INTERPARFUMS INC

Previous wording

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. Each license or agreement is for a specific term and may have additional optional terms. Generally, each license is subject to us making required royalty payments (which are subject to certain minimums), minimum advertising and promotional expenditures and meeting minimum sales requirements. Other agreements are generally subject to meeting minimum sales requirements. Just as the loss of a license or other significant agreement may have a material adverse effect on us, a renewal on less favorable terms may also negatively impact us.

Current wording

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. Generally, each license is subject to us making required royalty payments (which are subject to certain minimums), minimum advertising and promotional expenditures and meeting minimum sales requirements. Other agreements are generally subject to meeting minimum sales requirements. Just as the loss of a license or other significant agreement may have a material adverse effect on us, a renewal on less favorable terms may also negatively impact us.

Previous wording

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. 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.

Current wording

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.

Previous wording

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

Current wording

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

Previous wording

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. Fuel supplies and supply chain cost increases, as well as retailers or consumers, could all be negatively impacted by these wars. Such negative impacts could have a material adverse effect on our net sales, earnings and cash flows.

Current wording

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. Such negative impacts could have a material adverse effect on our net sales, earnings and cash flows.

Previous wording

We 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.

Current wording

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.

Previous wording

As 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 controls. 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. As a 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 weaknesses. 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.

Current wording

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. 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 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.

Previous wording

Despite significant inflationary pressures that started during 2022 and continued into 2024, affecting many aspects of our business, especially increasing component costs and shipping, we were able to offset the effects of inflation during 2022 by increasing the prices of our products. 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. 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.

Current wording

Despite significant inflationary pressures that started during 2022 and continued into 2024, affecting many aspects of our business, especially increasing component costs and shipping, we were able to offset the effects of inflation during 2022 by increasing the prices of our products. 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.

Previous wording

Our success depends, in part, on the quality and safety of our products. If our products are found to be defective or unsafe, or if they otherwise fail to meet our consumers’ standards, then our relationships with customers or consumers could suffer, the appeal of one or more of our brands could be diminished, and we could lose sales and/or become subject to liability claims, any of which could result in a material adverse effect on our business, results of operations and financial condition.

Current wording

Our success depends, in part, on the quality and safety of our products. If our products are found to be defective or unsafe, or if they otherwise fail to meet our consumers’ standards, then our relationships with customers or consumers could suffer, the appeal ofone or more of our brands could be diminished, and we could lose sales and/or become subject to liability claims, any of which could result in a material adverse effect on our business, results of operations and financial condition.

Previous wording

We have information 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. These systems may be susceptible to outages due to fire, floods, power loss, telecommunications failures, hacking, attacks and similar events. Despite the implementation of network security measures, our systems may be vulnerable to computer viruses, hacking, attacks and similar disruptions from unauthorized tampering.

Current wording

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. These systems may be susceptible to outages due to fire, floods, power loss, telecommunications failures, hacking, attacks and similar events. Despite the implementation of network security measures, our systems may be vulnerable to computer viruses, hacking, attacks and similar disruptions from unauthorized tampering.

Previous wording

Cybersecurity incidents may also result in the future from social engineering,i.e., the manipulation of people into sharing information, downloading malicious software, visiting malicious websites and sending money to criminal websites masquerading as legitimate websites, compromising their personal or organizational security, or masquerading of authorized users. 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. 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.

Current wording

Cybersecurity incidents may also result in the future from social engineering,i.e., the manipulation of people into sharing information, downloading malicious software, visiting malicious websites and sending money to criminal websites masquerading as legitimate websites, compromising their personal or organizational security, or masquerading of authorized users. 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.”