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Icon Energy Corp. (ICON) Risk Analysis
Risk Overview Q1, 2021
Source: the company's latest filing for the period ended Mar 31, 2021, filed May 13, 2021
Risk Change Over Time
No filing history is available.
- Accounting & Financial Operations - Risk 1We have a material amount of goodwill and other intangible assets, including our trademarks, recorded on our balance sheet. As a result of changes in market conditions and declines in the estimated fair value of these assets, we may, in the future, be required to further write down a portion of this goodwill and other intangible assets and such write-down would, as applicable, either decrease our net income or increase our net loss.
As of March 31, 2021, goodwill represented approximately $26.1 million, or approximately 7%, of the Company's total consolidated assets, and trademarks and other intangible assets represented approximately $242.4 million, or approximately 60% of our total consolidated assets. Under current U.S. GAAP accounting standards, goodwill and indefinite life intangible assets, including most of our trademarks, are no longer amortized, but instead are subject to impairment evaluation based on related estimated fair values, with such testing to be done at least annually. In FY 2020, as a result of the impact of COVID-19 pandemic on current and estimated future cash flows and their impact on the fair value of the Rampage, Joe Boxer, Umbro, Pony, Hydraulic, Cannon and Fieldcrest indefinite-lived trademarks, the Company recorded non-cash asset impairment charges related to the write-off of certain of our trademarks of $35.1 million. There can be no assurance that any future downturn in the business of any of the Company's segments, or a continued decrease in our market capitalization, will not result in a further write-down of goodwill or trademarks, which would either decrease the Company's net income or increase the Company's net loss, which may or may not have a material impact to the Company's consolidated statement of operations.
- Debt & Financing - Risk 2Our existing and future debt obligations could impair our liquidity and financial condition, and in the event we are unable to meet our debt obligations we could lose title to certain trademarks.
As of March 31, 2021, the Company's consolidated balance sheet reflects debt of approximately $549.7 million (which is net of $0.3 million of debt issuance costs), including (i) securitization debt of $415.6 million under our Series 2012-1 4.229% Senior Secured Notes, Class A-2, Series 2013-1 4.352% Senior Secured Notes, Class A-2 (collectively, the "Senior Secured Notes"), and the Variable Funding Notes, (ii) senior secured debt of $79.2 million (net of original issue discount and debt issuance costs of $4.0 million) under our Senior Secured Term Loan, and (iii) subordinated secured debt of $94.4 million (which is recorded in our consolidated balance sheet as of March 31, 2021 at a fair value of $53.6 million) under our 5.75% convertible senior subordinated secured second lien notes due 2023 (the "5.75% Convertible Notes"). We may also assume or incur additional debt, including secured debt, in the future in connection with, or to fund, future acquisitions or refinance our existing debt obligations. Our outstanding debt obligations: - could impair our liquidity;- could make it more difficult for the Company to satisfy its other obligations;- require us to dedicate a substantial portion of our cash flow to payments on our debt obligations, which reduces the availability of our cash flow to fund working capital, capital expenditures and other corporate requirements;- could impede us from obtaining additional financing in the future for working capital, capital expenditures, acquisitions and general corporate purposes;- impose restrictions on us with respect to the use of our available cash;- make us more vulnerable in the event of a downturn in our business prospects and could limit our flexibility to plan for, or react to, changes in our licensing markets; and - could place us at a competitive disadvantage when compared to our competitors who have less debt and/or less leverage. We cannot be certain that our earnings will be sufficient to allow us to pay principal and interest on our debt and meet our other obligations. In particular, we do not know at this time what the effects will be of the COVID-19 pandemic on our liquidity and financial conditions, including the effects of our licensees requesting delaying payments or failing to make payments to us. In the event that we fail to make any required payment under any current or future agreements governing our indebtedness or fail to comply with the financial and operating covenants contained in those agreements, we would be in default regarding that indebtedness. A debt default could significantly diminish the market value and marketability of our common stock, result in the acceleration of the payment obligations under all or a portion of our consolidated indebtedness and impact the Company's ability to continue as a going concern.
Risk Highlights Q1, 2021
Risk Word Cloud
Risk Factors Full Breakdown - Total Risks 35
- Share Price & Shareholder Rights - Risk 1The market price of our common stock, which has traded with significant volatility in the past year, may continue to be volatile, which could reduce the market price of our common stock.
The market price of our common stock has traded with significant volatility, and may continue to experience significant price and volume fluctuations. This market volatility could further reduce the market price of our common stock, regardless of our operating performance. In addition, the trading price of our common stock could change significantly over short periods of time in response to actual or anticipated variations in our quarterly operating results, announcements by us, our licensees or our respective competitors, factors affecting our licensees' markets generally and/or changes in national or regional economic conditions, making it more difficult for shares of our common stock to be sold at a favorable price or at all. The market price of our common stock could also be reduced by general market price declines or market volatility in the future or future declines or volatility in the prices of stocks for companies in the trademark licensing business or companies in the industries in which our licensees compete. In addition, any future conversions of the 5.75% Convertible Notes would dilute the holdings of our then existing stockholders, including any remaining holders of our 5.75% Convertible Notes that receive shares of our common stock upon conversion of their notes, and could reduce the market price of our common stock.
- Share Price & Shareholder Rights - Risk 2Future issuances of our common stock may cause the prevailing market price of our shares to decrease.
We have issued a substantial number of shares of common stock that are eligible for resale under Rule 144 of the Securities Act of 1933, as amended, or the Securities Act, and that may become freely tradable. We may, in the future, issue additional shares of our common stock. Pursuant to the terms of our 5.75% Convertible Notes, we may elect to pay interest on such notes in shares of our common stock, rather than in cash. Upon conversion of our 5.75% Convertible Notes, we may elect to satisfy our conversion obligations solely in shares of our common stock, which would result in an increase in the outstanding number of shares of our common stock that, subject to certain limitations, would be freely tradable. We have also issued a substantial number of restricted shares of common stock as inducement grants in connection with the Company's hiring of a new CEO in October 2018 and a new CFO in February 2019 and may do so again in the future. If the holders of 5.75% Convertible Notes choose to exercise their conversion rights and sell the underlying shares of common stock in the public market, or if holders of currently restricted shares of our common stock choose to sell such shares in the public market under Rule 144 or otherwise, the prevailing market price for our common stock may decline. Also, we have recently paid interest on the 5.75% Convertible Notes in shares of our common stock, and may continue to do so in the future, and any such issuance may cause the market price of our common stock to decline. The sale of shares issued upon the exercise of our derivative securities or other issuances of our common stock could also further dilute the holdings of our then existing stockholders, including holders of convertible notes that receive shares of our common stock upon conversion of their notes. In addition, future issuances of shares of our common stock could impair our ability to raise capital by offering equity securities.
- Share Price & Shareholder Rights - Risk 3Future issuances of equity or convertible notes to raise additional needed capital may result in significant dilution to our stockholders.
In order to raise additional needed capital, the Company may issue shares of its common stock or shares of preferred stock or debt convertible into shares of its common stock or preferred stock. There can be no assurance that such issuances will be at current market rates or on terms favorable to the Company and its existing stockholders. Any raising of capital involving the issuance of equity is expected to result in a significant dilution to existing stockholders. The terms of any debt securities issued could also impose significant restrictions on our operations. Broad market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance, and may adversely impact our ability to raise additional funds.
- Share Price & Shareholder Rights - Risk 4Provisions in our charter and Delaware law could make it more difficult for a third party to acquire us, discourage a takeover and adversely affect our stockholders.
Certain provisions of our certificate of incorporation could have the effect of making more difficult, delaying or deterring unsolicited attempts by others to obtain control of our company, even when these attempts may be in the best interests of our stockholders. Our certificate of incorporation authorizes our board of directors, without stockholder approval, to issue up to 5,000,000 shares of preferred stock, in one or more series, which could have voting and conversion rights that adversely affect or dilute the voting power of the holders of our common stock, none of which is outstanding. We are also subject to the provisions of Section 203 of the Delaware General Corporation Law, which could prevent us from engaging in a business combination with a 15% or greater stockholder for a period of three years from the date it acquired that status unless appropriate board or stockholder approvals are obtained.
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