC on June 27, 2019).
3.2		Certificate of Amendment of the Company’s Certificate of Incorporation (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on June 27, 2019).
3.3		Certificate of Correction to Certificate of Amendment of the Company (filed as Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed with the SEC on June 27, 2019).
3.4		Certificate of Amendment of the Company’s Certificate of Incorporation (filed as Exhibit 3.3 to the Company’s Current Report on Form 8-K, filed with the SEC on June 27, 2019).
3.5		Certificate of Amendment of the Company’s Certificate of Incorporation (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on September 26, 2019).
3.6		Certificate of Amendment of the Company’s Certificate of Incorporation (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on August 31, 2020)
10.1		Amendment to Forbearance Period dated February 28, 2020 by and among the Company, Gordon Brothers Finance Company and Gordon Brothers Brands, LLC (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, filed with SEC on June 16, 2020).
10.2		Amendment to Forbearance Period dated April 10, 2020 by and among the Company, Gordon Brothers Finance Company and Gordon Brothers Brands, LLC (filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q, filed with SEC on June 16, 2020).
10.3		Promissory Note dated April 14, 2020 by and between the Company and Bank of America (filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q, filed with SEC on June 16, 2020).
10.4		Fourth Amendment to Financing Agreement and Forbearance Agreement dated April 30, 2020 by and between the Company and Gordon Brothers Finance Company and Gordon Brothers Brands, LLC (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, filed with SEC on June 16, 2020).
10.5		Form of Promissory Note issued by the Company to each of Jess Ravich, Patti Johnson, Dwight Mamanteo and Evan Hengel (filed as Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q, filed with SEC on June 16, 2020).
10.6 10.7*		Fifth Amendment to Financing Agreement and Forbearance Agreement dated September 1, 2020 by and among the Company, Gordon Brothers Finance Company and Gordon Brothers Brands, LLC (filed as Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q, filed with SEC on September 15, 2020). Sixth Amendment to Financing Agreement and Forbearance Agreement dated December 15, 2020 by and among the Company, Callodine Commercial Finance and Gordon Brothers Brands, LLC.
31.1*		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document.
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

*	Filed herewith.

**	Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: December 15, 2020

		APEX GLOBAL BRANDS INC.

		By:	/s/ Henry Stupp
			Henry Stupp
			Chief Executive Officer
			(Principal Executive Officer)


		By:	/s/ Steven L. Brink
			Steven L. Brink
			Chief Financial Officer
			(Principal Financial Officer and Principal Accounting Officer)