What changed in this filing

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Item 9A. Controls and Procedures

2022-04-15 compared with 2021-04-23 · 102 added, 137 removed, 479 unchanged (33% of the section changed)

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Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a 15(f) and 15d 15(f) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of December 31, 2021.

Based on that evaluation, our management concluded that our disclosure controls and procedures were not effective as of December 31, 2020, due to the material weakness described below.

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2021, to ensure that all information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time specified in SEC rules and forms and is accumulated and communicated to our management, including our principal executive and principal accounting officers to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control over Financial Reporting

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Internal control over financial reporting is a process designed by, or under the supervision of, the chief executive officer and principal financial officer and effected by our board of directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the design and effectiveness of our internal control over financial reporting based on the criteria set forth in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

Based on its evaluation as of December 31, 2020, our management concluded that our internal controls over financial reporting were not effective as of December 31, 2020 due to the material weaknesses set forth below.

A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The basis for the conclusion that such internal control was ineffective included the following considerations:

● the Company was unable to file our Annual Report on Form 10-K within the time specified in SEC rules and forms, due to material subsequent events occurring in the first quarter of 2021, including a significant brand acquisition and a significant debt refinancing transaction, and impacts of the ongoing COVID-19 pandemic on our processes;

● the complexities in determining an impairment charge in the carrying value of one of the Company’s trademarks required additional time for a complete analysis.

The Company has hired additional personnel in its finance department to address the material weakness.

reporting based on the criteria set forth in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

Based on our evaluation under the framework described above, our management has concluded that our internal control over financial reporting was effective as of December 31, 2021.

This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting.

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Other Information

Directors, Executive Officers, Promoters, Control Persons and Corporate Governance;

Compliance with Section 16(a) of the Exchange Act

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

Directors, Executive Officers and Corporate Governance

The following table sets forth the names, ages, and positions of our executive officers and directors as of the date hereof.

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Chief Financial Officer and Assistant Secretary, and Principal Financial and Accounting Officer

Giuseppe “Joe” Falco

President and Chief Operating Officer of the Isaac Mizrahi Brand

Seth Burroughs

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D’Loren has been the Chairman of our Board and our Chief Executive Officer and President since September 2011.

D’Loren has been an entrepreneur, innovator, and pioneer of the consumer branded products industry for the past 35 years.

D’Loren has been an entrepreneur, innovator, and pioneer of the consumer branded products industry for over 35 years.

D’Loren has spearheaded the Company’s omni-channel platform, connecting the channels of digital, brick-and-mortar, social media, and direct-response television to create a single customer view and brand experience for Xcel’s brands.

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degree from State University of New York at Plattsburgh.

Joe Falco has been our Chief Operating Officer and President of the Mizrahi brands since September 2011.

Falco is a merchant with almost two decades of experience in managing lifestyle brands and business development.

Falco served as President of Misook, a division of HMX, from February 2010 to February 2011, as Worldwide President and Chief Merchant for Elie Tahari from 2007 to 2009, and as President of Sixty USA from 2005 to 2006.

Prior to that position, Mr.

Falco was Senior Vice President for Dolce & Gabbana from 1998 to 2004, where he was responsible for North American development and operations.

Falco started his career with the luxury retailer Barneys New York where he became a student of product merchandising and brand communication.

Seth Burroughs has been our Executive Vice President of Business Development and Treasury since September 2011.

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Weinswig was employed by Citigroup, Inc., most recently where she was Managing Director and Head of the Global Staples & Consumer Discretionary team at Citi Research.

Weinswig also serves as an e-commerce expert for the International Council of Shopping Centers’ Research Task Force and was a founding member of the Oracle Retail Industry Strategy Council.

Weinswig also serves as an e-commerce expert for the International

Council of Shopping Centers’ Research Task Force and was a founding member of the Oracle Retail Industry Strategy Council.

Lastly, she is a member of the Board of Directors of Kiabi (affiliated with the Auchan Group).

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As Chief Design Officer, he is responsible for design and design direction for all brands under his name.

Mizrahi has been a leader in the fashion industry for almost 30 years.

his first collection in 1987, Mr.

Mizrahi has been a leader in the fashion industry for over 30 years.

Since his first collection in 1987, Mr.

Mizrahi’s designs have come to stand for timeless, cosmopolitan style.

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Mizrahi’s media presence through his roles on “Project Runway All Stars” for Lifetime, and his appearances on broadcast television networks where he offers his expertise on fashion and style.

Lori Goldstein is Chief Creative Officer and Spokeswoman for the Lori Goldstein Brands.

As Chief Creative Officer, she is responsible for providing design input and guidance to Xcel Brands for all brands under her name.

Goldstein’s work has covered a vast range, from her collaborations with photographers Annie Leibovitz at Vanity Fair to Steven Meisel at Vogue Italia, to her styling for designers Donatella Versace and Vera Wang.

Goldstein stepped in front of the camera in 2009 when she launched LOGO by Lori Goldstein, her exclusive collection for QVC.

She is the author of “Style Is Instinct,” which was published in 2013.

Goldstein’s brand was awarded “Apparel Product Concept of the Year” and she was named QVC Ambassador.

Employment Agreements with Executives

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D’Loren would be entitled to two hundred times the average annual cash bonuses paid in the preceding 12 months.

D’Loren would also be entitled to continue to participate in the Company’s group medical plan or receive reimbursement for

premiums paid for other medical insurance in an amount not to exceed the cost to participate in the Company’s plan, subject to certain conditions, for a period of 36 months from the termination date.

D’Loren would also be entitled to continue to participate in the Company’s group medical plan or receive reimbursement for premiums paid for other medical insurance in an amount not to exceed the cost to participate in the Company’s plan, subject to certain conditions, for a period of 36 months from the termination date.

Change of Control

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Also, during his employment and for a one-year period after the termination of his employment, Mr.

Haran may not, directly or indirectly, solicit, induce or attempt to induce any customer, supplier, licensee, or other business relation of the Company or any of its subsidiaries to cease doing business with the Company or

any of its subsidiaries;

or solicit, induce or attempt to induce any person who is, or was during the then-most recent 12-month period, a corporate officer, general manager or other employee of the Company or any of its subsidiaries, to terminate such employee’s employment with the Company or any of its subsidiaries;

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or in any way interfere with the relationship between any such customer, supplier, licensee, employee or business relation and the Company or any of its subsidiaries.

Giuseppe Falco

On February 27, 2019, and effective January 1, 2019, the Company entered into a two-year employment agreement with Giuseppe Falco for him to serve as President and Chief Merchant of the Company’s Interactive Technology business and the Company’s Creative Director, referred to as the Falco Employment Agreement.

Following the initial two-year term, the agreement automatically renewed for an additional one-year term.

Under the Falco Employment Agreement, Mr.

Falco’s base salary is $0.55 million per annum.

Cash Bonus and Stock Bonus .

Falco was eligible to receive a performance cash bonus in an amount up to $0.4 million per annum and a performance stock bonus with a value of up to $0.09 million per annum based upon the Company receiving Gross DRT Sales as follows:

($ in thousands)

2019 Gross DRT Sales Level

$ Value of Stock Bonus

$242,500- $250,000

$250,000 - $257,500

$257,500 - $265,000

$265,000 or more

The Gross DRT Sale Level targets for 2020 were established by the Compensation Committee of the Company’s Board of Directors.

“ Gross DRT Sales ” means gross sales generated by the Company’s trademarks through any program transmitted by television, on QVC, HSN (including their e-commerce businesses known as Buy Any Time), or similar interactive television networks globally.

Falco’s employment is terminated by us without cause, or if Mr.

Falco resigns with good reason, or if we fail to renew the term, then Mr.

Falco will be entitled to receive his unpaid base salary and cash bonuses through the termination date and a lump sum payment of an amount equal to his base salary in effect for a period of six months, payable on the six-month anniversary of the date of separation of services and the option shall remain exercisable as to those shares as to which the option previously vested and shall become exercisable as to any unvested shares immediately following such transaction.

Falco would also be entitled to continue to participate in our group medical plan, subject to certain conditions, for a period of six months from the termination date.

Seth Burroughs

On February 28, 2019, and effective as of January 1, 2019, the Company entered into a two-year employment agreement with Seth Burroughs for him to continue to serve as the Company’s Executive Vice President – Business Development

and Treasury, referred to as the Burroughs Employment Agreement.

Following the initial two-year term, the agreement automatically renewed for a one-year term and will be automatically renewed for one-year terms thereafter unless either party gives written notice of intent to terminate at least 30 days prior to the expiration of the then current term.

Pursuant to the Burroughs Employment Agreement, Mr.

Burroughs’ annual base salary is $0.34 million per annum.

The board of directors or the compensation committee may approve increases (but not decreases) from time to time.

Following the initial two-year term, the base salary shall be reviewed at least annually.

Burroughs will be eligible to receive a performance cash bonus in an amount equal to (i) 0.23% of all IP Income in excess of $12.0 million earned and received by us in such fiscal year;

provided that any IP income generated through net sales shall be multiplied by (x) 7% in the case of net sales from wholesale sales, and private label sales and (y) 3% in the case of net sales from e-commerce sales through the Company’s web sites plus (ii) 0.375% of the Company’s adjusted EBITDA (as defined in the Haran Employment Agreement) for such fiscal year.

Pursuant to the Burroughs Employment Agreement, Mr.

Burroughs was granted an option to purchase up to 368,421 shares of the Company’s common stock at an exercise price of $1.72 per share.

The option is exercisable until February 28, 2029 and shall vest, subject to Mr.

Burroughs remaining employed with the Company and based upon the Company’s common stock achieving target prices as follows:

Target Prices

Number of Option Shares Vesting

Burrough’s employment is terminated by the Company without cause, or if Mr.

Burroughs resigns with good reason, or if the Company fails to renew the term, then Mr.

Burroughs will be entitled to receive his unpaid base salary and cash bonuses through the termination date and a lump sum payment equal to his base salary in effect on the termination date for 12 months.

Burroughs would also be entitled to continue to participate in our group medical plan, subject to certain conditions, for a period of 12 months from the termination date.

Change of Control

In the event Mr.

Falco’s employment is terminated within 12 months following a change of control by the Company without cause or by Mr.

Falco with good reason, Mr.

Falco would be entitled to a lump sum payment equal to his base salary in effect on the termination date for six months following such termination.

Burroughs’ employment is terminated within 12 months following a change of control by the Company without cause or by Mr.

Burroughs with good reason, Mr.

Burroughs would be entitled to a lump sum payment equal to his base salary in effect on the termination date for 12 months following such termination.

“Change of control,” as defined in Mr.

Falco’s employment agreement, means a merger or consolidation to which we are a party, a sale, lease or other transfer, exclusive license or other disposition of all or substantially all of our assets, or a sale or transfer by our stockholders of voting control, in a single transaction or a series of transactions.

Burroughs’ employment agreement, means a merger or consolidation to which we are a party, a sale, lease or other transfer, exclusive license or other disposition of all or substantially all of our assets, or a sale or transfer by our stockholders of voting control, in a single transaction or a series of transactions.

Upon a change of control, notwithstanding the vesting and exercisability schedule in any stock option or other grant agreement between Mr.

Falco and us, all unvested stock

options, shares of restricted stock and other equity awards granted by us to Mr.

Falco pursuant to any such agreement shall immediately vest, and all such stock options shall become exercisable and remain exercisable for the lesser of 180 days after the date the change of control occurs or the remaining term of the applicable option.

Burroughs and us, all unvested stock options, shares of restricted stock and other equity awards granted by us to Mr.

Burroughs pursuant to any such agreement shall immediately vest, and all such stock options shall become exercisable and remain exercisable for the lesser of 180 days after the date the change of control occurs or the remaining term of the applicable option.

Non-Competition and Non-Solicitation

During the term of his employment by the Company and for a one-year period after the termination of such employment, Mr.

Falco may not permit his name to be used by or participate in any business or enterprise (other than the mere passive ownership of not more than 5% of the outstanding stock of any class of a publicly held corporation whose stock is traded on a national securities exchange or in the over-the-counter market) that engages or proposes to engage in the Company’s business in the United States, its territories and possessions and any foreign country in which we do business as of the date of termination of his employment.

Also, during his employment and for a one-year period after the termination of such employment, Mr.

Falco may not, directly or indirectly, solicit, induce or attempt to induce any customer, supplier, licensee, or other business relation of the Company or any of its subsidiaries to cease doing business with the Company or any of its subsidiaries;

Burroughs may not permit his name to be used by or participate in any business or enterprise (other than the mere passive ownership of not more than 5% of the outstanding stock of any class of a publicly held corporation whose stock is traded on a national securities exchange or in the over-the-counter market) that engages or proposes to engage in our

business in the United States, its territories and possessions and any foreign country in which we do business as of the date of termination of such employment.

Also, during his employment and for a one-year period after the termination of his employment, Mr.

Burroughs may not, directly or indirectly, solicit, induce or attempt to induce any customer, supplier, licensee, or other business relation of the Company or any of its subsidiaries to cease doing business with the Company or any of its subsidiaries;

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To our knowledge, based solely on a review of Forms 3 and 4 and any amendments thereto furnished to our Company pursuant to Rule 16a-3(e) under the Securities Exchange Act of 1934, or representations that no Forms 5 were required, all Section 16(a) filing requirements applicable to our officers, directors, and beneficial owners of more than 10% of our equity securities were timely filed, except that Mr.

DiSanto filed Forms 4 late for six transactions and Mr.

D’Loren filed Forms 4 late for three transactions.

D’Loren filed Forms 4 late for two transactions.

Code of Ethics

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The Audit Committee operates under a written charter adopted by our board of directors.

The Audit Committee

assists the board of directors by providing oversight of our accounting and financial reporting processes, appoints the independent registered public accounting firm, reviews with the registered independent registered public accounting firm the scope and results of the audit engagement, approves professional services provided by the independent registered public accounting firm, reviews the independence of the independent registered public accounting firm, considers the range of audit and non-audit fees and reviews the adequacy of internal accounting controls.

The Audit Committee assists the board of directors by providing oversight of our accounting and financial reporting processes, appoints the independent registered public accounting firm, reviews with the registered independent registered public accounting firm the scope and results of the audit engagement, approves professional services provided by the independent registered public accounting firm, reviews the independence of the independent registered public accounting firm, considers the range of audit and non-audit fees and reviews the adequacy of internal accounting controls.

Compensation Committee

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Our board of directors has adopted a written Compensation Committee Charter that sets forth the committee’s responsibilities.

The committee is responsible for determining all forms of compensation for our executive officers, and establishing and maintaining executive compensation practices designed to enhance long-term stockholder value.

committee is responsible for determining all forms of compensation for our executive officers, and establishing and maintaining executive compensation practices designed to enhance long-term stockholder value.

Nominating Committee

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CEO and Chairman

Giuseppe Falco

President and COO

Seth Burroughs

EVP - Business

(1) Salary amounts for 2020 reflect temporary voluntary reductions from April 1, 2020 – December 31, 2020 in connection with cost reduction actions taken by management in response to the COVID-19 pandemic.

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See “Employment Agreements with Executives” in Item 10.

(3) The amount shown represents the grant date fair value of fully-vested common stock awards issued in 2020 as payment for a performance bonus earned in the prior year.

(3) The amounts shown represent the grant date fair value of fully-vested common stock awards issued as payment for performance bonuses earned in the prior year.

Outstanding Equity Awards as of December 31, 2021

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CEO, Chairman

Giuseppe Falco

President, COO

Multiple dates (5)

(1) These options became exercisable on September 29, 2011, the date of grant, and expire on September 29, 2021.

(2) These options become exercisable as to one-third of the shares on each of March 31, 2017, 2018, and 2019, and expire on March 31, 2021.

Seth Burroughs

(1) These options shall become exercisable based upon the Company’s common stock achieving specified target prices as outlined in the executive’s employment agreement, and expire on February 28, 2029.

See “Employment Agreements with Executives” in Item 10.

(4) Such shares vest (i) as to 77,500 shares of common stock, on March 31, 2021;

(ii) as to 37,500 shares of common stock, on May 15, 2021;

(iii) as to 30,333 shares of common stock, on June 1, 2021;

and (iv) as to 50,000 shares of common stock, on April 30, 2021;

provided, however, that Mr.

Falco has the right to extend each vesting date by six-month increments, in his sole discretion, prior to the date the restrictions would lapse.

(5) These options became exercisable as to one-fifth of the shares on each of January 1, 2018, 2019, and 2020, and shall become exercisable as to an additional one-fifth of the shares on each of January 1, 2021 and 2022, and expire at the five-year anniversary of each vesting date for each individual one-fifth tranche.

Director Compensation

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Mark DiSanto (1) (2)

Francis (1) (2)

Howard Liebman (1) (2)

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James Fielding (1) (2)

(1) On April 1, 2020, each non-employee director was granted options to purchase 40,000 shares of stock pursuant to the terms and conditions of the Plan.

(1) On April 1, 2021, each non-employee directory was granted 10,000 shares of restricted stock pursuant to the terms and conditions of the 2011 Equity Incentive Plan.

Such shares of restricted stock will vest evenly over two years, whereby 50% shall vest on April 1, 2022 and 50% shall vest on April 1, 2023.

Notwithstanding the foregoing, each grantee may extent the vesting date of all or a portion of the restricted shares by six months and, thereafter one or more times may further extend such date with respect to all or a portion of the restricted shares until the next following October 1 or April 1, as the case may be.

The grant date fair value of the shares was $1.93 per share.

(2) On April 1, 2021, each non-employee director was granted options to purchase 25,000 shares of stock pursuant to the terms and conditions of the 2011 Equity Incentive Plan.

Such options will vest evenly over two years, whereby 50% shall vest on April 1, 2022 and 50% shall vest on April 1, 2023.

The exercise price of the options is $1.93 per share.

There were no restricted stock awards granted to non-employee directors for the year ended December 31, 2020.

2011 Equity Incentive Plan

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Cash awards may be issued under the Plan either alone or in addition to or in tandem with other awards granted under the Plan or other payments made to a participant not under the Plan.

The board or committee, as the case may be, shall determine the eligible persons to whom, and the time or times at which, cash awards will be made, the amount that is subject to the cash award, the circumstances and conditions under which such amount shall be paid, in whole or in part, the time of payment, and all other terms and conditions of the awards.

The board or committee, as the case may be, shall determine the eligible persons to whom, and the time or times at which, cash awards will be made, the amount that is

subject to the cash award, the circumstances and conditions under which such amount shall be paid, in whole or in part, the time of payment, and all other terms and conditions of the awards.

The maximum cash award that may be paid to any participant under the Plan during any calendar year shall not exceed $2,500,000.

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No options or other awards may be granted on or after the fifth anniversary of the effective date of the Plan.

During the current year, we adopted the 2021 Equity Incentive Plan, the key terms and provisions of which are substantially similar to the 2011 Plan described above, with the major difference being that a total of 4,000,000 shares of common stock are eligible for issuance under the 2021 Equity Incentive Plan.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

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Named executive officers and directors:

Giuseppe Falco (3)

Seth Burroughs (3)

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DiSanto are the trustees and as to which Mr.

D’Loren has sole voting and dispositive power, (iii) 1,123,470 shares issuable upon exercise of immediately exercisable options and warrants, (iv) 2,473,325 shares of common stock (including 522,500 restricted shares) held in the name of Isaac Mizrahi, and (v) 3,955,287 shares of common stock (including 77,500 restricted shares) as to which holders thereof granted to Mr.

D’Loren has sole voting and dispositive power, (iii) 2,473,325 shares of common stock (including 522,500 restricted shares) held in the name of Isaac Mizrahi, (iv) 1,666,667 shares of common stock held in the name of Hilco Trading, LLC, and (v) 2,275,444 shares of common stock as to which holders thereof granted to Mr.

D’Loren irrevocable proxy and attorney-in-fact with respect to the shares.

Certain holders or grantees have entered into certain agreements, pursuant to which appoint a person designated by our board of directors as their irrevocable proxy and attorney-in-fact with respect to the shares set forth in clauses (iv) and (v).

D’Loren does not have any pecuniary interest in these shares described in clauses (iv) and (v) and disclaims beneficial ownership thereof.

D’Loren does not have any pecuniary interest in these shares described in clauses (iii), (iv), and (v) and disclaims beneficial ownership thereof.

Does not include 326,671 shares held by the D’Loren Family Trust (or the Family Trust) of which Mark DiSanto is a trustee and has sole voting and dispositive power.

(2) Consists of (i) 204,418 shares and (ii) immediately exercisable options and warrants to purchase 238,968 shares.

(3) Consists of (i) 58,579 shares, (ii) 195,333 restricted shares, and (iii) 600,000 shares issuable upon exercise of immediately exercisable warrants and options.

(4) Consists of (i) 310,549 shares and (ii) immediately exercisable options and warrants to purchase 176,312 shares.

(5) Consists of (i) 36,165 shares, (ii) 30,000 restricted shares, and (iii) immediately exercisable options to purchase 137,500 shares.

(2) Consists of (i) 204,018 shares of common stock.

(3) Consists of (i) 310,549 shares of common stock.

(4) Consists of (i) 36,165 shares of common stock, (ii) 40,000 restricted shares, and (iii) immediately exercisable options to purchase 95,000 shares.

(5) Consists of (i) 326,671 shares held by the D’Loren Family Trust, of which Mark DiSanto is trustee and has sole voting and dispositive power over the shares held by the D’Loren Family Trust, (ii) 1,027,613 shares held by Mark X.

DiSanto Investment Trust, of which Mark DiSanto is trustee and has sole voting and dispositive power over the

shares held by the Trust, (iii) 5,000 restricted shares, (iv) 137,500 shares issuable upon exercise of warrants and options that have vested, and (v) 82,392 shares held by other trusts, of which Mark DiSanto is trustee and has sole voting and dispositive power over the shares held by the trusts.

(7) Consists of (i) 104,000 shares, (ii) 5,000 restricted shares and (iii) immediately exercisable options to purchase 87,500 shares.

DiSanto Investment Trust, of which Mark DiSanto is trustee and has sole voting and dispositive power over the shares held by the Trust, (iii) 10,000 restricted shares, (iv) 95,000 shares issuable upon exercise of warrants and options that have vested, and (v) 82,392 shares held by other trusts, of which Mark DiSanto is trustee and has sole voting and dispositive power over the shares held by the trusts.

(6) Consists of (i) 109,000 shares of common stock, (ii) 10,000 restricted shares, and (iii) immediately exercisable options to purchase 95,000 shares.

(7) Consists of (i) 28,000 restricted shares and (ii) immediately exercisable options to purchase 70,000 shares.

(9) Consists of (i) 5,000 shares, (ii) 5,000 restricted shares, and (iii) immediately exercisable options to purchase 12,500 shares.

(10) Includes (i) 4,190,270 shares, (ii) 258,333 restricted shares, (iii) 438,750 shares issuable upon exercise of warrants that are currently exercisable, (iv) 2,112,500 shares issuable upon exercise of options that are currently exercisable, and (v) 6,428,612 other shares of common stock as to which holders thereof granted to Mr.

(8) Consists of (i) 10,000 shares of common stock, (ii) 10,000 restricted shares, and (iii) immediately exercisable options to purchase 45,000 shares.

(9) Includes (i) 3,720,553 shares of common stock, (ii) 98,000 restricted shares, (iii) 400,000 shares issuable upon exercise of options that are currently exercisable, and (iv) 7,022,753 other shares of common stock as to which holders thereof granted to Mr.

D’Loren irrevocable proxy and attorney-in-fact with respect to the shares.

(11) Consists of (i) 1,950,825 shares, (ii) 522,500 restricted shares, and (iii) immediately exercisable options to purchase 300,000 shares.

(10) Consists of (i) 1,950,825 shares of common stock, (ii) 522,500 restricted shares, and (iii) immediately exercisable options to purchase 300,000 shares.

(11) The H Company IP, LLC, or HIP, directly owns 1,000,000 shares of common stock, which we refer to as the H Company Shares.

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Certain Relationships and Related Transactions, and Director Independence

Benjamin Malka

Benjamin Malka was a director of the Company from June 2014 through September 2019.

Malka is also a 25% equity holder of House of Halston LLC (“HOH”), and is the former Chief Executive Officer of HOH.

HOH is the parent company of the H Company IP, LLC (“HIP”).

On February 11, 2019, the Company and its wholly owned subsidiary, H Heritage Licensing, LLC, entered into an asset purchase agreement (the "Heritage Asset Purchase Agreement") with HIP and HOH, pursuant to which the Company acquired certain assets of HIP, including the "Halston,"

"Halston Heritage,"

and "Roy Frowick"

trademarks (collectively, the "Halston Heritage Trademarks") and other intellectual property rights relating thereto.

Pursuant to the Heritage Asset Purchase Agreement, at closing, the Company delivered in escrow for HIP or its designees (collectively, the “Sellers”) an aggregate of $8.4 million in cash and 777,778 shares of the Company’s common stock valued at $1.1 million (the “Xcel Shares”), subject to a voting agreement and a lock-up agreement relating to the Xcel Shares and a consent and waiver agreement each in form satisfactory to Xcel within three months from the date of the Heritage Asset Purchase Agreement.

Such agreements were executed and delivered to Xcel, and the Xcel Shares were issued and delivered to the Sellers.

In addition to the closing considerations, HIP is eligible to earn up to an aggregate of $6.0 million (the “Earn-Out Value”) through December 31, 2022 based on Excess Net Royalties.

“Excess Net Royalties” during any calendar year for 2019 through 2022 (each, a “Royalty Target Year”) is equal to (a) the positive amount, if any, of the Net Royalties as calculated for such Royalty Target Year, less the greater of (i) One Million Five Hundred Thousand Dollars ($1.5 million), or (ii) the maximum Net Royalties for any previous Royalty Target Year.

“Applicable Percentage” means (a) 50% of the first $10.0 million of Excess Net Royalties during the Earn-Out Period, (b) 20% of aggregate Excess Net Royalties during the Earn-Out Period greater than $10.0 million and up to $15.0 million and (c) 0% of aggregate Excess Net Royalties during the Earn-Out Period in excess of $15.0 million.

The Earn-Out Consideration shall be payable in common stock of Xcel (the “Earn-Out Shares”);

provided, however, that if the number of Earn-Out Shares, when combined with the number of Xcel Shares issued at the Closing Date, will exceed 4.99% of the aggregate number of shares of Xcel common stock outstanding as of the Closing Date (calculated in accordance with Nasdaq Rule 5635(a)) (the “Xcel Share Limit”), then Xcel may, in its sole and unfettered discretion, elect to (x) pay cash for the Earn-Out Value attributable to the Earn-Out Shares that would exceed the Xcel Share Limit;

(y) solicit stockholder approval for the issuance of Earn-Out Shares in excess of the Xcel Share Limit in accordance with Nasdaq Rule 5635(a)(2) and, if such stockholder approval is obtained, issue such Earn-Out Shares to HIP;

or (z) solicit stockholder approval for the issuance of Shares in excess of the Xcel Share Limit in accordance with Nasdaq Rule 5635(a)(2) and, if such stockholder approval is obtained, pay the applicable Earn-Out Consideration with a combination of cash and Earn-Out Shares.

Hilco Trading, LLC

Hilco Trading, LLC ("Hilco") directly and indirectly owns greater than 5% of the Company's common stock, and its affiliate Hilco Global owns 50% of the equity of Longaberger Licensing, LLC.

During the year ended December 31, 2020, the Company sold certain apparel products to an affiliate of Hilco, and recognized $0.15 million of revenue from this transaction.

During the year ended December 31, 2020, the Company sold certain apparel products to an affiliate of Hilco, and recognized approximately $0.2 million of revenue from this transaction.

Additionally, during the year ended December 31, 2020, the Company sold certain intangible assets of Longaberger Licensing, LLC to a third party;

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D’Loren has worked on the implementation of the Company’s ERP system.

D’Loren received compensation of $0.14 million and $0.17 million for the years ended December 31, 2020 and 2019, respectively.

D’Loren received compensation of less than $0.1 million and approximately $0.1 million for the years ended December 31, 2021 and 2020, respectively.

Isaac Mizrahi

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Mizrahi’s base salary shall be $1.8 million, $2.0 million, and $2.1 million per annum during the term of the agreement and $2.25 million and $2.4 million during 2023 and 2024 if the term is extended, in each case, subject to adjustment in the event Mr.

Mizrahi does not make a specified number of appearances on QVC.

Mizrahi does not make a specified number of appearances on Qurate’s QVC channel.

Mizrahi shall be eligible to receive an annual cash bonus (the “Bonus”) up to an amount equal to $2.5 million less base salary for 2020 and $3.0 million less base salary for 2021, 2022, and any year during the Renewal Period.

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● “Monday Bonus” means $10,000 for each appearance by Mr.

Mizrahi on the QVC channel on Mondays (subject to certain expectations) up to a maximum of 40 such appearances in a calendar year.

Mizrahi on Qurate’s QVC channel on Mondays (subject to certain expectations) up to a maximum of 40 such appearances in a calendar year.

Mizrahi is required to devote his full business time and attention to the business and affairs of the Company and its subsidiaries;

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Mizrahi may not, directly or indirectly, solicit, induce, or attempt to induce any customer, supplier, licensee, or other business relation of the Company or any of its subsidiaries to cease doing business with the Company or any or its subsidiaries;

or solicit, induce, or attempt to induce any person who is, or was during the then-most recent 12-month period, a corporate officer, general manager, or other employee of the Company or any of its subsidiaries, to terminate such employee’s employment with the Company or any of its subsidiaries;

or solicit, induce, or attempt to induce any person who is, or was during the then-most recent 12-month period, a corporate officer, general

manager, or other employee of the Company or any of its subsidiaries, to terminate such employee’s employment with the Company or any of its subsidiaries;

or hire any such person unless such person’s employment was terminated by the Company or any of its subsidiaries;

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The Company will pay Laugh Club an annual fee of $0.72 million for such services.

Principal Accounting Fees and Services

The aggregate fees billed or to be billed for professional services rendered by our Independent Registered Public Accounting Firm, CohnReznick LLP, for the audit of our annual consolidated financial statements, review of our consolidated financial statements included in our quarterly reports, and other fees that are normally provided by the accounting firm in connection with statutory and regulatory filings or engagements for the years ended December 31, 2020 and December 31, 2019 were approximately $341,000 and $319,000, respectively.

Principal Accountant Fees and Services

The aggregate fees billed or to be billed for professional services rendered by our prior Independent Registered Public Accounting Firm, CohnReznick LLP, for the audit of our annual consolidated financial statements, review of our consolidated financial statements included in our quarterly reports for the first two fiscal quarters of 2021, and other fees that are normally provided by the accounting firm in connection with statutory and regulatory filings or engagements for the six months ended June 30, 2021 and the year ended December 31, 2020 were approximately $366,000.

The aggregate fees billed or to be billed for professional services rendered by our current Independent Registered Public Accounting Firm, Marcum LLP, for the audit of our annual consolidated financial statements, review of our consolidated financial statements included in our quarterly report for the third fiscal quarter of 2021, and other fees that are normally provided by the accounting firm in connection with statutory and regulatory filings or engagements for the year ended December 31, 2021 were approximately $277,000.

Audit-Related Fees

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In those circumstances, the Audit Committee requires specific pre-approval before engaging the Independent Registered Public Accounting Firm.

The engagements of our Independent Registered Public Accounting Firm, CohnReznick LLP was approved by the Company’s Audit Committee.

The engagements of our Independent Registered Public Accounting Firm were approved by the Company’s Audit Committee.

Exhibit and Financial Statement Schedules

INDEX TO EXHIBITS

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Third Amended and Restated Equity Incentive Plan and Forms of Award Agreements (14)

Form of Executive Warrant (1)

Warrant issued to Joe Falco dated September 29, 2011 (1)

2021 Equity Incentive Plan (18)

Description of Registrant’s Securities (17)

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and Isaac Mizrahi, dated September 28, 2011 (2)

Assignment and Assumption, New York Landlord Consent by and among Adler Holdings III, LLC, IM Ready-Made, LLC and Xcel Brands, Inc., dated September 29, 2011, and Guaranty by IM Brands, Inc., dated September 29, 2011 (1)

Employment Agreement entered into with Isaac Mizrahi, dated February 24, 2020 (9)

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Employment Agreement between the Company and James Haran dated February 27, 2019 (15)

Employment Agreement dated February 27, 2019 by and between the Company and Giuseppe Falco (15)

Employment Agreement between the Company and Seth Burroughs dated February 27, 2019 (20)

Amended and Restated Fifth Amendment, entered into as of March 14, 2014 and effective as of December 24, 2013, to the Asset Purchase Agreement filed as Exhibit 10.1 (6)

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and GBG USA Inc.

Amended and Restated Loan and Security Agreement by and among Bank Hapoalim B.M., as agent, the financial institution party thereto as lenders, Xcel Brands, Inc.

and IM Brands, LLC, JR Licensing, LLC, H Licensing, LLC, C Wonder Licensing LLC, Xcel Design Group, LLC, Judith Ripka Fine Jewelry, LLC, H Halston Heritage, LLC, LLC and Xcel-CT MFG, LLC, as guarantors (3)

Asset Purchase Agreement by and between Xcel Brands, Inc., H Licensing, LLC, and The H Company IP LLC (3)

Amendment No.

4 and Waiver to Amended and Restated Loan and Security Agreement (17)

Amendment No.

5 and Waiver to Amended and Restated Loan and Security Agreement (18)

Promissory Note, dated April 20, 2020, executed by Xcel Brands, Inc., as Borrower, for the benefit of Bank of America, NA, as lender (16)

Loan and Security Agreement dated December 30, 2021 (19)

Subsidiaries of the Registrant (20)

Independent Registered Public Accounting Firm’s Consent (20)

Consent of Independent Registered Public Accounting Firm (20)

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Section 1350 Certification (CFO) (20)

XBRL Instance Document (19)

XBRL Taxonomy Schema (19)

XBRL Taxonomy Calculation Linkbase (19)

XBRL Taxonomy Definition Linkbase (19)

XBRL Taxonomy Label Linkbase (19)

XBRL Taxonomy Presentation Linkbase (19)

Inline XBRL Instance Document (20)

Inline XBRL Taxonomy Schema (20)

Inline XBRL Taxonomy Calculation Linkbase (20)

Inline XBRL Taxonomy Definition Linkbase (20)

Inline XBRL Taxonomy Label Linkbase (20)

Inline XBRL Taxonomy Presentation Linkbase (20)

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) (20)

(1) This Exhibit is incorporated by reference to the appropriate exhibit to the Current Report on Form 8-K, which was filed with the SEC on October 5, 2011.

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(17) This Exhibit is incorporated by reference to the appropriate Exhibit to the Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on April 23, 2021.

(18) This Exhibit is incorporated by reference to the appropriate Exhibit to the Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2020, which was filed with the SEC on November 13, 2020.

(18) This Exhibit is incorporated by reference to the appropriate Exhibit to the revised Definitive Proxy Statement on Form DEF 14-A, which was filed with the SEC on October 20, 2021.

(19) This Exhibit is incorporated by reference to the appropriate Exhibit on the Current Report on Form 8-K, which was filed with the SEC on January 6, 2022.

(20) Filed herewith.

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Xcel Brands, Inc.

hereby undertakes to furnish supplementally to the SEC copies of any of the omitted schedules and exhibits upon request by the SEC.

undertakes to furnish supplementally to the SEC copies of any of the omitted schedules and exhibits upon request by the SEC.

Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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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-K

Item 9A. Controls and Procedures