Basis of Presentation	6 Months Ended
Jul. 29, 2017
Basis of Presentation
Basis of Presentation	CHEROKEE INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Unaudited (amounts in thousands, except percentages, share and per share amounts) (1) Basis of Presentation The accompanying unaudited condensed consolidated financial statements as of July 29, 2017 and for the three and six month periods ended July 29, 2017 and July 30, 2016 have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and Article 10 of Regulation S-X. The accompanying consolidated financial statements include the accounts of Cherokee Inc. and its consolidated subsidiaries (referred to collectively as “Cherokee Global Brands” or the “Company” unless the context indicates or requires otherwise) include all adjustments, consisting of normal recurring accruals, which in the opinion of management of Cherokee Global Brands are necessary for a fair statement of the Company’s financial condition and the results of operations for the periods presented. All intercompany accounts and transactions have been eliminated during the consolidation process. The accompanying consolidated balance sheet as of January 28, 2017 has been derived from audited consolidated financial statements, but does not include all disclosures required by GAAP for an audited balance sheet. The Company’s financial condition and results of operations as of or for the three and six month periods ended July 29, 2017 are not necessarily indicative of the financial condition or results to be expected as of or for the fiscal year ending February 3, 2018 or any other date period. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 28, 2017 (“Annual Report”). As used herein, “Second Quarter” refers to the three month ended July 29, 2017; “Six Months” refers to the six month ended July 29, 2017; “Fiscal 2019” refers to the fiscal year ending February 2, 2019; “Fiscal 2018” refers to the fiscal year ending February 3, 2018; “Fiscal 2017” refers to the fiscal year ended January 28, 2017; and “Fiscal 2016” refers to the fiscal year ended January 30, 2016. Liquidity and Going Concern The accompanying condensed consolidated financial statements have been prepared on the going concern basis of accounting, which assumes that 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. As described in Note 8, the Company has entered into the Cerberus Credit Facility with Cerberus (each as defined below), pursuant to which the Company has borrowed $45,000 under a term loan facility, which the Company drew down in December 2016, and $5,000 under a revolving credit facility, which the Company drew down in the First Quarter. As of July 29, 2017, the Company had $48,800 in principal amount of outstanding indebtedness owed under the Cerberus Credit Facility. Additionally, as of July 29, the Company was not in compliance with certain of its financial covenants set forth in the Cerberus Credit Facility (see Note 8). The Company is working with Cerberus to obtain a waiver of the events of default and/or amend certain terms of the Cerberus Credit Facility, but such a waiver or amendment may not be obtained, or if obtained, may not be obtained in a timely manner, or on terms favorable to the Company. Any failure to obtain such a waiver or amendment would subject the Company to significant risks. These risks include Cerberus’s right to terminate its obligations under the Cerberus 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 rights 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 Cerberus elects to exercise any of these rights, the Company’s financial condition and ability to continue operations could be materially jeopardized. As a result of these risks, there is substantial doubt about the Company’s ability to continue as a going concern.

CHEROKEE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

(amounts in thousands, except percentages, share and per share amounts)

(1) Basis of Presentation

The accompanying unaudited condensed consolidated financial statements as of July 29, 2017 and for the three and six month periods ended July 29, 2017 and July 30, 2016 have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and Article 10 of Regulation S-X. The accompanying consolidated financial statements include the accounts of Cherokee Inc. and its consolidated subsidiaries (referred to collectively as “Cherokee Global Brands” or the “Company” unless the context indicates or requires otherwise) include all adjustments, consisting of normal recurring accruals, which in the opinion of management of Cherokee Global Brands are necessary for a fair statement of the Company’s financial condition and the results of operations for the periods presented. All intercompany accounts and transactions have been eliminated during the consolidation process. The accompanying consolidated balance sheet as of January 28, 2017 has been derived from audited consolidated financial statements, but does not include all disclosures required by GAAP for an audited balance sheet. The Company’s financial condition and results of operations as of or for the three and six month periods ended July 29, 2017 are not necessarily indicative of the financial condition or results to be expected as of or for the fiscal year ending February 3, 2018 or any other date period. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 28, 2017 (“Annual Report”).

As used herein, “Second Quarter” refers to the three month ended July 29, 2017; “Six Months” refers to the six month ended July 29, 2017; “Fiscal 2019” refers to the fiscal year ending February 2, 2019; “Fiscal 2018” refers to the fiscal year ending February 3, 2018; “Fiscal 2017” refers to the fiscal year ended January 28, 2017; and “Fiscal 2016” refers to the fiscal year ended January 30, 2016.

Liquidity and Going Concern

The accompanying condensed consolidated financial statements have been prepared on the going concern basis of accounting, which assumes that 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. As described in Note 8, the Company has entered into the Cerberus Credit Facility with Cerberus (each as defined below), pursuant to which the Company has borrowed $45,000 under a term loan facility, which the Company drew down in December 2016, and $5,000 under a revolving credit facility, which the Company drew down in the First Quarter. As of July 29, 2017, the Company had $48,800 in principal amount of outstanding indebtedness owed under the Cerberus Credit Facility. Additionally, as of July 29, the Company was not in compliance with certain of its financial covenants set forth in the Cerberus Credit Facility (see Note 8). The Company is working with Cerberus to obtain a waiver of the events of default and/or amend certain terms of the Cerberus Credit Facility, but such a waiver or amendment may not be obtained, or if obtained, may not be obtained in a timely manner, or on terms favorable to the Company. Any failure to obtain such a waiver or amendment would subject the Company to significant risks. These risks include Cerberus’s right to terminate its obligations under the Cerberus 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 rights 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 Cerberus elects to exercise any of these rights, the Company’s financial condition and ability to continue operations could be materially jeopardized. As a result of these risks, there is substantial doubt about the Company’s ability to continue as a going concern.