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Item 1A. Risk Factors

2026-03-10 compared with 2025-03-11 · 86 added, 86 removed, 205 unchanged (46% of the section changed)

5 unchanged sentences

We are dependent upon the continuation and renewal of various licenses and other agreements for a significant portion of our sales, and the loss of one or more licenses or agreements could have a material adverse effect on us.

All of our rights relating to prestige fragrance brands, other than Off-White, Lanvin and Rochas, are derived from licenses or other agreements from unaffiliated third parties, and our business is dependent upon the continuation and renewal of such licenses and other agreements on terms favorable to us.

All of our rights relating to prestige fragrance brands, other than Off-White, Lanvin, Goutal and Rochas, are derived from licenses or other agreements from unaffiliated third parties, and our business is dependent upon the continuation and renewal of such licenses and other agreements on terms favorable to us.

Each license or agreement is for a specific term and may have additional optional terms.

81 unchanged sentences

These risks could have a material adverse effect on our business, prospects, results of operations and financial condition.

Associated with Changes in International Trade Policies, Tariffs and

Cross-Border Operations

The US government has indicated its intent to

adopt a new approach to trade policy and in some cases to renegotiate, or

potentially terminate, certain existing bilateral or multi-lateral trade

It has initiated or is considering the imposition of tariffs on

certain foreign goods, including fragrances and fragrance related products.

Changes in US trade policy could result in one or more of US trading partners

adopting responsive trade policies making it more difficult or costly for us to

export our products to those countries.

As an example, on February 1, 2025, the

government announced a 25% tariff on product imports from certain

countries, including Mexico and Canada, and 10% tariffs on product imports from

certain countries, including China.

Our business operations, financial

condition, and results of operations could be significantly affected by these

measures and the potential expansion of existing tariffs or implementation of

new tariffs, trade restrictions, or retaliatory measures by China, Mexico, or

Canada that could disrupt our established supply chain, increase costs of goods

sold into the United States and this in turn could require us to increase

prices to our customers which may reduce demand, or, if we are unable to

increase prices, result in lowering our margin on products sold.

We cannot predict future trade policy or the

terms of any renegotiated trade agreements and their impact on our business.

The adoption and expansion of trade restrictions, the occurrence of a trade

war, or other governmental action related to tariffs or trade agreements or

policies has the potential to adversely impact demand for our products, our

costs, our customers, our suppliers, and the US economy, which in turn could

adversely impact our business, financial condition and results of operations.

Risks Associated with Changes in International Trade Policies, Tariffs and Cross-Border Operations

The US government has indicated its intent to adopt a new approach to trade policy and in some cases to renegotiate, or potentially terminate, certain existing bilateral or multi-lateral trade agreements.

It has initiated or is considering the imposition of tariffs on certain foreign goods, including fragrances and fragrance related products.

Changes in US trade policy could result in one or more of US trading partners adopting responsive trade policies making it more difficult or costly for us to export our products to those countries.

As an example, on February 1, 2025, the U.S.

government announced a 25% tariff on product imports from certain countries, including Mexico and Canada, and 10% tariffs on product imports from certain countries, including China.

However, a recent Supreme Court decision determined that the previously announced tariffs were not validly authorized, and a new global 15% tariff was instituted.

Our business operations, financial condition, and results of operations could be significantly affected by these measures and the potential expansion of existing tariffs or implementation of new tariffs, trade restrictions, or retaliatory measures by China, Mexico, or Canada that could disrupt our established supply chain, increase costs of goods sold into the United States and this in turn could require us to increase prices to our customers which may reduce demand, or, if we are unable to increase prices, result in lowering our margin on products sold.

We cannot predict future trade policy or the terms of any renegotiated trade agreements and their impact on our business.

The adoption and expansion of trade restrictions, the occurrence of a trade war, or other governmental action related to tariffs or trade agreements or policies has the potential to adversely impact demand for our products, our costs, our customers, our suppliers, and the US economy, which in turn could adversely impact our business, financial condition and results of operations.

Terrorist attacks, acts of war or military actions, other civil unrest or natural disasters may adversely affect territories in which we operate, and therefore affect our business, financial condition and operating results.

23 unchanged sentences

The potential implications of such uncertainty, which include, among others, exchange rate fluctuations, tariffs, trade barriers and market contraction, could adversely affect the Company’s business and financial results.

The wars between Russia and Ukraine, and Israel and Hamas or other Iranian sponsored actors could adversely impact our business and financial results.

The wars between Russia and Ukraine, and Israel and Hamas have negatively impacted our operations to a limited degree to date.

However, future impacts to our Company are difficult to predict due to the high level of uncertainty as to how these wars will evolve.

The war between Russia and Ukraine, and the war with Iran or Iranian sponsored actors could adversely impact our business and financial results.

The war between Russia and Ukraine has negatively impacted our operations to a limited degree to date.

However, the war with Iran or Iranian sponsored actors could impact our Company, which are difficult to predict due to the high level of uncertainty as to how they will or could evolve.

Fuel supplies and supply chain cost increases, as well as retailers or consumers, could all be negatively impacted by these wars.

33 unchanged sentences

Any such matters could have a material adverse effect on our business.

President Trump’s anti-DEI sentiment could subject our

business to potential claims .

In the United States, the President has recently

issued Executive Order 14173 opposing diversity, equity, and inclusion (“DEI”) initiatives

in the private sector.

In recent years, anti-DEI sentiment has gained momentum

across the United States in favor of a merit based system, as several states

and Congress have proposed or enacted “anti-DEI” policies, legislation, or

However, the European Union and France, the country where our 72%

owned subsidiary is organized and has its principal place of business, have

enacted both ESG (environmental, social and governance) and DEI initiatives,

regulations and requirements.

Compliance with such anti-DEI-related policies,

legislation, initiatives, and scrutiny in the United States, while our French

operating subsidiary complies with European ESG and DEI requirements, could

result in our company facing additional compliance obligations, becoming the

subject of investigations or enforcement actions, or sustaining damage to our reputation.

have identified material weaknesses in our internal control over financial

reporting for the fiscal year ended December 31, 2024.

If we are unable to

remediate these material weaknesses or if we identify additional material

weaknesses in the future or otherwise fail to maintain effective internal

control over financial reporting, we may not be able to accurately or timely

report financial information.

disclosed in Part II, Item 9A, “Controls and Procedures,” we have identified

material weaknesses in our internal controls over financial reporting related

to risk assessment, monitoring of controls, lack of documentation of evidence

of control operating effectiveness and information technology general

A material weakness is a deficiency or a combination of

deficiencies, in internal control over financial reporting such that there is a

reasonable possibility that a material misstatement of the registrant’s

financial statements will not be prevented or detected on a timely basis.

result of the material weakness, we concluded that our internal control over

financial reporting and related disclosure controls and procedures were not

effective as of December 31, 2024.

We cannot be certain that the measures we

may take in the future will be sufficient to remediate the control deficiencies

that led to our material weaknesses in our internal control over financial

reporting or that they will prevent or avoid potential future material

The effectiveness of our internal control over financial reporting

is subject to various inherent limitations, including cost limitations,

judgments used in decision making, assumptions about the likelihood of future

events, the possibility of human error and the risk of fraud.

If we are unable

to remediate our existing or any future material weaknesses in our internal

control over financial reporting, our ability to record, process or report

financial information accurately and to prepare financial statements in an

accurate and timely manner could be adversely affected, which could subject us

to litigation or investigations requiring management resources and payment of

legal and other expenses, negatively affect investor confidence in our

financial statements and adversely impact our stock price.

President Trump’s anti-DEI sentiment could subject our business to potential claims .

In the United States, the President has recently issued Executive Order 14173 opposing diversity, equity, and inclusion (“DEI”) initiatives in the private sector.

In recent years, anti-DEI sentiment has gained momentum across the United States in favor of a merit based system, as several states and Congress have proposed or enacted “anti-DEI” policies, legislation, or initiatives.

However, the European Union and France, the country where our 72% owned subsidiary is organized and has its principal place of business, have enacted both ESG (environmental, social and governance) and DEI initiatives, regulations and requirements.

Compliance with such anti-DEI-related policies, legislation, initiatives, and scrutiny in the United States, while our French operating subsidiary complies with European ESG and DEI requirements, could result in our Company facing additional compliance obligations, becoming the subject of investigations or enforcement actions, or sustaining damage to our reputation.

We have ident ified material weaknesses in our internal control over financial reporting for the fiscal year ended December 31, 2025.

If we are unable to remediate these material weaknesses or if we identify additional material weaknesses in the future or otherwise fail to maintain effective internal control over financial reporting, we may not be able to accurately or timely report financial information.

We have identified material weaknesses in our internal control

over financial reporting.

If we are unable to remediate the remaining material

weakness or if we identify additional material weaknesses in the future or

otherwise fail to maintain effective internal control over financial reporting,

we may not be able to accurately or timely report financial information.

As disclosed in Item 9A, “Controls and Procedures,” of our Annual

Report on Form 10-K for the fiscal year ended December 31, 2024, we identified

material weaknesses in our internal control over financial reporting related to

risk assessment, monitoring of controls, lack of documentation evidencing

control operating effectiveness and information technology general controls.

material weakness is a deficiency, or a combination of deficiencies, in

internal control over financial reporting such that there is a reasonable

possibility that a material misstatement of the Company’s financial statements

will not be prevented or detected on a timely basis.

As a result of these

material weaknesses, we concluded that our internal control over financial

reporting and related disclosure controls and procedures were not effective as

of December 31, 2024.

During fiscal 2025, we implemented a number of remediation actions

designed to strengthen our internal control environment, including enhancing

our control environment and monitoring procedures, improving documentation and

evidence of control operating effectiveness, strengthening information

technology general controls, and implementing a formal enterprise-wide risk

assessment process.

Based on testing performed by management, we concluded that

certain previously reported material weaknesses related to the control

environment and information technology general controls were remediated as of

December 31, 2025.

However, a material weakness related to the design and

implementation of our risk assessment process remains as of December 31, 2025.

We cannot be certain that the measures we have taken or may take

in the future will be sufficient to remediate the remaining material weakness

or prevent additional material weaknesses from occurring.

The effectiveness of

our internal control over financial reporting is subject to various inherent

limitations, including cost limitations, judgments used in decision making,

assumptions about the likelihood of future events, the possibility of human

error and the risk of fraud.

If we are unable to remediate the remaining

material weakness or any future material weaknesses in our internal control

over financial reporting, our ability to record, process or report financial

information accurately and to prepare financial statements in an accurate and

timely manner could be adversely affected.

Any failure to maintain effective internal control over financial

reporting could subject us to litigation or investigations, require management

resources and payment of legal and other expenses, negatively affect investor

confidence in our financial statements, and adversely impact the market price

of our common stock.

Our business is subject to seasonal variability.

4 unchanged sentences

Although inflation was a major factor in 2023 and continued to have impacts in 2024, we increased our sales prices to mitigate its impact to some degree in prior years and implemented cost saving efforts to mitigate these impacts in the current year.

With the inflation moderating in 2025, we did increase our prices, predominately in the US, to partially offset the impact of tariffs.

However, we may not be able to continue increasing our prices indefinitely without causing a reduction in the number of consumers with sufficient disposable income to buy certain of our fragrance products, which could have a material adverse effect on our business.

26 unchanged sentences

Our information systems and websites may be susceptible to outages, hacking and other cybersecurity risks.

We have information systems that support our business processes, including product development, production, marketing, order processing, sales, distribution, finance and intra-company communications.

We have information technology systems (“IT Systems”) that support our business processes, including product development, production, marketing, order processing, sales, distribution, finance and intra-company communications.

We also have Internet websites in the United States and Europe.

3 unchanged sentences

Malicious activity may exploit design flaws and security weaknesses, or sabotage information systems.

Cybersecurity incidents can also be caused by other malicious software programs or other attacks, such as ransomware, and “denial of service attacks.” Use of AI may intensify cybersecurity risks as techniques used in cyberattacks continue to become more sophisticated and thereby more dangerous.

Cybersecurity incidents can also be caused by other malicious software programs or other attacks, such as ransomware, and “denial of service attacks.”

Our IT Systems require an ongoing commitment of significant resources to maintain, protect, and enhance to keep pace with continuing changes in technology, regulatory standards, and cyber threats, as well as new commercial opportunities.

From time to time, we undertake significant information technology systems reviews, as well as projects, such as enterprise resource planning updates, modifications, integrations and rollouts.

These projects may be subject to cost overruns and delays that may cause disruptions in our normal business operations.

These cost overruns and delays as well as our reliance on third party contractors for certain software implementation, maintenance and upgrades for certain business and financial information could adversely affect our business and results of operations.

We have started using artificial intelligence (“AI”), and improper use by us or third parties could have an adverse impact on our brands, business and results of operations.

We have started using AI to assist in the development and marketing of our products.

This evolving technology presents risks inherent in its use, including risks related to inaccuracies, bias, and infringement of intellectual property.

In addition, the use of AI could potentially increase cybersecurity and data privacy risks, such as unintended access to and transmission of proprietary or sensitive information.

These risks may become more pronounced as we increase our reliance on AI.

We cannot assure that our usage of AI will assist us in being more efficient in all cases.

Our competitors or other third parties may incorporate AI into their business, services, and products more rapidly or more successfully than us, which could hinder our ability to compete effectively and adversely affect our business.

As AI is an emerging technology and new laws and regulations are being promulgated, and our obligation to comply with this evolving regulatory landscape could entail significant costs.

Use of AI may intensify cybersecurity risks as techniques used in cyberattacks continue to become more sophisticated and thereby more dangerous.

Malicious use of AI, or any other unauthorized access to our informational systems could result in disruption or damage to our information systems, and significant expense in remediating the damage, thereby adversely affecting our business and results of operations.

16 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors