XCel Brands, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS ​ Xcel Brands, Inc. and Subsidiaries Unaudited Condensed Consolidated Balance Sheets (in thousands, except share and per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2026 ​ ​ ​ December 31, 2025 ​ ​ (Unaudited) ​ (Note 1) Assets ​ ​ ​ ​ Current Assets: ​ ​ ​ ​ Cash and cash equivalents ​ $ 179 ​ $ 1,150 Accounts receivable, net ​ 656 ​ 956 Assets held for sale ​ 2,542 ​ — Prepaid expenses and other current assets ​ 1,117 ​ 1,564 Total current assets ​ 4,494 ​ 3,670 Non-current Assets: ​ ​ ​ ​ ​ ​ Property and equipment, net ​ 115 ​ 130 Operating lease right-of-use assets ​ ​ 2,810 ​ ​ 3,005 Trademarks and other intangibles, net ​ 27,747 ​ 31,229 Other assets ​ 1,252 ​ 912 Total non-current assets ​ 31,924 ​ 35,276 ​ ​ ​ ​ ​ ​ ​ Total Assets ​ $ 36,418 ​ $ 38,946 ​ ​ ​ ​ ​ ​ ​ Liabilities and Stockholders' Equity ​ ​ ​ ​ Current Liabilities: ​ ​ ​ ​ Accounts payable, accrued expenses and other current liabilities ​ $ 1,915 ​ $ 1,221 Deferred revenue ​ 1,319 ​ 1,330 Current portion of operating lease obligations ​ ​ 1,718 ​ ​ 1,687 Current portion of long-term debt ​ 2,750 ​ 3,250 Total current liabilities ​ 7,702 ​ 7,488 Long-Term Liabilities: ​ ​ ​ ​ Deferred revenue ​ ​ 1,556 ​ ​ 1,778 Long-term portion of operating lease obligations ​ ​ 3,238 ​ ​ 3,678 Long-term debt, net, less current portion ​ 9,840 ​ 9,456 Other long-term liabilities ​ 901 ​ 722 Total long-term liabilities ​ 15,535 ​ 15,634 Total Liabilities ​ 23,237 ​ 23,122 ​ ​ ​ ​ ​ ​ ​ Commitments and Contingencies ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stockholders' Equity: ​ ​ ​ ​ 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 5,913,492 and 5,880,757 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively ​ 6 ​ 6 Paid-in capital ​ 111,506 ​ 111,660 Accumulated deficit ​ ( 96,194 ) ​ ( 93,705 ) Total Xcel Brands, Inc. stockholders' equity ​ 15,318 ​ 17,961 Noncontrolling interest ​ ​ ( 2,137 ) ​ ​ ( 2,137 ) Total Stockholders' Equity ​ 13,181 ​ 15,824 ​ ​ ​ ​ ​ ​ ​ Total Liabilities and Stockholders' Equity ​ $ 36,418 ​ $ 38,946 ​ See accompanying Notes to Unaudited Condensed Consolidated Financial Statements. ​ 3 Table of Contents Xcel Brands, Inc. and Subsidiaries Unaudited Condensed Consolidated Statements of Operations (in thousands, except share and per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended ​ ​ ​ March 31, ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ Revenues ​ ​ ​ ​ ​ ​ Net licensing revenue ​ $ 1,144 ​ $ 1,332 ​ ​ ​ ​ ​ ​ ​ ​ ​ Direct operating costs and expenses ​ ​ ​ ​ ​ Salaries, benefits and employment taxes ​ 872 ​ 1,086 ​ Other selling, general and administrative expenses ​ 1,202 ​ 1,197 ​ Total direct operating costs and expenses ​ 2,074 ​ 2,283 ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating loss before other operating costs and expenses ​ ​ ( 930 ) ​ ​ ( 951 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Other operating costs and expenses ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ 893 ​ 900 ​ Asset impairment charge ​ ​ 61 ​ ​ — ​ Loss from equity investments ​ ​ — ​ ​ 336 ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating loss ​ ( 1,884 ) ​ ( 2,187 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest and finance expense (income) ​ ​ ​ ​ ​ Interest expense ​ 562 ​ 473 ​ Other finance charges (income), net ​ 31 ​ 87 ​ Interest and finance expense (income), net ​ 593 ​ 560 ​ ​ ​ ​ ​ ​ ​ ​ ​ Loss before income taxes ​ ( 2,477 ) ​ ( 2,747 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Income tax provision (benefit) ​ 12 ​ 50 ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss ​ ​ ( 2,489 ) ​ ​ ( 2,797 ) ​ Net loss attributable to noncontrolling interest ​ ​ — ​ ​ — ​ Net loss attributable to Xcel Brands, Inc. stockholders ​ $ ( 2,489 ) ​ $ ( 2,797 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Loss per common share attributable to Xcel Brands, Inc. stockholders: ​ ​ ​ ​ ​ Basic and diluted net loss per share ​ $ ( 0.42 ) ​ $ ( 1.18 ) ​ Weighted average number of common shares outstanding: ​ ​ ​ ​ ​ Basic and diluted weighted average common shares outstanding ​ 5,903,599 ​ 2,373,583 ​ ​ See accompanying Notes to Unaudited Condensed Consolidated Financial Statements. ​ 4 Table of Contents ​ Xcel Brands, Inc. and Subsidiaries Unaudited Condensed Consolidated Statements of Stockholders’ Equity (in thousands, except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Xcel Brands, Inc. Stockholders ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ ​ ​ ​ Paid-In ​ Accumulated ​ Noncontrolling ​ ​ ​ ​ ​ ​ ​ Shares ​ ​ ​ Amount ​ ​ ​ Capital ​ ​ ​ Deficit ​ ​ ​ Interest ​ ​ Total Balance as of December 31, 2024 2,368,072 ​ $ 2 ​ $ 106,666 ​ $ ( 76,244 ) ​ $ ( 2,026 ) ​ ​ $ 28,398 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional impact related to fractional shares from reverse stock split ​ ( 57 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Compensation expense related to stock options and restricted stock ​ — ​ ​ — ​ ​ 33 ​ ​ — ​ ​ — ​ ​ ​ 33 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Contra-revenue related to warrants held by licensee — ​ — ​ 10 ​ — ​ — ​ ​ 10 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares issued to executives for pro rata portion of base salaries, net of withholding taxes ​ 18,310 ​ ​ — ​ ​ 66 ​ ​ — ​ ​ — ​ ​ ​ 66 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss — ​ — ​ — ​ ( 2,797 ) ​ ​ — ​ ​ ( 2,797 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of March 31, 2025 2,386,325 ​ $ 2 ​ $ 106,775 ​ $ ( 79,041 ) ​ $ ( 2,026 ) ​ ​ $ 25,710 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of December 31, 2025 5,880,757 ​ $ 6 ​ $ 111,660 ​ $ ( 93,705 ) ​ $ ( 2,137 ) ​ ​ $ 15,824 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Compensation expense related to stock options and restricted stock ​ — ​ ​ — ​ ​ 51 ​ ​ — ​ ​ — ​ ​ ​ 51 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Contra-revenue related to warrants held by licensee ​ — ​ ​ — ​ ​ 10 ​ ​ — ​ ​ — ​ ​ ​ 10 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares issued to executive for pro rata portion of base salary, net of withholding taxes ​ 32,735 ​ ​ — ​ ​ 43 ​ ​ — ​ ​ — ​ ​ ​ 43 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Costs incurred related to equity line facility ​ — ​ ​ — ​ ​ ( 258 ) ​ ​ — ​ ​ — ​ ​ ​ ( 258 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss — ​ — ​ — ​ ( 2,489 ) ​ ​ — ​ ​ ( 2,489 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of March 31, 2026 5,913,492 ​ $ 6 ​ $ 111,506 ​ $ ( 96,194 ) ​ $ ( 2,137 ) ​ ​ $ 13,181 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ See accompanying Notes to Unaudited Condensed Consolidated Financial Statements . ​ 5 Table of Contents ​ Xcel Brands, Inc. and Subsidiaries Unaudited Condensed Consolidated Statements of Cash Flows (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended March 31, ​ ​ ​ ​ 2026 ​ ​ ​ 2025 Cash flows from operating activities ​ ​ ​ ​ Net loss ​ $ ( 2,489 ) ​ $ ( 2,797 ) Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ ​ ​ Depreciation and amortization expense ​ 893 ​ 900 Asset impairment charge ​ 61 ​ — Paid in-kind interest expense ​ ​ 253 ​ ​ — Amortization of deferred finance costs and other non-cash interest expense ​ 199 ​ 102 Stock-based compensation and cost of licensee warrants ​ 104 ​ 109 Loss from equity investments ​ ​ — ​ ​ 336 Changes in operating assets and liabilities: ​ ​ ​ ​ Accounts receivable ​ 300 ​ 164 Prepaid expenses and other current and non-current assets ​ ( 603 ) ​ 12 Deferred revenue ​ ​ ( 233 ) ​ ​ ( 205 ) Accounts payable, accrued expenses, accrued income taxes payable, and other current liabilities ​ 852 ​ 27 Lease-related assets and liabilities ​ ​ ( 214 ) ​ ​ ( 82 ) Net cash used in operating activities ​ ( 877 ) ​ ( 1,434 ) ​ ​ ​ ​ ​ ​ ​ Cash flows from investing activities ​ ​ ​ ​ Purchase of property and equipment ​ — ​ ( 14 ) Net cash used in investing activities ​ — ​ ( 14 ) ​ ​ ​ ​ ​ ​ ​ Cash flows from financing activities ​ ​ ​ ​ Payment of costs associated with equity line facility ​ ​ ( 208 ) ​ ​ — Proceeds from long-term debt ​ ​ — ​ ​ 2,050 Shares repurchased including vested restricted stock in exchange for withholding taxes ​ ​ ( 46 ) ​ ( 58 ) Payment of long-term debt ​ ( 500 ) ​ — Net cash (used in) provided by financing activities ​ ( 754 ) ​ 1,992 ​ ​ ​ ​ ​ ​ ​ Net (decrease) increase in cash, cash equivalents, and restricted cash ​ ( 1,631 ) ​ 544 ​ ​ ​ ​ ​ ​ ​ Cash, cash equivalents, and restricted cash at beginning of period ​ ​ 2,889 ​ ​ 1,993 ​ ​ ​ ​ ​ ​ ​ Cash, cash equivalents, and restricted cash at end of period ​ $ 1,258 ​ $ 2,537 ​ ​ ​ ​ ​ ​ ​ Reconciliation to amounts on condensed consolidated balance sheets: ​ ​ ​ ​ Cash and cash equivalents ​ $ 179 ​ $ 298 Restricted cash (reported in other non-current assets) ​ 1,079 ​ 2,239 Total cash, cash equivalents, and restricted cash ​ $ 1,258 ​ $ 2,537 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental disclosure of cash flow information: ​ ​ ​ ​ Cash paid during the period for interest ​ $ 109 ​ $ 372 Cash paid during the period for income taxes ​ $ 50 ​ $ — ​ See accompanying Notes to Unaudited Condensed Consolidated Financial Statements. ​ ​ 6 Table of Contents XCEL BRANDS, INC. AND SUBSIDIARIES Notes to Unaudited Condensed Consolidated Financial Statements March 31, 2026 (Unaudited) 1. Nature of Operations, Background, and Basis of Presentation 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 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 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) ● 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; and ● 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 7 Table of Contents XCEL BRANDS, INC. AND SUBSIDIARIES Notes to Unaudited Condensed Consolidated Financial Statements March 31, 2026 (Unaudited) 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 the Company. 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 The Company has a single reportable segment, which generates revenue from the design and licensing of branded apparel, jewelry, and similar consumer products. The Company derives revenue in North America and manages its business activities on a consolidated basis. The accounting policies of the Company’s single reportable segment are the same as those for the Company as a whole. The Company’s chief operating decision maker, as such term is defined under GAAP, is its Chief Executive Officer. The chief operating decision maker assesses performance for the single reportable segment and decides how to allocate resources based on net income that also is reported on the income statement as consolidated net income. The chief operating decision maker analyzes and reviews business performance based on available sales data from key licensees and quarterly sales and royalty reports provided by its licensees in addition to assessing the overall operating results on a monthly basis. The measure of segment assets is reported on the balance sheet as total consolidated assets, and, as the Company has a single reportable segment, the Company’s resources are applicable to the business as a whole. The Company does not have intra-entity sales or transfers. ​ 8 Table of Contents XCEL BRANDS, INC. AND SUBSIDIARIES Notes to Unaudited Condensed Consolidated Financial Statements March 31, 2026 (Unaudited) ​ ​ 2. Investments in Unconsolidated Affiliates and Variable Interest Entities ​ Investment in IM Topco, LLC 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 Since 2019, Xcel has been party to a limited liability company agreement with a subsidiary of Hilco Global related to Longaberger Licensing, LLC (“LL”). Hilco Global is the sole Class A Member of LL, and Xcel is the sole Class B Member of LL (each individually a “Member”). Each Member holds a 50 % equity ownership interest in LL; however, based on an analysis of the contractual terms and rights contained in the LLC agreement and related agreements, the Company has previously determined that under the applicable accounting standards, LL is a variable interest entity and the Company has effective control over LL. 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 March 31, 2026 and 2025 was $ 0 for each period. ​ ​ 9 Table of Contents XCEL BRANDS, INC. AND SUBSIDIARIES Notes to Unaudited Condensed Consolidated Financial Statements March 31, 2026 (Unaudited) ​ 3. Trademarks and Other Intangibles Trademarks and other intangibles, net consist of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average March 31, 2026 ​ Amortization ​ Gross Carrying ​ Accumulated ​ Net Carrying ($ in thousands) ​ Period ​ Amount ​ Amortization ​ Amount Trademarks (finite-lived) 15 years ​ 54,408 ​ 26,661 ​ 27,747 Copyrights and other intellectual property 8 years ​ 239 ​ 239 ​ — Total ​ ​ ​ $ 54,647 ​ $ 26,900 ​ $ 27,747 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average December 31, 2025 ​ Amortization Gross Carrying ​ Accumulated ​ Net Carrying ($ in thousands) ​ Period ​ Amount ​ Amortization ​ Amount Trademarks (finite-lived) 15 years ​ 58,580 ​ 27,354 ​ 31,226 Copyrights and other intellectual property 8 years ​ 429 ​ 426 ​ 3 Total ​ ​ $ 59,009 ​ $ 27,780 ​ $ 31,229 ​ 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). ​ ​ 4. Significant Contracts and Concentrations Halston Master License On May 15, 2023, the Company, through its wholly owned subsidiaries, H Halston, LLC and H Heritage Licensing, LLC (collectively, the “Licensor”), entered into a master license agreement relating to the Halston brand (the “Halston Master License”) with G-III Apparel Group (“G-III”), an industry-leading wholesale apparel company, for men’s and women’s apparel, men’s and women’s fashion accessories, children’s apparel and accessories, home, airline amenity and amenity kits, and such other product categories as mutually agreed upon. The Halston Master License provided for an upfront cash payment and royalties payable to the Company, including certain guaranteed minimum royalties, includes annual minimum net sales requirements, and has a twenty-five-year term (consisting of an initial five-year period, followed by a twenty-year period), subject to G-III’s right to terminate with at least 120 days’ notice prior to the end of each five-year period during the term. 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 10 Table of Contents XCEL BRANDS, INC. AND SUBSIDIARIES Notes to Unaudited Condensed Consolidated Financial Statements March 31, 2026 (Unaudited) 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. ​ 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 $ 0.19 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. The Company has a license agreement with America’s Collectibles Network, Inc. (d/b/a JTV) (“JTV”) that obligates JTV to pay the Company royalties based on product sales of Judith Ripka brand merchandise. In addition, the Company has outstanding receivables from prior product sales of fine jewelry made to JTV. 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. ​ 5. Leases 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 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 %. 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 $ 0.2 million for the current quarter and 11 Table of Contents XCEL BRANDS, INC. AND SUBSIDIARIES Notes to Unaudited Condensed Consolidated Financial Statements March 31, 2026 (Unaudited) $ 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: ​ ​ ​ ​ ​ ​ ​ Amount Year ​ ​ ​ (in thousands) 2026 (April 1 through December 31) ​ $ 1,547 2027 ​ ​ 1,841 2028 ​ 570 2029 ​ 585 2030 ​ 599 Thereafter (through 2032) ​ 821 Total lease payments ​ ​ 5,963 Less: Discount to present value ​ ​ 1,007 Present value of lease liabilities ​ ​ 4,956 Current portion of lease liabilities (April 1, 2026 through March 31, 2027) ​ ​ 1,718 Non-current portion of lease liabilities ​ $ 3,238 ​ ​ ​ ​ 6. Debt The Company’s net carrying amount of debt is comprised of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, ($ in thousands) ​ ​ ​ 2026 ​ ​ ​ 2025 Term loan debt (including accumulated unpaid PIK interest) ​ $ 13,334 ​ $ 13,581 Unamortized deferred finance costs and other reductions to carrying value ​ ( 744 ) ​ ( 875 ) Total ​ 12,590 ​ 12,706 Current portion of debt ​ 2,750 ​ 3,250 Long-term debt ​ $ 9,840 ​ $ 9,456 ​ 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. The term loans under the loan agreement are as follows: (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 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. 12 Table of Contents XCEL BRANDS, INC. AND SUBSIDIARIES Notes to Unaudited Condensed Consolidated Financial Statements March 31, 2026 (Unaudited) 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. On May 15, 2025, the Company repaid $ 0.50 million of the outstanding principal amount of Term Loan A. 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. 13 Table of Contents XCEL BRANDS, INC. AND SUBSIDIARIES Notes to Unaudited Condensed Consolidated Financial Statements March 31, 2026 (Unaudited) 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. Principal 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: ​ ​ ​ ​ ​ ​ Amount of ($ in thousands) Principal Year ​ ​ ​ Payment 2026 (April 1 through December 31) ​ $ 2,750 2027 ​ 500 2028 ​ ​ 10,084 Total ​ $ 13,334 ​ Interest 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. From and after April 21, 2025, interest on the Term Loans accrues at an annual rate equal to the 3-month SOFR rate, subject to a 2.0 % floor, plus (i) 8.5 % for Term Loan A and (ii) 6.5 % for Term Loan B. 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, 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 %. ​ 14 Table of Contents XCEL BRANDS, INC. AND SUBSIDIARIES Notes to Unaudited Condensed Consolidated Financial Statements March 31, 2026 (Unaudited) Exit Fees 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 In connection with entering into the Term Loans in December 2024, the Company incurred loan origination fees, plus various legal and other fees; these fees and costs totaling $ 0.92 million were deferred on the Company’s balance sheet as a reduction of the carrying value of the term loan debt. Also in connection with entering into the Term Loans in December 2024, the Company issued certain warrants to the lenders to purchase shares of the Company’s common stock. In accordance with applicable GAAP, the Company allocated the value of the total proceeds of $ 10.0 million between the term loan debt and the warrants, based on the relative fair values of each; 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, 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, 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. Also in connection with the April 21, 2025 debt refinancing transaction, the Company issued certain warrants to UTG to purchase shares of the Company’s common stock. In accordance with GAAP, the Company allocated the value of the total proceeds of $ 13.62 million between the term loan debt and the warrants, based on the relative fair values of each; as a result, the Company recognized a $ 0.58 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. 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. ​ 7. Stockholders’ Equity ​ 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 15 Table of Contents XCEL BRANDS, INC. AND SUBSIDIARIES Notes to Unaudited Condensed Consolidated Financial Statements March 31, 2026 (Unaudited) 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 A total of 1,150,000 shares of common stock are eligible for issuance under the Company’s 2021 Equity Incentive Plan (the “2021 Plan”). The 2021 Plan provides for the grant of any or all of the following types of awards: stock options (incentive or non-qualified), restricted stock, restricted stock units, performance awards, or cash awards. 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, 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 $ 0.10 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. ​ 16 Table of Contents XCEL BRANDS, INC. AND SUBSIDIARIES Notes to Unaudited Condensed Consolidated Financial Statements March 31, 2026 (Unaudited) Stock Options A summary of the Company’s stock options activity for the current quarter is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average ​ ​ ​ ​ ​ ​ ​ Weighted ​ Remaining ​ ​ ​ ​ ​ ​ ​ Average ​ Contractual ​ Aggregate ​ ​ Number of ​ Exercise ​ Life ​ Intrinsic ​ ​ ​ ​ Options ​ ​ ​ Price ​ ​ ​ (in Years) ​ ​ ​ Value Outstanding at December 31, 2025 977,695 ​ $ 8.69 3.98 ​ $ — Granted — ​ — ​ ​ ​ Exercised — ​ — ​ ​ ​ Expired/Forfeited ( 362,494 ) ​ ( 18.11 ) ​ ​ ​ Outstanding at March 31, 2026, and expected to vest 615,201 ​ $ 3.14 4.27 ​ $ — Exercisable at March 31, 2026 185,000 ​ $ 6.92 4.16 ​ $ — ​ 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Average ​ ​ Number of ​ Grant Date ​ ​ ​ ​ Options ​ ​ ​ Fair Value Balance at December 31, 2025 780,201 ​ $ 0.31 Granted — ​ — Vested — ​ ​ — Forfeited or Canceled ( 350,000 ) ​ — Balance at March 31, 2026 430,201 ​ $ 0.56 ​ 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. ​ ​ 17 Table of Contents XCEL BRANDS, INC. AND SUBSIDIARIES Notes to Unaudited Condensed Consolidated Financial Statements March 31, 2026 (Unaudited) Stock Awards A summary of the Company’s restricted stock activity for the current quarter is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ Number of ​ Average ​ ​ Restricted ​ Grant Date ​ ​ ​ ​ Shares ​ ​ ​ Fair Value Outstanding at December 31, 2025 96,417 ​ $ 13.73 Granted 32,735 ​ 1.32 Vested ( 32,735 ) ​ 1.32 Expired/Forfeited — ​ — Outstanding at March 31, 2026 96,417 ​ $ 13.73 ​ 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. Mr. 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. 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 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 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 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 . ​ 18 Table of Contents XCEL BRANDS, INC. AND SUBSIDIARIES Notes to Unaudited Condensed Consolidated Financial Statements March 31, 2026 (Unaudited) Warrants A summary of the Company’s warrants activity for the current quarter is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average ​ ​ ​ ​ ​ ​ ​ Weighted ​ Remaining ​ ​ ​ ​ ​ ​ Average Contractual ​ Aggregate ​ ​ Number of ​ Exercise Life ​ Intrinsic ​ ​ ​ ​ Warrants ​ ​ ​ Price ​ ​ ​ (in Years) ​ ​ ​ Value Outstanding at December 31, 2025 3,152,209 ​ $ 5.70 4.47 ​ $ — Issued — ​ — ​ ​ ​ Exercised — ​ — ​ ​ ​ Expired/Forfeited — ​ — ​ ​ ​ Outstanding at March 31, 2026 3,152,209 ​ $ 5.70 4.28 ​ $ — Exercisable at March 31, 2026 3,052,209 ​ $ 5.40 4.19 ​ $ — ​ 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. As of March 31, 2026, no portion of this warrant had vested. ​ 8. Earnings (Loss) Per Share Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS reflects, in periods in which they have a dilutive effect, the effect of common shares issuable upon the exercise of stock options and warrants, using the treasury stock method. 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 months ended March 31, 2026 and 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ ​ ​ ​ 2026 ​ ​ ​ 2025 Numerator: ​ ​ ​ ​ ​ ​ Net loss attributable to Xcel Brands, Inc. stockholders (in thousands) ​ $ ( 2,489 ) ​ $ ( 2,797 ) ​ ​ ​ ​ ​ ​ ​ Denominator: ​ ​ ​ ​ ​ ​ Basic weighted average number of shares outstanding ​ ​ 5,903,599 ​ 2,373,583 Add: Effect of warrants ​ ​ — ​ — Add: Effect of stock options ​ ​ — ​ ​ — Diluted weighted average number of shares outstanding ​ ​ 5,903,599 ​ 2,373,583 ​ ​ ​ ​ ​ ​ ​ Basic earnings (loss) per share ​ $ ( 0.42 ) ​ $ ( 1.18 ) Diluted earnings (loss) per share ​ $ ( 0.42 ) ​ $ ( 1.18 ) 19 Table of Contents XCEL BRANDS, INC. AND SUBSIDIARIES Notes to Unaudited Condensed Consolidated Financial Statements March 31, 2026 (Unaudited) ​ 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. The computation of diluted EPS excludes the following potentially dilutive securities because their inclusion would be anti-dilutive: ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ ​ ​ ​ 2026 ​ ​ ​ 2025 Stock options ​ 615,201 ​ 449,392 Warrants ​ 3,152,209 ​ 263,957 Total ​ 3,767,410 713,349 ​ ​ 9. Income Taxes The estimated annual effective income tax rate was for the current quarter and the prior year quarter was approximately - 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. ​ 10. Related Party Transactions Guarantee 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. ​ Debt ​ 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. ​ 11. 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 (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 % 20 Table of Contents XCEL BRANDS, INC. AND SUBSIDIARIES Notes to Unaudited Condensed Consolidated Financial Statements March 31, 2026 (Unaudited) to 82.5 %. 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. 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 statement 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. Legal Matters From time to time, the Company becomes involved in legal claims and litigation in the ordinary course of business. The Company routinely assesses all its litigation and threatened litigation as to the probability of ultimately incurring a liability, and records its best estimate of the ultimate loss in situations where it assesses the likelihood of loss as probable. In the opinion of management, based on consultations with legal counsel, the disposition of litigation currently pending against the Company is unlikely to have, individually or in the aggregate, a materially adverse effect on the Company’s business, financial position, results of operations, or cash flows. ​ ​ ​ 12. Subsequent Events ​ 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 21 Table of Contents XCEL BRANDS, INC. AND SUBSIDIARIES Notes to Unaudited Condensed Consolidated Financial Statements March 31, 2026 (Unaudited) 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. ​ ​ ​ 22 Table of Contents