934795--3/22/2007--EVERLAST_WORLDWIDE

related topics

{customer, product, revenue}

{cost, regulation, environmental}

{product, market, service}

{operation, international, foreign}

{property, intellectual, protect}

{stock, price, share}

{competitive, industry, competition}

{acquisition, growth, future}

{control, financial, internal}

{personnel, key, retain}

{product, liability, claim}

{condition, economic, financial}

{tax, income, asset}

We currently have an informal business arrangement with Title Boxing, L.L.C. to administer the Everlast catalog sales business our products and provide all order fulfillment of our catalog and e-commerce business, and any alteration to these arrangements could impact our sales and growth strategy. We may be unable to sustain our past growth or manage our future growth, which may have a material adverse effect on our future operating results. Failure to adapt to changes in consumer market trends may materially affect our business and results of operations. The failure to successfully protect our intellectual property rights could have a material adverse effect on our licensing business. The failure of our licensing partners to preserve the value of our licenses could have a material adverse effect on our business. Failure to maintain and integrate licensing partners could harm our business. Our women s apparel license with Jacques Moret contains a 99-year exclusive renewal option which, if exercised, would provide us with a one-time royalty of $24.0 million, which may be less than the future discounted royalty cash flows over this 99-year term. We depend on certain key employees, the loss and replacement of whom could have a material adverse effect on our business. The issuance of additional warrants to purchase shares of our common stock could adversely affect our financial results and the trading price of shares of our common stock. Our financial success may be limited to the strength of our relationships with our retail customers and to the success of these retail customers. If we or our licensees do not accurately forecast consumer demand, we or our licensees may have excess inventory to liquidate or have greater difficulty filling our customers orders, either of which could adversely affect our business. Third parties may claim that we are infringing their intellectual property rights, and these claims may be costly to defend, may require us to pay licensing fees, damages, or other amounts, and may prevent, or otherwise impose limitations on the manufacture, distribution or sale of our products. The failure to comply with our quality control standards may have a material adverse effect on our business. Our business is subject to intense competition and could be adversely affected by the failure to effectively compete. Returns and chargebacks may have a material adverse effect on our business. Potential liability exposure in our sporting goods equipment business may have a material adverse effect on the consumer demand for our products. Our business is subject to the general economic cycle, a downturn in which could cause a material adverse effect on our business, financial condition and results of operations. Fluctuations in the price, availability and quality of raw materials could cause delays and increase costs which may have a material adverse effect on our business. If the U.S. continues to impose tariffs and import quota restrictions on products manufactured in China and we are unable to meet our manufacturing needs from countries other than China or from domestic sources, it could materially affect our gross margin and financial performance. Failure to control the costs for the products that we manufacture could adversely affect our sales and results of operations. Because we depend on third party manufacturers, we may face challenges in maintaining a sufficient supply of goods to meet sales demand, and we may experience interruptions in our supply chain. Any shortfall in the supply of our products may decrease our sales and have an adverse impact on our customer relationships. Our business could suffer if our third party manufacturers violate labor laws or fail to conform to generally accepted ethical standards. We depend on a limited number of suppliers for key production materials, and any disruption in the supply of these materials could interrupt product manufacturing and increase product costs. An interruption of the services of our manufacturing and distribution facility in Moberly, Missouri could negatively impact our sporting goods equipment business. Failure to comply with environmental laws and regulations may have a material adverse effect on our business. We will incur significant time and expense in documenting, testing and certifying our internal control over financial reporting, and any deficiencies in our financial reporting or internal controls could adversely affect our business and the price of our common stock. We may fail to successfully expand our distribution network or introduce our products both domestically and internationally, and this may cause our results of operations to fall short of expectations. We conduct a significant portion of our activities outside the U.S., and therefore we are subject to the risks of international commerce. We can issue shares of preferred stock without stockholder approval, which could adversely affect the rights of common stock stockholders.

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934795--3/22/2007--EVERLAST_WORLDWIDE_INC