What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2026-05-14 compared with 2025-11-19 · 252 added, 430 removed, 271 unchanged (72% of the section changed)

4 unchanged sentences

(in thousands, except share and per share data)

September 30, 2025

March 31, 2026

December 31, 2025

1 unchanged sentence

Cash and cash equivalents

Accounts receivable, net of allowances for credit losses of $ 30 and $ 0 , respectively

Accounts receivable, net

Assets held for sale

Prepaid expenses and other current assets

4 unchanged sentences

Trademarks and other intangibles, net

Investments in unconsolidated affiliates

Total non-current assets

3 unchanged sentences

Deferred revenue

Accrued income taxes payable

Current portion of operating lease obligations

Current portion of long-term debt

Contingent obligation

Total current liabilities

9 unchanged sentences

Preferred stock, $ .001 par value, 1,000,000 shares authorized, none issued and outstanding

Common stock, $ .001 par value, 50,000,000 shares authorized, and 4,806,776 and 2,368,072 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively

Common stock, $ .001 par value, 50,000,000 shares authorized, and 5,913,492 and 5,880,757 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively

Paid-in capital

11 unchanged sentences

For the Three Months Ended

For the Nine Months Ended

September 30,

Net licensing revenue

Cost of goods sold

Direct operating costs and expenses

2 unchanged sentences

Total direct operating costs and expenses

Operating loss before other operating costs and expenses (income)

Other operating costs and expenses (income)

Operating loss before other operating costs and expenses

Other operating costs and expenses

Depreciation and amortization

Asset impairment charges

Asset impairment charge

Loss from equity investments

Gain on divestiture of Lori Goldstein Brand

Operating loss

1 unchanged sentence

Interest expense

Other interest and finance charges (income), net

Loss on early extinguishment of debt

Other finance charges (income), net

Interest and finance expense (income), net

3 unchanged sentences

Net loss attributable to Xcel Brands, Inc.

Earnings (loss) per common share attributable to Xcel Brands, Inc.

Loss per common share attributable to Xcel Brands, Inc.

stockholders:

Basic earnings (loss) per share (1)

Diluted earnings (loss) per share (1)

Basic and diluted net loss per share

Weighted average number of common shares outstanding:

Basic weighted average common shares outstanding (1)

Diluted weighted average common shares outstanding (1)

(1) Amounts presented for 2024, including the weighted average number of shares outstanding and the resulting loss per share information have been retroactively adjusted in order to give effect to the Company’s March 24, 2025 1-for-10 reverse stock split.

See Note 1 and Note 7.

Basic and diluted weighted average common shares outstanding

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

6 unchanged sentences

Balance as of December 31, 2024

Compensation expense related to stock options and restricted stock

Contra-revenue related to warrants held by licensee

Shares issued to consultant in connection with stock grant

Shares issued in connection with public offering and private placement transactions, net of transaction costs

Balance as of March 31, 2024

Compensation expense related to stock options and restricted stock

Contra-revenue related to warrants held by licensee

Shares issued to directors in connection with restricted stock grants

Net income (loss)

Balance as of June 30, 2024

Compensation expense related to stock options and restricted stock

Contra-revenue related to warrants held by licensee

Shares issued to employee in connection with stock grant

Shares issued to executives for pro rata portion of base salaries, net of withholding taxes

Balance as of September 30, 2024

Balance as of December 31, 2024

Additional impact related to fractional shares from reverse stock split

3 unchanged sentences

Balance as of March 31, 2025

Balance as of December 31, 2025

Compensation expense related to stock options and restricted stock

Contra-revenue related to warrants held by licensee

Warrants issued and amended in connection with refinancing of term loan debt

Shares issued to management and directors in connection with restricted stock grants

Shares issued to executives for pro rata portion of base salaries, net of withholding taxes

Balance as of June 30, 2025

Compensation expense related to stock options and restricted stock

Contra-revenue related to warrants granted to licensee

Shares issued to executives for pro rata portion of base salaries, net of withholding taxes

Shares issued in connection with public offering and private placement transactions, net of transaction costs

Balance as of September 30, 2025

The values of Common stock and Paid-in capital, as well as the number of shares issued and outstanding, have been retroactively adjusted in order to give effect to the Company’s March 24, 2025 1-for-10 reverse stock split.

See Note 1 and Note 7.

Shares issued to executive for pro rata portion of base salary, net of withholding taxes

Costs incurred related to equity line facility

Balance as of March 31, 2026

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements .

3 unchanged sentences

(in thousands)

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

Cash flows from operating activities

1 unchanged sentence

Depreciation and amortization expense

Asset impairment charges

Asset impairment charge

Paid in-kind interest expense

1 unchanged sentence

Stock-based compensation and cost of licensee warrants

Provision for (recovery of) credit losses

Loss from equity method investments

Loss on early extinguishment of debt

Gain on divestiture of Lori Goldstein brand

Loss from equity investments

Changes in operating assets and liabilities:

4 unchanged sentences

Lease-related assets and liabilities

Other long-term liabilities

Net cash used in operating activities

3 unchanged sentences

Cash flows from financing activities

Proceeds from public offering and private placement transactions, net of transaction costs

Payment of costs associated with equity line facility

Proceeds from long-term debt

Payment of deferred finance costs

Shares repurchased including vested restricted stock in exchange for withholding taxes

Payment of long-term debt

Net cash provided by financing activities

Net increase (decrease) in cash, cash equivalents, and restricted cash

Net cash (used in) provided by financing activities

Net (decrease) increase in cash, cash equivalents, and restricted cash

Cash, cash equivalents, and restricted cash at beginning of period

Cash, cash equivalents, and restricted cash at end of period

Reconciliation to amounts on consolidated balance sheets:

Reconciliation to amounts on condensed consolidated balance sheets:

Cash and cash equivalents

Restricted cash (reported in prepaid expenses and other current assets)

Restricted cash (reported in other non-current assets)

7 unchanged sentences

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2025

March 31, 2026

Nature of Operations, Background, and Basis of Presentation

The accompanying condensed consolidated balance sheet as of December 31, 2024 (which has been derived from audited financial statements) and the unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X promulgated by the United States Securities and Exchange Commission (“SEC”).

Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting.

Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements were prepared following the same policies and procedures used in the preparation of the audited consolidated financial statements and reflect all adjustments (consisting of normal recurring adjustments) necessary to present fairly the results of operations, financial position, and cash flows of Xcel Brands, Inc.

and its subsidiaries (the “Company” or "Xcel").

The results of operations for the interim periods presented herein are not necessarily indicative of the results for the entire fiscal year or for any future interim periods.

These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on May 28, 2025.

Xcel is a media and consumer products company engaged in the design, licensing, marketing, live streaming, and social commerce sales of branded apparel, footwear, accessories, fine jewelry, home goods and other consumer products, and the acquisition of dynamic consumer lifestyle brands.

Xcel Brands, Inc.

(“Xcel” and, together with its subsidiaries, the “Company”) is a media and consumer products company engaged in the design, licensing, marketing, live streaming, and social commerce sales of branded apparel, footwear, accessories, fine jewelry, home goods and other consumer products, and the development of influencer led brands and the acquisition of dynamic consumer lifestyle brands.

The Company primarily generates revenue through the licensing of its brands through contractual arrangements with manufacturers and retailers.

The Company, through its licensees, distributes through a modern consumer products sales strategy, which includes the promotion and sale of products under its brands through interactive television, digital live-stream shopping, social commerce, brick-and-mortar retailers, and e-commerce channels, to be everywhere its customers shop.

The Company, through its licensees, distributes through an omni-channel and social commerce sales strategy which includes the promotion and sale of products under its brands through interactive television, digital live-stream shopping, social commerce, brick-and-mortar retailers, and e-commerce channels.

Brand Portfolio

Currently, the Company’s brand portfolio consists of the following:

● the Halston, Judith Ripka, and C Wonder brands, which are wholly owned by Xcel;

● the TowerHill by Christie Brinkley brand, which is a new co-branded collaboration between Xcel and Christie Brinkley that launched in May 2024;

● the LB70 by Lloyd Boston brand, which is a new co-branded collaboration between Xcel and Lloyd Boston that launched in August 2024;

● the Trust, Respect, Love by Cesar Millan brand, which is a new co-branded collaboration between Xcel and Cesar Millan that is planned to launch in the fourth quarter of 2025;

● the Longaberger brand, which Xcel manages through its 50 % ownership interest in Longaberger Licensing, LLC;

● the Halston and C Wonder brands, which are wholly owned by Xcel;

● the Longaberger by Shannon Doherty brand, which Xcel manages through its 50 % ownership interest in Longaberger Licensing, LLC;

the Company consolidates Longaberger Licensing, LLC and recognizes noncontrolling interest for the remaining ownership interest held by a third party (see Note 2 for additional details)

● GemmaMade, which is a co-branded collaboration between Xcel and baking influencer Gemma Stafford which is planned to launch in the fourth quarter of 2025;

● the TowerHill by Christie Brinkley brand, which is a co-branded collaboration between Xcel and Christie Brinkley that launched in 2024;

● the Trust.Respect.Love by Cesar Millan brand, which is a new co-branded collaboration between Xcel and Cesar Millan that is planned to launch in Fall 2026;

● the GemmaMade by Gemma Stafford brand, which is a new co-branded collaboration between Xcel and Gemma Stafford that launched in April 2026;

● the Off/Duty by Coco Rocha brand, which is a new co-branded collaboration between Xcel and Coco Rocha, which is planned to launch in Fall 2026;

● Mesa Mia by Jenny Martinez, which is a brand owned by Mexican home influencer Jenny Martinez, and for which Xcel holds the television rights through a long-term license agreement, that launched in April 2026.

Also, as of March 31, 2026, and through April 27, 2026, the Company’s brand portfolio also included the Judith Ripka brand, which was wholly owned by Xcel;

this brand was sold to a third party in April 2026 (see Note 12 for additional details).

Additionally, through October 1, 2025, the Company held a noncontrolling ownership interest in the Isaac Mizrahi brand.

Basis of Presentation

The accompanying condensed consolidated balance sheet as of December 31, 2025 (which has been derived from audited financial statements) and the unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X promulgated by the United States Securities

XCEL BRANDS, INC.

1 unchanged sentence

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2025

● Mesa Mia, which is a brand owned by Mexican home influencer Jenny Martinez, and for which Xcel holds the television rights through a long-term license agreement and expects to launch in the fourth quarter of 2025.

Additionally, through October 1, 2025, the Company held a noncontrolling interest in the Isaac Mizrahi brand (see Note 2 and Note 12 for additional details).

The Company also holds a 19 % noncontrolling interest in ORME Live, Inc.

(“ORME”), a short-form video and social commerce marketplace that launched in April 2024.

Change in Capital Structure

As described more fully in Note 7, effective March 24, 2025, the Company effected a 1-for-10 reverse stock split for all of its issued and outstanding common stock.

All share and per share amounts presented in these condensed consolidated financial statements and accompanying notes, including but not limited to shares issued and outstanding, earnings/(loss) per share, and warrants and options, as well as the dollar amounts of common stock and paid-in capital, have been retroactively adjusted for all periods presented in order to reflect this change in capital structure.

There were no changes to the total number of authorized common shares or par value per common share as a result of this reverse stock split.

March 31, 2026

and Exchange Commission (“SEC”).

Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows.

The results of operations for the interim periods presented herein are not necessarily indicative of the results for the entire fiscal year or for any future interim periods.

These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on April 15, 2026.

Going Concern

The unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

The Company has incurred recurring losses, a history of cash flows used in operating activities, and an accumulated deficit.

Although the Company has undertaken significant restructuring and cost reduction efforts, obtained additional funding through a combination of equity and debt financing transactions, and continues to explore strategic financing alternatives and operational efficiencies to improve liquidity (see Note 12 for information regarding financing transactions entered into subsequent to quarter-end), management has determined that there is nonetheless substantial doubt about the Company’s ability to meet its financial obligations as they become due within twelve months from the date these financial statements are issued.

The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Restricted Cash

Restricted cash at March 31, 2026 consisted of $ 1.08 million of cash deposited as collateral for a standby letter of credit associated with a real estate lease (reported in other non-current assets).

Restricted cash at December 31, 2025 consisted of $ 0.74 million of cash deposited as collateral for a standby letter of credit associated with a real estate lease (reported in other non-current assets) and $ 1.00 million of cash deposited in a bank account to satisfy a liquidity covenant in the Company’s term loan debt agreement (reported in other current assets).

Segment Reporting Information

7 unchanged sentences

The Company does not have intra-entity sales or transfers.

Restricted Cash

Restricted cash at September 30, 2025 consisted of $ 0.7 million of cash deposited as collateral for a standby letter of credit associated with a real estate lease (reflected within other non-current assets in the condensed consolidated balance sheets) and $ 1.0 million of cash deposited in a bank account to satisfy a liquidity covenant in the Company’s term loan debt agreement (reflected within prepaid expenses and other current assets in the condensed consolidated balance sheets).

Restricted cash at December 31, 2024 consisted of $ 0.7 million of cash deposited as collateral for a standby letter of credit associated with a real estate lease (reflected within other non-current assets in the condensed consolidated balance sheets).

Going Concern

The unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

XCEL BRANDS, INC.

1 unchanged sentence

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2025

As of September 30, 2025, the Company has incurred recurring losses, a history of cash flows used in operating activities, and an accumulated deficit.

While the Company has undertaken significant restructuring efforts during 2023 and 2024, and implemented additional measures during 2025 to further optimize its cost structure, management has determined that, absent additional funding, there is substantial doubt about the Company’s ability to meet its financial obligations as they become due within twelve months from the date these financial statements are issued.

In April 2025, the Company restructured its outstanding debt and received net proceeds from financing activities.

In August 2025, the Company closed on a public offering and private placement of its common stock, which provided the Company with additional net proceeds.

While these transactions have significantly improved the Company’s liquidity position, the proceeds received may still be insufficient to fully address the Company’s liquidity needs.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

Management intends to continue exploring strategic financing alternatives and operational efficiencies to improve liquidity.

The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Recently Issued Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“ FASB”) issued Accounting Standards Update (“ ASU”) No.

2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.” This ASU requires disclosure of additional categories of information about federal, state, and foreign income taxes in the rate reconciliation table and requires entities to provide more details about the reconciling items in some categories if items meet a quantitative threshold.

The ASU also requires entities to disclose income taxes paid, net of refunds, disaggregated by federal (national), state, and foreign taxes for annual periods and to disaggregate the information by jurisdiction based on a quantitative threshold.

The guidance makes several other changes to the disclosure requirements.

The ASU is required to be applied prospectively, with the option to apply it retrospectively, and is effective for fiscal years beginning after December 15, 2024.

The required disclosures will be included in the Company’s Form 10-K for the year ending December 31, 2025.

As the requirements of this ASU relate to disclosure only, the Company does not anticipate that the adoption of this ASU will have a significant impact on its consolidated financial statements.

In November 2024, the FASB issued ASU No.

2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.” This ASU requires public business entities to disclose specified information about certain costs and expenses, including but not limited to purchases of inventory, employee compensation, depreciation, and intangible asset amortization, in a tabular format within the notes to their financial statements, as well as provide additional disclosures related to certain other specified expenses.

The ASU may be applied on either a prospective or retrospective basis, and is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027.

The Company is currently evaluating the ASU to determine its impact on the Company's disclosures.

March 31, 2026

Investments in Unconsolidated Affiliates and Variable Interest Entities

Investment in IM Topco, LLC

On May 31, 2022, Xcel sold 70 % of the membership interests of IM Topco, LLC (“IM Topco”), a former subsidiary which holds the trademarks and other intellectual property rights relating to the Isaac Mizrahi brand, to a subsidiary of WHP Global (“WHP”), a private equity-backed brand management and licensing company.

From June 1, 2022 through April 15, 2025, the Company accounted for its 30 % retained interest in the ongoing operations of IM Topco as a component of other operating costs and expenses under the equity method of accounting, using the distribution provisions set forth in the governing business venture agreement between the Company and WHP.

XCEL BRANDS, INC.

AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2025

On and effective April 15, 2025, pursuant to certain provisions contained in the May 31, 2022 membership interest purchase agreement between Xcel and WHP (as amended), the Company and two subsidiaries of WHP entered into a membership interest transfer agreement, under which Xcel transferred to WHP equity interests equal to 12.5 % of the outstanding equity interests of IM Topco.

As a result of the transfer, Xcel’s interest in IM Topco was reduced from a 30 % equity interest to a 17.5 % equity interest.

Accordingly, as of and effective April 15, 2025, the Company concluded that as it no longer held significant influence over IM Topco, and discontinued the application of the equity method of accounting.

In accordance with relevant GAAP guidance, the Company remeasured its retained investment in IM Topco as of the date of discontinuance of the equity method, which was not significantly different from the value reflected on the Company’s condensed consolidated balance sheet at March 31, 2025.

From April 15, 2025, as the equity securities of IM Topco are not publicly traded and do not have readily determinable fair values, the Company elected to measure its investment in IM Topco in accordance with ASC 321-10-35-2:

at adjusted cost, less impairment, plus or minus observable price changes of an identical or similar investment of the same issuer.

On and effective September 26, 2025, the Company, IM Topco, and two subsidiaries of WHP entered into a settlement agreement, pursuant to which the Company agreed to transfer all of its remaining equity interests in IM Topco to WHP, in exchange for (i) the release of the Company’s liability under a license agreement with IM Topco (see Note 10) and (ii) a capital appreciation right for the Company to receive 15 % of the net consideration received by IM Topco and/or WHP in excess of $ 46 million in connection with any potential future capital transaction involving IM Topco which occurs on or before September 1, 2032.

The equity interests were transferred on October 1, 2025.

Based on consideration of the above along with other relevant facts and circumstances, the Company determined that there were indicators of impairment with respect to its investment in IM Topco, and that the estimated fair value of its investment in IM Topco as well as the estimated fair value of the capital appreciation right as of September 30, 2025 was effectively zero.

As such, the Company recognized a non-cash impairment charge to reduce the carrying value of its investment to zero.

Thus, for the three months ended September 30, 2025, the Company recognized a $ 5.49 million loss related to its investment in IM Topco, comprised of (i) a $ 5.53 million impairment charge, and (ii) a $( 0.04 ) million adjustment related to the settlement of certain net receivables and payables between Xcel and IM Topco.

For the nine months ended September 30, 2025, the Company recognized a $ 6.01 million loss related to its investment in IM Topco, comprised of (i) a $ 5.53 million impairment charge, (ii) a $ 0.21 million equity method loss, (ii) a $( 0.24 ) million adjustment to the carrying value of a contingent contractual obligation related to IM Topco (see Note 11 for additional information), and (iii) other related costs and adjustments totaling $ 0.51 million.

For the three and nine months ended September 30, 2024, the Company recognized equity method losses related to its investment in IM Topco of $ 0.52 million and $ 1.55 million, respectively, and also recognized a $ 6.25 million non-cash charge to recognize a contingent contractual obligation related to IM Topco (see Note 11 for additional information) .

Investment in Orme Live, Inc.

During 2024, the Company accounted for its investment in ORME under the equity method of accounting.

The Company’s proportional share of the operating results of ORME for the three and nine months ended September 30, 2024 was a loss of approximately $ 0.08 million and $ 0.14 million, respectively.

Effective January 2025, the Company no longer applies the equity method of accounting to its investment in ORME.

Instead, the Company currently accounts for its investment in ORME in accordance with ASC 321-10-35-2:

XCEL BRANDS, INC.

AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2025

cost, less impairment, plus or minus observable price changes of an identical or similar investment of the same issuer.

There were no amounts recognized in the condensed consolidated statement of operations related to ORME for the three and nine months ended September 30, 2025.

The carrying value of the Company’s investment in ORME as of September 30, 2025 and December 31, 2024 was zero.

From May 31, 2022 through October 1, 2025, the Company held a noncontrolling equity ownership interest IM Topco, LLC (“IM Topco”), a former subsidiary which holds the trademarks and other intellectual property rights relating to the Isaac Mizrahi brand.

From June 1, 2022 through April 15, 2025, the Company accounted for its noncontrolling interest in the ongoing operations of IM Topco as a component of other operating costs and expenses (income) under the equity method of accounting, using the distribution provisions set forth in the governing business venture agreement.

On April 15, 2025, the Company discontinued the application of the equity method of accounting, and from April 15, 2025 through October 1, 2025, the Company measured its investment in IM Topco at adjusted cost, less impairment, plus or minus observable price changes of an identical or similar investment of the same issuer.

On and effective September 26, 2025, the Company, IM Topco, and the other owners of IM Topco entered into a settlement agreement, pursuant to which the Company agreed to transfer all of its remaining equity interests in IM Topco to the other owners, in exchange for (i.) the release of the Company’s liability under certain agreements with IM Topco and (ii.) a capital appreciation right for the Company to receive 15 % of the net consideration received by IM Topco and/or the other owners in excess of $ 46 million in connection with any potential future capital transaction involving IM Topco which occurs on or before September 1, 2032.

All remaining IM Topco equity interests were transferred to WHP on October 1, 2025.

For the three months ended March 31, 2025, the Company recognized a $ 0.34 million loss related to its investment in IM Topco, comprised of (i) a $ 0.18 million equity method loss, (ii) a $ 0.40 million charge to adjust the carrying value of the investment in IM Topco to its estimated fair value as of March 31, 2025, and (iii) a $( 0.24 ) million adjustment to the carrying value of a contingent contractual obligation related to IM Topco.

Longaberger Licensing, LLC Variable Interest Entity

4 unchanged sentences

Therefore, as the primary beneficiary, the Company has consolidated LL since 2019, and has recognized the assets, liabilities, revenues, and expenses of LL as part of its consolidated financial statements, along with a noncontrolling interest which represents Hilco Global’s 50 % ownership share in LL.

The amount of LL's losses attributed to Hilco Global's non-controlling interest for the three months ended September 30, 2025 and 2024 was $ 0.09 million and $ 0.01 million, respectively.

The amount of LL's losses attributed to Hilco Global's non-controlling interest for the nine months ended September 30, 2025 and 2024 was $ 0.09 million and $ 0.09 million, respectively.

The amount of LL's losses attributed to Hilco Global's non-controlling interest for the three months ended March 31, 2026 and 2025 was $ 0 for each period.

XCEL BRANDS, INC.

AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2026

Trademarks and Other Intangibles

Trademarks and other intangibles, net consist of the following:

September 30, 2025

March 31, 2026

Gross Carrying

7 unchanged sentences

Copyrights and other intellectual property

Amortization expense for intangible assets was approximately $ 0.88 million for the three-month period ended September 30, 2025 (the "current quarter") and approximately $ 0.89 million for the three-month period ended September 30, 2024 (the "prior year quarter").

Amortization expense intangible assets was approximately $ 2.65 million for the nine-month period ended September 30, 2025 (the "current nine months") and approximately $ 3.95 million for the nine-month period ended September 30, 2024 (the "prior year nine months").

XCEL BRANDS, INC.

AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2025

Amortization expense for intangible assets was approximately $ 0.88 million for the three-month period ended March 31, 2026 (the "current quarter") and approximately $ 0.88 million for the three-month period ended March 31, 2025 (the "prior year quarter").

As of March 31, 2026, the intangible assets related to the Judith Ripka brand were reclassified to “assets held for sale” in the condensed consolidated balance sheet.

This included trademarks with a gross carrying value of approximately $ 4.17 million and accumulated amortization of $ 1.57 million, and copyrights with a gross carrying value of $ 0.19 million and accumulated amortization of $ 0.19 million.

Additionally, upon reclassification to “assets held for sale,” the assets were remeasured at the lower of (i) their carrying amount or (ii) estimated fair value less cost to sell;

accordingly, the Company recognized an impairment charge during the current quarter of approximately $ 0.06 million, such that the net carrying value of these assets classified as “assets held for sale” at March 31, 2026 was approximately $ 2.54 million.

These assets were subsequently sold to a third party in April 2026 (see Note 12 for additional details).

Significant Contracts and Concentrations

Qurate Agreements

Under the Company’s agreements with Qurate Retail Group (“Qurate”), collectively referred to as the Qurate Agreements, Qurate is obligated to make payments to the Company on a quarterly basis, based primarily upon a percentage of net retail sales of certain specified branded merchandise.

Net retail sales are defined as the aggregate amount of all revenue generated through the sale of the specified branded products by Qurate and its subsidiaries under the Qurate Agreements, net of customer returns, and excluding freight, shipping and handling charges, and sales, use, or other taxes.

Net licensing revenue from the Qurate Agreements represents a significant portion of the Company’s total net revenue.

Net licensing revenue from the Qurate Agreements totaled $ 0.24 million and $ 0.26 million for the current quarter and prior year quarter, respectively, representing approximately 21 % and 14 % of the Company’s total net revenue for the current quarter and prior year quarter, respectively.

Net licensing revenue from the Qurate Agreements totaled $ 0.81 million and $ 3.27 million for the current nine months and prior year nine months, respectively, representing approximately 22 % and 46 % of the Company’s total net revenue for the current nine months and prior year nine months, respectively.

As of September 30, 2025 and December 31, 2024, the Company had receivables from Qurate of $ 0.25 million and $ 0.40 million, respectively, representing approximately 18 % and 18 % of the Company’s total net accounts receivable, respectively.

Halston Master License

2 unchanged sentences

G-III has an option to purchase the Halston brand for $ 5.0 million at the end of the twenty-five-year term, which right may be accelerated under certain conditions associated with an uncured material breach in accordance with the terms of the Halston Master License.

The Licensor granted G-III a security interest in the Halston trademarks to secure the Licensor’s obligations under the Halston Master License, including to honor the obligations under the purchase option.

As a result of the upfront cash payment and guaranteed minimum royalties discussed above, the Company has recognized $ 2.89 million and $ 3.56 million of deferred revenue contract liabilities on its condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024, respectively.

As of December 31, 2024, approximately $ 0.89 million of the contract liability balance was classified as a current liability and approximately $ 2.67 million was classified as a long-term liability.

As of September 30, 2025, approximately $ 0.89 million of the contract liability balance was classified as a current liability and approximately $ 2.00 million was classified as a long-term liability;

the balance of the deferred revenue contract liabilities will be recognized ratably as revenue over the next 3.25 years.

The Licensor granted G-III a security interest in the Halston

XCEL BRANDS, INC.

1 unchanged sentence

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2025

March 31, 2026

trademarks to secure the Licensor’s obligations under the Halston Master License, including to honor the obligations under the purchase option.

As a result of the upfront cash payment and guaranteed minimum royalties under this agreement, the Company has recognized $ 2.87 million and $ 3.09 million of deferred revenue contract liabilities on its condensed consolidated balance sheets as of March 31, 2026 and December 31, 2025, respectively.

As of December 31, 2025, approximately $ 1.31 million of the contract liability balance was classified as a current liability and approximately $ 1.78 million was classified as a long-term liability.

As of March 31, 2026, approximately $ 1.31 million of the contract liability balance was classified as a current liability and approximately $ 1.56 million was classified as a long-term liability;

the balance of the deferred revenue contract liabilities will be recognized ratably as revenue over the next 2.75 years.

Net licensing revenue recognized from the Halston Master License was $ 0.64 million for both the current quarter and prior year quarter, representing approximately 56 % and 48 % of the Company’s total net revenue for the current quarter and prior year quarter, respectively.

Net licensing revenue recognized from the Halston Master License was $ 1.91 million and $ 1.93 million for the current nine months and prior year nine months, respectively, representing approximately 51 % and 27 % of the Company’s total net revenue for the current nine months and prior year nine months, respectively.

Qurate Agreements

Net licensing revenue from the Qurate Agreements represents a significant portion of the Company’s total net revenue.

Net licensing revenue from the Qurate Agreements totaled $ 0.19 million and $ 0.33 million for the current quarter and prior year quarter, respectively, representing approximately 16 % and 25 % of the Company’s total net revenue for the current quarter and prior year quarter, respectively.

As of March 31, 2026 and December 31, 2025, the Company had receivables from Qurate of $ 0.20 million and $ 0.21 million, respectively, representing approximately 31 % and 22 % of the Company’s total net accounts receivable, respectively.

JTV / America’s Collectibles Network, Inc.

2 unchanged sentences

In addition, the Company has outstanding receivables from prior product sales of fine jewelry made to JTV.

As of September 30, 2025 and December 31, 2024, the Company had receivables from JTV of $ 0.20 million and $ 1.06 million, respectively, representing approximately 14 % and 47 % of the Company’s total net accounts receivable, respectively.

As of March 31, 2026 and December 31, 2025, the Company had receivables from JTV of $ 0.10 million and $ 0.41 million, respectively, representing approximately 16 % and 42 % of the Company’s total net accounts receivable, respectively.

The Company is party to operating leases for real estate, and for certain equipment and storage space with a term of 12 months or less.

The Company is currently not a party to any finance leases.

As of September 30, 2025, the Company’s real estate leases have a weighted-average remaining lease term of approximately 4.22 years, and the lease liabilities are measured using a weighted-average discount rate of 8.05 %.

Total lease expense (net of sublease income) included in selling, general and administrative expenses on the Company’s unaudited condensed consolidated statements of operations was approximately $ 0.1 million for the current quarter, $ 0.3 million for the prior year quarter, $ 0.5 million for the current nine months, and $ 0.7 million for the prior year nine months.

Cash paid for amounts included in the measurement of operating lease liabilities was approximately $ 0.5 million for the current quarter, $ 0.4 million for the prior year quarter, $ 1.4 million for the current nine months, and $ 1.2 million for the prior year nine months.

During the prior year nine months, as a result of entering into an agreement (as sublessor) in January 2024 for the sublease of offices located at 1333 Broadway to a third-party subtenant, the Company recognized non-cash impairment charges related to the right-of-use asset for this location and associated leasehold improvement assets at this location.

These impairment charges amounted to approximately $ 3.1 million for the right-of-use asset and approximately $ 0.4 million for the leasehold improvements during the nine month period ended September 30, 2024.

As of September 30, 2025, the maturities of future lease obligations were as follows:

As of March 31, 2026, the Company’s real estate leases have a weighted-average remaining lease term of approximately 3.96 years, and the lease liabilities are measured using a weighted-average discount rate of 8.22 %.

XCEL BRANDS, INC.

AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2026

$ 0.2 million for the prior year quarter.

Cash paid for amounts included in the measurement of operating lease liabilities was approximately $ 0.5 million for the current quarter and $ 0.4 million for the prior year quarter.

As of March 31, 2026, the maturities of future lease obligations were as follows:

(in thousands)

2025 (October 1 through December 31)

2026 (April 1 through December 31)

Thereafter (through 2032)

Total lease payments

Discount to present value

Present value of lease liabilities

Current portion of lease liabilities (October 1, 2025 through September 30, 2026)

Current portion of lease liabilities (April 1, 2026 through March 31, 2027)

Non-current portion of lease liabilities

XCEL BRANDS, INC.

AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2025

The Company’s net carrying amount of debt is comprised of the following:

September 30,

($ in thousands)

Term loan debt

Accumulated paid in-kind interest

Term loan debt (including accumulated unpaid PIK interest)

Unamortized deferred finance costs and other reductions to carrying value

1 unchanged sentence

Long-term debt

Description of Term Loan Debt and Amendments

On December 12, 2024, the Company and certain of its subsidiaries entered into a loan and security agreement with FEAC Agent, LLC (“FEAC”), as administrative agent and collateral agent, FEF Distributors, LLC, as lead arranger, and Restore Capital, LLC (“Restore”), as agent for certain lenders, pursuant to which the lenders made term loans to the Company and agreed to make additional term loans to the Company upon the satisfaction of a condition precedent described in the loan agreement.

1 unchanged sentence

(1) a term loan in the amount of $ 3.95 million (“Term Loan A”) was made on the closing date, (2) a term loan in the amount of $ 4.0 million (“Term Loan B”) was made on the closing date, and (3) a term loan in the amount of $ 2.05 million (“Delayed Draw Term Loan”;

Term Loan A, Term Loan B and Delayed Draw Term Loan are referred to as “Term Loans”) was made in March 2025.

The proceeds from Term Loan A and Term Loan B were used to repay the remaining balance of the Company’s previous term loan debt with Israel Discount Bank of New York, as well as to pay fees, costs, and expenses incurred in connection with entering into the new loan agreement, and the balance may be used for working capital purposes.

Approximately $ 1.5 million of the proceeds from the Delayed Draw Term Loan were deposited in a bank account to satisfy a liquidity covenant in the loan agreement.

On April 21, 2025, the Company and certain of its subsidiaries and its lenders and FEAC Agent, LLC entered into an amendment of the December 12, 2024 loan and security agreement, which provided for $ 1.5 million repayment of the $ 3.95 million Term Loan A and an additional Term Loan B in the amount of $ 5.12 million.

The term loans outstanding after giving effect to the April 21, 2025 amendment and the application of the proceeds of the additional Term Loan B are as follows:

Term Loan A, Term Loan B and Delayed Draw Term Loan are referred to as “Term Loans”) was subsequently made in March 2025.

A portion of the proceeds from the Delayed Draw Term Loan were deposited in a bank account to satisfy a liquidity covenant in the loan agreement.

On April 21, 2025, the Company and certain of its subsidiaries and its lenders and FEAC Agent, LLC entered into an amendment of the December 12, 2024 loan and security agreement, which provided for a $ 1.5 million repayment of the $ 3.95 million Term Loan A and an additional Term Loan B in the amount of $ 5.12 million.

The term loans outstanding after giving effect to the April 21, 2025 amendment and the application of the proceeds of the additional Term Loan B were as follows:

(1) Term Loan A in the amount of $ 4.50 million, and (2) Term Loan B in the amount of $ 9.12 million.

The proceeds from the additional Term Loan B were used to repay a portion of Term Loan A, as well as to pay fees, costs, and expenses incurred in connection with entering into the April 21, 2025 amendment, and the balance will be used for working capital purposes.

XCEL BRANDS, INC.

AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2026

In connection with the April 21, 2025 amendment and refinancing transaction, UTG Capital, Inc., a Delaware corporation (UTG”), purchased a 100 % undivided, participation interest in Term Loan B for a purchase price of $ 9.12 million.

Also in connection with the refinancing, the Company issued certain warrants to UTG and Restore, and amended certain warrants that had been previously issued on December 12, 2024 (see Note 7 for additional details).

Also in connection with the refinancing, the Company issued certain warrants to UTG and Restore, and amended certain warrants that had been previously issued on December 12, 2024.

On May 15, 2025, the Company repaid $ 0.50 million of the outstanding principal amount of Term Loan A.

The Term Loans are guaranteed by certain direct and indirect subsidiaries of the Company, and are secured by all of the assets of the Company and such subsidiaries.

The loan agreement contains various customary financial covenants and reporting requirements, as specified and defined therein.

The Company was in compliance with all applicable covenants

On October 7, 2025, the Company and certain of its subsidiaries and its lenders and FEAC Agent, LLC entered into a further amendment of the December 12, 2024 loan and security agreement, pursuant to which (i) the agents and lenders (as defined in the loan and security agreement) consented to the transfer and the release of the agents’ liens on the equity interests of IM Topco, LLC;

(ii) the liquid asset covenant requirement was reduced to $ 1,000,000 ;

and (iii) Xcel made a prepayment of $ 0.25 million against the outstanding principal amount of Term Loan A, of which $ 0.14 million was paid from the blocked account.

On November 18, 2025, the Company and certain of its subsidiaries and its lenders and FEAC Agent, LLC entered into the fourth amendment of the December 12, 2024 loan and security agreement, pursuant to which (i) the agents and lenders (as defined in the loan and security agreement) provided the Company with a limited waiver with respect to certain specified events of default, and also amended certain financial covenants related to the term loan agreement;

(ii) the Company committed to make a prepayment of $ 3.25 million on Term Loan A by February 20, 2026, along with the payment of an amendment fee of $ 0.45 million (of which $ 0.125 million was payable on December 5, 2025 and the remaining $ 0.325 million would be due only if the $ 3.25 million principal amount of Term Loan A was not repaid on or prior to February 20, 2026);

and (iii) the payment of the remaining principal balance on Term Loan A of $ 0.5 million was changed to be due on December 31, 2026 which shall be held by IPX Capital, LLC, a related party.

In addition, upon the repayment of the $ 3.25 million of Term Loan A, the Company will have revised financial covenants.

The minimum revenue requirement for the rolling 12 months ending December 31, 2025 will be $ 3.9 million and $ 1.7 million for the Included Subsidiaries and Halston, respectively, each as defined in the loan agreements.

Further, after the Term Loan A payment is made, the minimum revenue requirement covenants shall remain at these levels for the duration of the loans and the minimum liquidity requirement shall be zero, which includes the lenders’ release of $ 1.0 million of restricted cash within the blocked account back to the Company.

On February 20, 2026 and March 20, 2026, the Company entered into the fifth and sixth amendments to the loan and security agreement with the term loan debt lenders and FEAC Agent, LLC.

Pursuant to such amendments, (i) the Company prepaid $ 0.50 million on Term Loan A (paid from the blocked account, as defined in the loan and security agreement) in connection with the fifth amendment and irrevocably authorized FAEC Agent, LLC, as the administrative agent to transfer up to $ 0.50 million (the “Sixth Amendment Cash Collateral”) from the blocked account to an account maintained by the Administrative Agent to be held as cash collateral securing the Obligations (as defined in the loan and security agreement);

(ii) the Company irrevocably authorized the administrative agent to:

(a) apply all or any portion of the Sixth Amendment Cash Collateral to repay the Term Loan A, or (b) return all or any portion of the Sixth Amendment Cash Collateral to the Company, in each case at the lenders’ sole discretion;

(iii) the liquid asset covenant requirement was reduced to:

(a) at all times prior to the repayment in full of the First Out Obligations (as defined in the loan and security agreement), $ 0.50 million minus that amount of Sixth Amendment Cash Collateral used to repay Term Loan A, and (b) at all times after the repayment in full of the First Out Obligations, $ 0 ;

and (iv) the transaction closing date was extended to March 24, 2026.

The $ 0.50 million of Sixth Amendment Cash Collateral was reported in other current assets on the condensed consolidated balance sheet as of March 31, 2026.

The loan and security agreement with the term loan debt lenders and FEAC Agent, LLC was subsequently further amended in April 2026;

see Note 12 for additional details.

XCEL BRANDS, INC.

1 unchanged sentence

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2025

under the loan agreement, or if not in compliance with certain covenants had obtained a waiver from the lenders with respect to such covenants, as of and for all periods presented in the condensed consolidated financial statements.

As of September 30, 2025, principal on Term Loan A was payable on a pro rata basis in quarterly installments of $ 250,000 on each of March 31, June 30, September 30, and December 31 of each year, commencing on March 31, 2026, with the unpaid balance due on the maturity date of December 12, 2028.

Principal on Term Loan B is payable on the maturity date of December 12, 2028.

However, as a result of the October 2025 and November 2025 amendments to the Company’s term loan debt (see Note 12), the Company became obligated to make a prepayment of $ 250,000 on Term Loan A in October 2025 and to make a prepayment of $ 3,250,000 on Term Loan A in February 2026, with the remaining principal balance on Term Loan A of $ 500,000 due on December 31, 2026.

These amendments are reflected in the table below.

Thus, the aggregate future principal payments due under the Term Loans are as follows:

March 31, 2026

The Term Loans are guaranteed by certain direct and indirect subsidiaries of the Company, and are secured by all of the assets of the Company and such subsidiaries.

The loan agreement contains various customary financial covenants and reporting requirements, as specified and defined therein.

The Company was in compliance with all applicable covenants under the loan agreement, or if not in compliance with certain covenants had obtained a waiver from the lenders with respect to such covenants, as of and for all periods presented in the condensed consolidated financial statements.

As of March 31, 2026, $ 3.25 million of the principal amount on Term Loan A was due and payable (and was repaid as part of the April 2026 debt refinancing transaction described in Note 12), with the remaining $ 0.50 million of the principal amount on Term Loan A due on September 20, 2027.

The principal amount on Term Loan B is due at the maturity date of December 12, 2028 along with all accumulated paid in-kind (“PIK”) interest (as discussed below).

Thus, the aggregate future principal payments under the Term Loans (inclusive of accumulated unpaid PIK interest of $ 0.96 million as of March 31, 2026) at March 31, 2026 were as follows:

($ in thousands)

2025 (October 1 through December 31)

Interest and Exit Fees

2026 (April 1 through December 31)

From December 12, 2024 through April 20, 2025, interest on Term Loans accrued at an annual rate equal to the secured overnight financing rate as administered by the Federal Reserve Bank of New York for an interest period equal to three months (the “3-month SOFR rate”), subject to a 2.0 % floor, plus (i) 8.5 % for Term Loan A and Delayed Draw Term Loan and (ii) 13.5 % for Term Loan B.

1 unchanged sentence

Interest on amounts outstanding under the Term Loans accrues daily and is payable at the end of each calendar month, except that from April 21, 2025 through March 31, 2027, interest on the Term Loan B will be paid in-kind (“PIK”) by being capitalized and added to the principal amount of the Term Loan B at the end of each calendar month.

For the current quarter and current nine months, the Company recognized approximately $ 0.26 million and $ 0.45 million, respectively, of PIK interest.

For the current quarter and current nine months, the Company incurred interest expense (including interest paid in cash, PIK, and the amortization of deferred finance costs) related to term loan debt of approximately $ 0.39 million and $ 1.32 million, respectively, reflecting an effective interest rate of approximately 13.4 % and 15.6 %, respectively.

For the prior year quarter and prior year nine months, the Company incurred interest expense (including both interest paid in cash and the amortization of deferred finance costs) related to term loan debt of approximately $ 0.14 million and $ 0.42 million, respectively, reflecting an effective interest rate of approximately 11.6 %.

For the current quarter, the Company recognized approximately $ 0.25 million of PIK interest.

The accumulated PIK interest at March 31, 2026 and December 31, 2025 was $ 0.96 million and $ 0.71 million, respectively, and is reported within the carrying value of long-term debt on the condensed consolidated balance sheets.

For the current quarter, the Company incurred interest expense related to term loan debt (including interest paid in cash, PIK, and the amortization of deferred finance costs) related to term loan debt of approximately $ 0.56 million, respectively, reflecting an effective interest rate of approximately 13.1 %.

For the prior year quarter and prior year nine months, the Company incurred interest expense (including both interest paid in cash and the amortization of deferred finance costs) related to term loan debt of approximately $ 0.47 million, reflecting an effective interest rate of approximately 19.0 %.

XCEL BRANDS, INC.

1 unchanged sentence

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2025

The amended loan agreement also requires that the Company pay an exit fee of $ 175,000 to FEAC related to Term Loan A and an exit fee of $ 400,000 to Restore related to Term Loan B upon the maturity or full payment of the Term Loans.

The Company is accruing the cost of the Term Loan A exit fee over the term of the related debt, while the net present value of the Term Loan B exit fee on April 21, 2025 was recognized as part of the loss on early extinguishment of debt.

March 31, 2026

The amended loan agreement also requires that the Company pay an exit fee of $ 0.175 million to FEAC related to Term Loan A and an exit fee of $ 0.40 million to Restore related to Term Loan B upon the maturity or full payment of the Term Loans.

The Company recognized the cost of the Term Loan A exit fee over the remaining term of the related debt, while the net present value of the Term Loan B exit fee on April 21, 2025 was recognized as part of the loss on early extinguishment of debt recorded in the second quarter of 2025.

As of March 31, 2026, the amount of accrued exit fees with respect to Term Loan A was $ 0.17 million, while the amount of accrued exit fees with respect to Term Loan B was $ 0.30 million;

both amounts are presented within Other long-term liabilities on the condensed consolidated balance sheet as of March 31, 2026.

Deferred Finance Costs and Other Reductions to Carrying Value of Debt

4 unchanged sentences

as a result, the Company recognized a $ 0.48 million increase to stockholders’ equity as additional paid-in capital for the allocated fair value of the warrants, and an offsetting decrease to the net carrying value of the term loan debt.

From December 12, 2024 through April 20, 2025, these reductions to the carrying value of the term loan debt totaling $ 1.40 million were being amortized to interest expense over the term of the debt using the effective interest method.

From December 12, 2024, and through April 20, 2025, these reductions to the carrying value of the term loan debt totaling $ 1.40 million were being amortized to interest expense over the term of the debt using the effective interest method.

The $ 1.26 million remaining unamortized balance of such amounts was written-off as part of the loss on early extinguishment of debt upon the closing of the April 21, 2025 debt refinancing.

In connection with the debt refinancing transaction on April 21, 2025 as described above, the Company incurred certain legal costs and other fees;

In connection with the debt refinancing transaction on April 21, 2025, the Company incurred certain legal costs and other fees;

these fees and costs totaling $ 0.53 million were deferred on the Company’s balance sheet as a reduction of the carrying value of the term loan debt.

3 unchanged sentences

These reductions to the carrying value of the term loan debt totaling $ 1.11 million are being amortized to interest expense over the term of the debt using the effective interest method.

Loss on Early Extinguishment of Debt

As a result of the April 21, 2025 debt refinancing transaction as described above, the Company recognized a loss on extinguishment of debt of $ 0 and approximately $ 1.85 million for the current quarter and current nine months, respectively.

This loss was comprised of the write-off of $ 1.26 million of remaining unamortized deferred finance costs related to the December 2024 term loan, $ 0.25 million for a termination fee paid in cash to Restore at closing, $ 0.27 million for the net present value of the Term Loan B exit fee which will be paid to in cash to Restore upon the maturity or full payment of the Term Loans, and $ 0.07 million related to the new warrants granted to Restore and the amendment of certain warrants previously granted in December 2024.

The $ 0.07 million amount related to the warrants was recorded with an offsetting increase to stockholders’ equity as additional paid-in capital.

Stockholders’ Equity

Reverse Stock Split

At a special meeting of the Company’s stockholders on March 12, 2025, the stockholders approved a proposal granting the Company’s Board of Directors the discretion to effect a reverse stock split of the Company’s issued and outstanding common stock at a ratio in the range of 1-for-2 to 1-for-10 , with such ratio to be determined by the Chairman of the Company’s Board of Directors.

Following the special meeting, the Chairman of the Company’s Board of Directors approved a final split ratio of 1-for-10 (the “Reverse Stock Split”).

XCEL BRANDS, INC.

AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2025

Subsequently, the Company filed with the Delaware Secretary of State a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation, which became effective at 5:00 p.m.

on March 24, 2025, to effect such Reverse Stock Split.

As a result of the Reverse Stock Split, every ten (10) shares (the “Reverse Stock Split Number”) of issued and outstanding Common Stock was automatically combined into one (1) issued and outstanding share of common stock, without any change in the par value per share.

No fractional shares were issued as a result of the Reverse Stock Split.

Instead, stockholders who otherwise would have been entitled to receive fractional shares were entitled to receive a cash payment (without interest and subject to applicable withholding taxes) in lieu of such fractional shares equal to the fraction of a share of common stock to which such stockholder would otherwise be entitled multiplied by (i) the closing price per share of the common stock on the Nasdaq Capital Market at the close of business on the trading day preceding the date of the Certificate of Amendment, multiplied by (ii) the Reverse Stock Split Number.

The aggregate number of fractional shares resulting from the Reverse Stock Split was 1,120 shares of common stock (or 112 shares on a pre-Reverse Stock Split basis);

the aggregate cash payments made to stockholders in lieu of fractional shares was less than $ 1,000 .

Immediately prior to the Reverse Stock Split there were 23,796,200 shares of common stock outstanding;

immediately following the Reverse Stock Split there were 2,379,508 shares of common stock outstanding.

The shares of common stock underlying the Company’s outstanding stock options and warrants were also proportionately adjusted along with corresponding adjustments to their exercise prices.

2025 Public Offering and Private Placement Transactions

On August 1, 2025, the Company entered into a placement agency agreement with Maxim Group LLC (the “Placement Agent”), as lead placement agent, relating to a best efforts public offering (the “2025 Offering”) of 2,181,818 shares of the Company’s common stock at a price to the public of $ 1.10 per share.

The closing of the 2025 Offering occurred on August 4, 2025.

The net proceeds to the Company from the sale of the shares, after deducting the underwriting discounts and commissions and other estimated offering expenses payable by the Company, were approximately $ 1.8 million.

In connection with the 2025 Offering, on August 1, 2025, the Company entered into subscription agreements with each of Robert W.

D’Loren, Chairman and Chief Executive Officer of the Company, and Mark DiSanto, a director of the Company, to purchase 82,159 and 60,883 shares, respectively, at a price of $ 1.38 per share.

The total number of shares purchased was 143,042 .

Net proceeds after payment of agent fees were approximately $ 0.2 million.

The purchase of such shares closed concurrently with the 2025 Offering.

The aggregate number of shares of common stock issued in the 2025 Public Offering and Private Placement Transactions was 2,324,860 shares and the total net proceeds received were approximately $ 2.0 million.

Upon the closing of these transactions, the Company issued the Placement Agent certain warrants to purchase up to 80,791 shares of common stock.

Such warrants will be exercisable at an exercise price of $ 1.10 per share, in whole or in part, during the four and one-half year period that commenced 180 days after August 1, 2025.

Equity Line Facility

On January 21, 2026, the Company entered into a common stock purchase agreement with White Lion Capital, LLC (“White Lion”), pursuant to which White Lion has committed to purchase up to $ 15.0 million of the Company’s common stock.

Under the terms and conditions of this agreement, the Company has the right, but not the obligation, to sell to White Lion, and White Lion is obligated to purchase, up to $ 15.0 million of the Company’s common stock.

The actual amount and timing of any sales of Common Stock will be determined by the Company at its discretion.

The aggregate number of shares that the Company can sell White Lion under this agreement is limited to and may not exceed 1,178,173 shares (subject to adjustment for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split, or other similar transaction), which is equal to 19.99 % of the total shares of the Company’s common

XCEL BRANDS, INC.

1 unchanged sentence

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2025

2024 Public Offering and Private Placement Transactions

On March 15, 2024, the Company entered into an underwriting agreement with Craig-Hallum Capital Group LLC (the “Representative”), as the representative of the underwriters, relating to a firm commitment underwritten public offering (the “2024 Offering”) of 328,427 shares of the Company’s common stock at a price to the public of $ 6.50 per share.

The closing of the 2024 Offering occurred on March 19, 2024.

In connection with the 2024 Offering, on March 14, 2024, the Company entered into subscription agreements with each of Robert W.

D’Loren, Chairman and Chief Executive Officer of the Company;

Mark DiSanto, a director of the Company;

and Seth Burroughs, Executive Vice President of Business Development and Treasury of the Company to purchase 13,258 , 13,258 , and 2,946 shares, respectively, at a price of $ 9.80 per share.

The total number of shares purchased was 29,462 .

Net proceeds after payment of agent fees were approximately $ 0.3 million.

The purchase of such shares closed concurrently with the 2024 Offering.

The aggregate number of shares of common stock issued in the 2024 Public Offering and Private Placement Transactions was 357,889 shares and the total net proceeds received were approximately $ 1.9 million.

Upon the closing of these transactions, the Company issued the Representative certain warrants to purchase up to 18,293 shares of common stock.

Such warrants are exercisable at an exercise price of $ 8.125 per share, in whole or in part, during the four and one-half year period that commenced 180 days after March 15, 2024.

March 31, 2026

stock outstanding immediately prior to the execution of the agreement, unless (i.) the Company obtains stockholder approval to issue additional shares in excess of this amount, or (ii.) the average price paid for all shares of Common Stock issued under the agreement equals or exceeds certain levels as specified in the agreement.

In consideration for White Lion’s execution and entry into such arrangement, the Company agreed to issue White Lion $ 37,500 worth of common stock, with the number of shares issued determined based on the closing price of the Company’s stock on the business day immediately preceding the day on which the related registration statement is declared effective by the SEC;

these shares have not yet been issued as of March 31, 2026.

Additionally, pursuant to the terms of an advisory agreement between the Company and Maxim Group LLC, the Company agreed to pay Maxim Group LLC a cash fee equal to 4.0 % of the gross proceeds received from any sales of securities to White Lion under this arrangement.

As of March 31, 2026, no shares have been issued under the equity line facility arrangement.

The Company incurred approximately $ 0.26 million of fees and expenses (consisting of legal and accounting fees) associated with the equity line arrangement and related registration statement, which were recorded as a reduction to additional paid-in capital during the current quarter.

Equity Incentive Plans

3 unchanged sentences

The 2021 Plan is administered by the Company’s Board of Directors, or, at the Board’s discretion, a committee of the Board.

In addition, stock-based awards (including options, warrants, and restricted stock) previously granted under the Company’s 2011 Equity Incentive Plan (the “2011 Plan”) remain outstanding and shares of common stock may be issued to satisfy options or warrants previously granted under the 2011 Plan, although no new awards may be granted under the 2011 Plan.

In addition, 20,000 stock options previously granted under the Company’s 2011 Equity Incentive Plan (the “2011 Plan”) remain outstanding and shares of common stock may be issued to satisfy options or warrants previously granted under the 2011 Plan, although no new awards may be granted under the 2011 Plan.

Stock-based Compensation

Stock-based compensation expense is recorded as a component of Other selling, general and administrative expenses in the condensed consolidated statements of operations.

Total expense recognized for all forms of stock-based compensation was approximately $ 0.14 million and $ 0.16 million for the current quarter and prior year quarter, respectively.

Of the current quarter expense amount, approximately $ 0.13 million related to employees and approximately $ 0.02 million related to directors and consultants .

Of the current quarter expense amount, approximately $ 0.10 million related to employees and approximately $ 0.04 million related to directors .

Of the prior year quarter expense amount, approximately $ 0.13 million related to employees and approximately $ 0.03 million related to directors and consultants.

Total expense recognized for all forms of stock-based compensation was approximately $ 0.48 million and $ 0.32 million for the current nine months and prior year nine months, respectively.

Of the current nine months expense amount, approximately $ 0.40 million related to employees and approximately $ 0.08 million related to directors and consultants .

Of the prior year nine months expense amount, approximately $ 0.11 million related to employees and approximately $ 0.21 million related to directors and consultants.

XCEL BRANDS, INC.

1 unchanged sentence

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2025

Stock-based compensation expense is recorded as a component of Other selling, general and administrative expenses in the condensed consolidated statements of operations.

March 31, 2026

Stock Options

A summary of the Company’s stock options activity for the current nine months is as follows:

Outstanding at January 1, 2025

A summary of the Company’s stock options activity for the current quarter is as follows:

Outstanding at December 31, 2025

Expired/Forfeited

Outstanding at September 30, 2025, and expected to vest

Exercisable at September 30, 2025

On April 7, 2025, the Company granted options to purchase an aggregate of 10,000 shares of common stock to certain key individuals.

The exercise price of the options is $ 2.91316 per share, and the vesting of such options is contingent upon the achievement of certain revenue targets.

On May 28, 2025, the Company granted options to purchase an aggregate of 10,000 shares of common stock to non-management directors.

The exercise price of the options is $ 2.6321 per share;

50 % of the options vested on May 28, 2025 and the remaining 50 % will vest on May 1, 2026.

On May 28, 2025, the Company granted options to purchase an aggregate of 17,500 shares of common stock to Messrs.

D’Loren, DiSanto, and Burroughs.

The exercise price of the options is $ 2.6321 per share, and the options vested immediately upon grant.

On September 24, 2025, the Company granted options to purchase an aggregate of 60,000 shares of common stock to a member of management.

The exercise price of the options is $ 1.585 per share, and the vesting of such options is contingent upon the Company’s common stock achieving certain target prices or the Company achieving certain financial performance targets.

Compensation expense related to stock options for the current quarter and the prior year quarter was approximately $ 0.01 million and $ 0.02 million, respectively.

Compensation expense related to stock options for the current nine months and the prior year nine months was approximately $ 0.07 million and $ 0.06 million, respectively.

Total unrecognized compensation expense related to unvested stock options at September 30, 2025 was approximately $ 0.01 million and is expected to be recognized over a weighted average period of approximately 0.51 years.

Outstanding at March 31, 2026, and expected to vest

Exercisable at March 31, 2026

Effective January 21, 2026, certain stock options originally issued in 2019 to executive management (including the Company’s Chief Executive Officer, Chief Financial Officer, and Executive Vice President of Business Development and Treasury) to purchase an aggregate of 350,000 shares of common stock, were cancelled through mutual agreement between the Company and the respective executives.

None of these options had vested, and no compensation was paid to the executives in exchange for such cancellation.

Compensation expense related to stock options for both the current quarter and the prior year quarter was approximately $ 0.02 million for each respective period.

Total unrecognized compensation expense related to unvested stock options at March 31, 2026 was approximately $ 0.16 million and is expected to be recognized over a weighted average period of approximately 4.27 years.

A summary of the Company’s non-vested stock options activity for the current quarter is as follows:

Balance at December 31, 2025

Forfeited or Canceled

Balance at March 31, 2026

Of the non-vested stock options outstanding at March 31, 2026, the vesting of 340,201 options is contingent upon the Company’s common stock achieving certain target prices, the vesting of 20,000 options is contingent upon the achievement of certain revenue targets, the vesting of 60,000 options is contingent upon the Company’s common stock achieving certain target prices or the Company achieving certain financial performance targets, and the vesting of 10,000 options is subject to service-based criteria.

XCEL BRANDS, INC.

1 unchanged sentence

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2025

A summary of the Company’s non-vested stock options activity for the current nine months is as follows:

Balance at January 1, 2025

Forfeited or Canceled

Balance at September 30, 2025

Of the total stock options outstanding at September 30, 2025, the vesting of 350,000 options is contingent upon the Company’s common stock achieving certain target prices, the vesting of 20,000 options is contingent upon the achievement of certain revenue targets, and the vesting of 60,000 options is contingent upon the Company’s common stock achieving certain target prices or the Company achieving certain financial performance targets.

None of these 430,000 performance-based stock options have vested, and no compensation expense has been recorded related to such options.

A summary of the Company’s restricted stock activity for the current nine months is as follows:

Outstanding at January 1, 2025

March 31, 2026

A summary of the Company’s restricted stock activity for the current quarter is as follows:

Outstanding at December 31, 2025

Expired/Forfeited

Outstanding at September 30, 2025

On May 28, 2025, the Company issued an aggregate of 4,000 shares of common stock to non-management directors, of which 50 % vests on each of April 1, 2026 and April 1, 2027 .

On May 28, 2025, the Company issued an aggregate of 17,500 shares of common stock to Messrs.

D’Loren, DiSanto, and Burroughs, which vest on November 1, 2025.

In accordance with the amended employment agreements with each of Mr.

D’Loren and Mr.

Burroughs, effective July 16, 2024 and through December 31, 2025, the Company is paying 40 % of each such executive officer’s base salary via the issuance of shares of the Company’s common stock, issued on the last day of each month.

D’Loren and Mr.

Burroughs are permitted to pay the withholding tax through the exchange of a portion of the shares.

Under the terms of these amended agreements, the Company issued an aggregate of 92,401 shares of common stock (which vested immediately) to executives for the current nine months.

Outstanding at March 31, 2026

In accordance with the amended employment agreement with Mr.

D’Loren, the Company is paying 40 % of each such executive officer’s base salary via the issuance of shares of the Company’s common stock.

D’Loren is permitted to pay the withholding tax through the exchange of a portion of the shares.

Under the terms of this amended agreement, the Company issued an aggregate of 32,735 shares of common stock (net of shares exchanged for withholding taxes) to Mr.

D’Loren for the current quarter, which vested immediately .

Compensation expense related to stock awards was approximately $ 0.12 million for the current quarter and approximately $ 0.14 million for the prior year quarter.

Compensation expense related to stock awards was approximately $ 0.41 million for the current nine months and approximately $ 0.26 million for the prior year nine months.

Total unrecognized compensation expense related to unvested restricted stock grants at September 30, 2025 was approximately $ 0.03 million

XCEL BRANDS, INC.

AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2025

and is expected to be recognized over a weighted average period of approximately 0.68 years.

Total unrecognized compensation expense related to unvested restricted stock grants at March 31, 2026 was approximately $ 0.01 million and is expected to be recognized over a weighted average period of approximately 1.00 year.

Restricted Stock Units

There were no restricted stock units outstanding as of September 30, 2025 and December 31, 2024, and no restricted stock units have been issued since the inception of the 2021 Plan.

There were no restricted stock units outstanding as of March 31, 2026 and December 31, 2025, and no restricted stock units have been issued since the inception of the 2021 Plan.

Shares Available Under the Company’s Equity Incentive Plans

At September 30, 2025, there were 72,559 shares of common stock available for future award grants under the 2021 Plan.

At March 31, 2026, there were 159,268 shares of common stock available for future award grants under the 2021 Plan.

Shares Reserved for Issuance

As of September 30, 2025, there were 596,553 shares of common stock reserved for issuance under the Company’s Equity Incentive Plans, including 381,494 shares reserved pursuant to unexercised warrants and stock options previously granted under the 2011 Plan, 142,500 shares reserved pursuant to unexercised stock options granted under the 2021 Plan, and 72,559 shares available for issuance under the 2021 Plan.

As of September 30, 2025, there were also 1,476,455 shares of common stock reserved for issuance that were unrelated to the Company’s Equity Incentive Plans, including 100,000 shares reserved pursuant to unexercised warrants related to the Halston Master License (as described below), 18,293 shares reserved pursuant to unexercised Representative warrants related to the 2024 Offering (as described above), 80,791 shares reserved pursuant to unexercised Placement Agent warrants related to the 2025 Offering (as described above), 139,916 shares reserved pursuant to unexercised warrants related to the December 12, 2024 debt refinancing transaction (see Note 6), and 1,137,455 shares reserved pursuant to unexercised warrants related to the April 21, 2025 debt refinancing transaction (see Note 6).

A summary of the Company’s warrants activity for the current nine months is as follows:

Outstanding and exercisable at January 1, 2025

Expired/Forfeited

Outstanding at September 30, 2025

Exercisable at September 30, 2025

In connection with the April 21, 2025 refinancing of the Company’s term loan debt (see Note 6), the Company issued an aggregate of 1,107,455 shares of the common stock to UTG and warrants to purchase 30,000 shares of common stock to Restore Capital (EQ-W), LLC.

The warrants issued to UTG are exercisable for a period of seven years from the date of issuance at the following exercise prices:

131,100 shares at $ 6.60 per share, and 195,271 shares at each of $ 7.50 , $ 10.00 , $ 12.50 , $ 15.00 , and $ 17.50 per share.

The warrants issued to Restore Capital (EQ-W), LLC are exercisable for a period of seven years from the date of issuance at an exercise price of $ 6.67 per share.

As of March 31, 2026, there were 774,469 shares of common stock reserved for issuance under the Company’s Equity Incentive Plans, including 20,000 shares reserved pursuant to unexercised stock options previously granted under the 2011 Plan, 595,201 shares reserved pursuant to unexercised stock options granted under the 2021 Plan, and 159,268 shares available for issuance under the 2021 Plan.

As of March 31, 2026, there were also 3,152,209 shares of common stock reserved for issuance that were unrelated to the Company’s Equity Incentive Plans, including 100,000 shares reserved pursuant to unexercised warrants related to the Halston Master License (as described below), and 3,052,209 shares reserved pursuant to unexercised warrants issued through various corporate transactions in 2024 and 2025, including equity offerings and debt financing transactions .

Subsequent to March 31, 2026, due to the conversion feature contained within the terms of the new Senior Secured Notes issued on April 13, 2026 (see Note 12 for additional details), the number of shares of common stock reserved for issuance increased by 7,712,199 .

XCEL BRANDS, INC.

1 unchanged sentence

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2025

Also in connection with the April 21, 2025 refinancing, the Company and certain holders amended certain warrants that had been previously issued on December 12, 2024:

(i) the exercise price of previously outstanding warrants to purchase 107,333 shares of common stock was reduced from $ 6.315 per share to $ 2.2477 per share, and (ii) the number of shares issuable under previously outstanding warrants to purchase an aggregate of 22,998 shares of common stock was reduced to 17,250 shares of common stock, and the exercise price of such warrants was reduced from $ 6.315 per share to $ 3.00 per share.

In connection with the 2025 Offering (the details of which are disclosed above), the Company issued the Placement Agent certain warrants to purchase up to 80,791 shares of common stock.

Such warrants will be exercisable at an exercise price of $ 1.10 per share, in whole or in part, during the four and one-half year period that commenced 180 days after August 1, 2025.

March 31, 2026

A summary of the Company’s warrants activity for the current quarter is as follows:

Outstanding at December 31, 2025

Expired/Forfeited

Outstanding at March 31, 2026

Exercisable at March 31, 2026

In connection with the entrance into the Halston Master License in 2023 (see Note 4), the Company issued to G-III a ten-year warrant to purchase up to 100,000 shares of the Company’s common stock at an exercise price of $ 15.00 per share, which vests based upon certain annual royalty targets being satisfied under the license agreement.

The fair value of this warrant is being recognized as a reduction of revenue over the term of the related license agreement, with an offsetting increase to stockholders’ equity as additional paid-in capital.

The amount of contra-revenue recognized related to this warrant during the current quarter and prior year quarter was approximately $ 0.01 million in each period, and the amount of contra-revenue recognized was during the current nine months end prior year nine months was approximately $ 0.03 million in each period.

As of September 30, 2025, no portion of this warrant had vested.

The amount of contra-revenue recognized related to this warrant during the current quarter and prior year quarter was approximately $ 0.01 million in each period.

As of March 31, 2026, no portion of this warrant had vested.

Earnings (Loss) Per Share

2 unchanged sentences

Diluted EPS excludes all potentially dilutive shares of common stock if their effect is anti-dilutive.

The following table is a reconciliation of the numerator and denominator of the basic and diluted earnings (loss) per share computations for the three and nine months ended September 30, 2025 and 2024:

The following table is a reconciliation of the numerator and denominator of the basic and diluted earnings (loss) per share computations for the three months ended March 31, 2026 and 2025:

Three Months Ended

Nine Months Ended

September 30,

Net loss attributable to Xcel Brands, Inc.

9 unchanged sentences

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2025

March 31, 2026

As a result of the net loss for all periods presented, the Company calculated diluted EPS using basic weighted average shares outstanding for all such periods, as utilizing diluted shares would be anti-dilutive to loss per share.

1 unchanged sentence

Three Months Ended

Nine Months Ended

September 30,

Stock options

The estimated annual effective income tax rate was for the current quarter and the prior year quarter was approximately

- 0.3 % and 0 %, resulting in an income tax provision (benefit) of $ 0.03 million and $ 0 , respectively.

The estimated annual effective income tax rate for the current nine months and the prior year nine months was approximately - 0.5 % and 0 % respectively, resulting in an income tax provision (benefit) of $ 0.08 million and $ 0 , respectively.

For all periods presented, the federal statutory rate differed from the effective tax rate due to the recording of a valuation allowance against the benefit that would have otherwise been recognized, as it was considered not more likely than not that the net operating losses generated during each period will be utilized in future periods.

- 0.5 % and - 1.8 %, resulting in an income tax provision (benefit) of $ 0.01 million and $ 0.05 million, respectively.

For both periods, the federal statutory rate differed from the effective tax rate due to the recording of a valuation allowance against the benefit that would have otherwise been recognized, as it was considered not more likely than not that the net operating losses generated during each period will be utilized in future periods.

Related Party Transactions

IM Topco, LLC

As described in Note 2, the Company held a noncontrolling interest in IM Topco as of September 30, 2025.

Service Agreement

The Company is party to a services agreement with IM Topco that has been amended from time to time, pursuant to which the Company agreed to provide certain design and support services (including assistance with the operations of the interactive television business and related talent support) to IM Topco in exchange for a service fee.

In April 2024, the services agreement was amended to set the service fees at $ 150,000 per year.

In accordance with the terms of this services agreement, the Company recognized service fee income of $ 0 and $ 37,500 , respectively, within net licensing revenue in the condensed consolidated statements of operations for the three months ended September 30, 2025 and 2024, respectively.

The Company recognized service fee income related to this services agreement of $ 112,500 for both the nine months ended September 30, 2025 and 2024.

License Agreement

The Company was previously party to a license agreement with IM Topco, pursuant to which IM Topco granted the Company a license to use certain Isaac Mizrahi trademarks related to women’s sportswear products in exchange for the payment of royalties to IM Topco.

This license agreement was later terminated in favor of a new similar license agreement between IM Topco and an unrelated third party;

however, as part of such termination, Xcel had provided a guarantee to IM Topco for the payment of any difference between (i) the royalties received by IM Topco under the new agreement and (ii) the amount of royalties that IM Topco would have received under the original license agreement with Xcel.

XCEL BRANDS, INC.

AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2025

periods presented in these condensed consolidated financial statements, royalties received by IM Topco from the third-party agreement were expected to exceed the guaranteed royalties that IM Topco would have received under the original license agreement with Xcel, and thus no royalty expense for any shortfall was recognized for such periods.

Additionally, pursuant to the terms of a 2023 amendment to the May 2022 membership purchase agreement, Xcel had agreed to make additional royalty payments to IM Topco totaling $ 450,000 , of which $ 75,000 was paid during the year ended December 31, 2023, and $ 237,500 was paid during the year ended December 31, 2024.

No payments of these additional royalties were made during the nine months ended September 30, 2025.

Effective September 26, 2025, pursuant to the terms of a settlement agreement entered into with IM Topco and WHP (see Note 2 for additional details), the Company was released from any current or future liability related to the aforementioned guarantee to IM Topco and the aforementioned additional royalty payments.

Financing Transactions

2025 Public Offering and Private Placement Transactions

In connection with the 2025 Offering of 2,181,818 shares of the Company’s common stock at a price to the public of $ 1.10 per share which was consummated on August 4, 2025 (see Note 7 for additional details), Robert W.

D’Loren, Chairman and Chief Executive Officer of the Company, and Mark DiSanto, a director of the Company, purchased 124,200 and 91,800 shares, respectively, at $ 1.10 per share, the same price at which the shares were sold to other purchasers in the Offering.

In connection with the 2025 Offering, on August 1, 2025, the Company entered into subscription agreements with each of Mr.

D’Loren and Mr.

DiSanto, to purchase 82,159 and 60,883 shares, respectively, at a price of $ 1.38 per share.

The purchase of such shares closed concurrently with the 2025 Offering.

2024 Public Offering and Private Placement Transactions

In connection with the 2024 Offering of 328,427 shares of the Company’s common stock at a price to the public of $ 6.50 per share which was consummated on March 19, 2024 (see Note 7 for additional details), Robert W.

D’Loren, Chairman and Chief Executive Officer of the Company;

an affiliate of Mark DiSanto, a director of the Company;

and Seth Burroughs, Executive Vice President of Business Development and Treasury of the Company, purchased 14,625 , 14,625 , and 3,250 shares, respectively, at $ 6.50 per share, the same price at which the shares were sold to other purchasers in the Offering.

In connection with the 2024 Offering, on March 14, 2024, the Company entered into subscription agreements with each of Mr.

DiSanto, and Mr.

Burroughs to purchase 13,258 , 13,258 , and 2,946 shares, respectively, at a price of $ 9.80 per share.

The purchase of such shares closed concurrently with the 2024 Offering.

Debt Financing

In connection with the December 12, 2024 term loan debt transaction (see Note 6 for additional details), IPX Capital, LLC (“IPX”), a company controlled by Mr.

D’Loren, made a $ 250,000 advance to one of the Company’s subsidiaries.

Of this amount, $ 200,000 was repaid to IPX upon the closing of the December 12, 2024 debt transaction, and was subsequently returned by IPX to the Company during the three months ended March 31, 2025 for repayment by the Company at a later date.

From time to time, Mr.

D'Loren may advance funds to the Company on a short-term basis as necessary.

Additionally, IPX purchased a 12.5 % undivided, last-out, subordinated participation interest in a portion of the December 2024 Term Loan B debt for a purchase price of $ 500,000 , and received a pro rata share of warrants received by the Term

XCEL BRANDS, INC.

AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2025

Loan B Lenders to purchase shares of the Company’s common stock.

In connection with the April 21, 2025 refinancing of the Company's term loan debt (see Note 6 for additional details), IPX’s participation in Term Loan B was repaid and IPX purchased a $ 500,000 undivided, last-out, subordinated participation interest in Term Loan A.

Since October 2024, in connection with a required standby letter of credit associated with the Company’s real estate lease for offices located at 1333 Broadway (see Note 5), Mr.

D’Loren has provided and continues to provide a personal guarantee to the financial institution providing such letter of credit, in order to satisfy a portion of the associated collateral requirements for the letter of credit.

As of both March 31, 2026 and December 31, 2025, IPX Capital, LLC (“IPX”), a company controlled by Robert W.

D’Loren, Chairman and Chief Executive Officer of the Company, held a $ 0.50 million undivided, last-out, subordinated participation interest in Term Loan A (see Note 6).

In April 2026, a $ 0.50 million portion of Term Loan A was sold and assigned to IPX in connection with the refinancing of the Company’s term loan debt.

In addition, IPX purchased a portion of the new 12.5 % Senior Secured Notes due April 13, 2027 that were issued in April 2026.

See Note 12 for additional details related to these subsequent events.

Commitments and Contingencies

Contingent Obligation – Isaac Mizrahi Transaction

Under the terms of the May 31, 2022 transaction related to the sale of a majority interest in the Isaac Mizrahi brand (as subsequently amended in 2023 and 2024), the Company had agreed with WHP that, in the event that the aggregate royalties received by IM Topco were less than $ 13.5 million for the twelve-month period ending March 31, 2025 or less than $ 18.0 million for the year ending December 31, 2025, Xcel was obligated to transfer equity interests in IM Topco to WHP equal to 12.5 % of the total outstanding equity interests of IM Topco, such that Xcel’s ownership interest in IM Topco would decrease from 30 % to 17.5 %, and WHP’s ownership interest in IM Topco would increase from 70 % to 82.5 %.

During 2024, management concluded that, based on current trends in and projections of IM Topco’s royalty revenues as well as the Company’s decision to not make the remaining additional royalty payments to IM Topco (see Note 10), it was virtually certain that the Company would be required to make such transfer of equity interests to WHP in 2025.

As such, the Company estimated and recorded a contingent obligation of approximately $ 6.25 million as of September 30, 2024, and recognized a corresponding non-cash charge in the statement of operations for the prior year quarter and prior year nine months.

During the three months ended December 31, 2024, the Company recorded an adjustment to this contingent obligation of approximately $( 2.04 ) million, resulting in a $ 4.21 million contingent obligation reflected on the condensed consolidated balance sheet as of December 31, 2024.

As of March 31, 2025, in accordance with the terms of the amended membership purchase agreement between Xcel and WHP, WHP became contractually entitled to receive from Xcel equity interests in IM Topco equal to 12.5 % of the total outstanding equity interests of IM Topco.

Also during the three months ended March 31, 2025, the Company adjusted the carrying value of the contingent obligation to its estimated fair value of $ 3.97 million as of March 31, 2025 in the condensed consolidated balance sheets, and recognized a $( 0.24 ) million credit in the condensed consolidated statements of operations.

On and effective April 15, 2025, such equity interests were transferred to WHP in full satisfaction and settlement of this contractual obligation, and the previously recorded liability was de-recognized by reducing the value of the asset for the investment in IM Topco.

Contractual Commitment – Disposition of IM Topco Equity Interests

Under the terms of the May 31, 2022 transaction related to the sale of a majority interest in the Isaac Mizrahi brand (as subsequently amended in 2023 and 2024), the Company had agreed with WHP (the buyer) that, in the event that the aggregate royalties received by IM Topco were less than $ 13.5 million for the twelve-month period ending March 31, 2025 or less than $ 18.0 million for the year ending December 31, 2025, Xcel was obligated to transfer equity interests in IM Topco to WHP equal to 12.5 % of the total outstanding equity interests of IM Topco, such that Xcel’s ownership interest in IM Topco would decrease from 30 % to 17.5 %, and WHP’s ownership interest in IM Topco would increase from 70 %

XCEL BRANDS, INC.

1 unchanged sentence

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2025

in excess of $ 46 million in connection with any potential future capital transaction involving IM Topco which occurs on or before September 1, 2032.

The equity interests were transferred on October 1, 2025.

March 31, 2026

During 2024, management concluded that it was virtually certain that the Company would be required to make such transfer of equity interests to WHP in 2025.

As such, the Company recognized a contingent obligation of approximately $ 4.21 million as of December 31, 2024.

Legal Matters

3 unchanged sentences

Subsequent Events

IM Topco Equity Interest Transfer

On October 1, 2025, in accordance with the settlement agreement described in Note 2 and Note 11, Xcel transferred to WHP equity interests equal to 17.5 % of the outstanding equity interests of IM Topco (which represented all of Xcel’s remaining equity interest in IM Topco) in exchange for (i) the release of the Company’s liability under a license agreement with IM Topco (see Note 10) and (ii) a capital appreciation right for the Company to receive 15 % of the net consideration received by IM Topco and/or WHP in excess of $ 46 million in connection with any potential future capital transaction involving IM Topco which occurs on or before September 1, 2032.

Term Loan Debt Amendments

On October 7, 2025, the Company and certain of its subsidiaries and its lenders and FEAC Agent, LLC entered into a further amendment of the December 12, 2024 loan and security agreement, pursuant to which the (i) the agents and lenders (as defined in the loan and security agreement) consented to the transfer and the release of the termination of the pledge agreement and the release of the agents’ liens on the equity interests of IM Topco, LLC;

(ii) the liquid asset covenant requirement was reduced to $ 1,000,000 ;

and (iii) Xcel made a prepayment of $ 250,000 against the outstanding principal amount of Term Loan A, of which $ 140,000 was paid from the blocked account.

(ii) the Company committed to make a prepayment of $ 3,250,000 on Term Loan A by February 20, 2026, along with the payment of an amendment fee of $ 450,000 (of which $ 125,000 is payable on December 5, 2025 and the remaining $ 325,000 will be due if the $ 3,250,000 principal amount of Term Loan A is not repaid on or prior to February 20, 2026);

and (iii) the payment of the remaining principal balance on Term Loan A of $ 500,000 was changed to be due on December 31, 2026 which shall be held by IPX (See Note 10).

In addition, upon the repayment of the $ 3.25 million of Term Loan A, the Company will have revised financial covenants.

And after the Term Loan A payment is made, the minimum revenue requirement covenants shall remain at these levels for the duration of the loans and the minimum liquidity requirement shall be zero, which includes the lenders’ release of $ 1.0 million of restricted cash within the blocked account back to the Company.

Shares Issued to Chief Executive Officer

In accordance with the terms of the amended employment agreement with Mr.

D’Loren (see Note 7 for details), the Company issued 6,413 and 6,862 shares of common stock to Mr.

D’Loren on April 20, 2026 and April 30, 2026, respectively.

Debt Amendments and Refinancing

On April 13, 2026, the Company entered into the seventh amendment to the loan and security agreement with the term loan debt lenders and FEAC Agent, LLC, which provided for, among other things:

the ability of the Company to consummate the issuance of certain senior secured notes (as described below);

the ability for IPX to convert its $ 500,000 Term Loan A to common shares of the Company at the price per share equal to $ 1.435 , subject to adjustment;

modifications to certain payment terms;

modifications to certain financial covenants;

modifications to certain financial reporting requirements;

and the amendment of the FEAC Agent, LLC’s role to include certain limitations.

In connection with the seventh amendment, FEAC Agent LLC’s affiliated lenders entered into agreements whereby a $ 500,000 portion of Term Loan A was sold and assigned to IPX, and the entirety of Term Loan B was sold and assigned to UTG.

Additionally, the Company was relieved of its obligation to pay the remaining $ 325,000 amendment fee as specified in the fourth amendment.

Also on April 13, 2026, the Company entered into certain agreements with Smithline Family Trust II (“SFT”), Quick Capital, LLC (“Quick”), and IPX (collectively, the “Purchasers”), pursuant to which the Company issued and sold to the Purchasers 12.5 % Senior Secured Notes due April 13, 2027 in the original principal amount of $ 3,005,780 (the “Secured Notes”) and 100,579 shares of the Company’s common stock.

The Secured Notes were issued with an original issue

XCEL BRANDS, INC.

1 unchanged sentence

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2025

Stock-based Awards

On October 30, 2025, the Company’s Board of Directors resolved that the Company shall grant of the following stock-based awards, subject to and conditioned upon stockholder approval of the proposal to increase the number of shares of common stock authorized for issuance under the 2021 Plan at the annual stockholder meeting scheduled to be held on December 3, 2025:

● options to purchase an aggregate of 113,500 shares of common stock to non-management directors, with exercise price to be equal to the last sale price of the common stock on the grant date and vesting determined by the Board of Directors or the Compensation Committee on the grant date;

● an aggregate of 39,583 shares of common stock to non-management directors, with vesting determined by the Board of Directors or the Compensation Committee on the grant date;

● 25,000 and 20,000 shares of common stock to Mr.

D’Loren and Mr.

DiSanto, respectively, which shall be fully vested immediately upon grant;

● options to purchase an aggregate of 340,200 shares of common stock to senior management, with vesting contingent upon the Company’s common stock achieving certain specified target prices and the exercise price to be equal to the last sale price of the common stock on the grant date.

The vesting of 97,500 options shall occur if the stock price reaches $ 3.00 per share;

81,500 options shall vest if the stock price reaches $ 5.00 per share;

67,000 options shall vest if the stock price reaches $ 7.00 per share;

54,200 options shall vest if the stock price reaches $ 9.00 per share;

and 40,000 options shall vest if the stock price reaches $ 11.00 per share.

March 31, 2026

discount, such that the cash proceeds received by the Company were $ 2,600,000 .

The Company is required to make $ 100,000 monthly payments on the Secured Notes commencing October 13, 2026, with the balance due at maturity.

The Company’s obligations under the Secured Notes are guaranteed by certain direct and indirect subsidiaries of the Company pursuant to a subsidiary guarantee, and are secured by the assets of the Company and the subsidiary guarantors pursuant to a security agreement.

At any time after the occurrence of an event of default under the Secured Notes and for so long as such event of default is continuing, the Secured Notes are convertible into shares of common stock of the Company (i) initially at a fixed conversion price equal to $ 1.165 per share and (ii) after May 17, 2026, at a price equal to the lesser of (a) 85 % multiplied by the lowest volume weighted average price of the common stock during the 10-trading day period prior to conversion and (b) $ 1.165 .

In addition, to the extent that Company is listed on the Nasdaq Capital Market, the aggregate number of shares of common stock issuable to the Purchasers and any subsequent holder of the Secured Note shall not exceed 19.9 % of the total number of shares of common stock outstanding or of the voting power of the common stock as of April 13, 2026 less the shares issued pursuant to the securities purchase agreement unless the Company has obtained stockholder approval in compliance with Nasdaq Listing Rule 5635(d) to authorize the issuance of shares of common stock in connection with the conversion or exchange of all Secured Notes.

The Company granted the Purchasers certain piggyback registration rights with respect to the shares of common stock issuable upon conversion of the Secured Notes.

Fees incurred in connection with the transactions described above were approximately $ 0.1 million.

As part of the transactions described above, IPX purchased $ 57,803 original principal amount of the Secured Notes and purchased 1,742 shares of common stock, on the same terms as the other Purchasers, except that the shares of common stock purchased by IPX were priced at current market value.

The net proceeds received from the April 13, 2026 issuance of the Secured Notes and shares as described above were used to repay $ 2.25 million of the Term Loan A debt, and an additional $ 1 million of the Term Loan A debt was paid with the Company’s restricted cash.

As such, following the funding and completion of the transactions described above, the Company’s debt obligations will be as follows:

(1) Senior Secured Notes in the principal amount of $ 2.6 million, with payments commencing October 13, 2026 and a maturity date of April 13, 2027, (2) Term Loan A in the principal amount of $ 0.5 million, payable on the maturity date of September 20, 2027, and (3) Term Loan B in the amount of $ 9.9 million, payable on the maturity date of December 12, 2028.

Sale of Judith Ripka Brand

On April 24, 2026, the Company and certain of its wholly owned subsidiaries entered into an asset purchase agreement with a third-party buyer (“the Buyer”), pursuant to which the Company sold to the Buyer substantially all of the assets of the Judith Ripka brand, including the “Judith Ripka” brand name and trademarks, and assigned all licenses associated with the trademarks to the Buyer.

As consideration for the sale, the asset purchase agreement provided for a $ 2.30 million cash payment to the Company at closing, plus additional earn-out contingent consideration.

The earn-out contingent consideration is payable to the Company if certain specified license agreements related to the Judith Ripka brand are renewed following the expiration of their current term for a period of 5 years ;

in such event, the Buyer shall be obligated to make quarterly payments to the Company over a three-year period in the amount of 50 % of the revenue earned by the Buyer from such licenses, subject to such payments not being less than $ 250,000 per year.

This transaction closed on April 27, 2026.

Costs associated with the transaction were $ 0.40 million, of which $ 0.30 million was paid at closing and $ 0.10 million will be paid in future periods.

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-Q

Item 1. Financial Statements