Debt load and cash strain at Xcel Brands (NASDAQ: XELB) in Q1 2026

Q: How did Xcel Brands (XELB) perform financially in Q1 2026?

Xcel Brands posted Q1 2026 net licensing revenue of $1.14 million , down from $1.33 million a year earlier. Net loss attributable to stockholders was $2.49 million , slightly improved from a $2.80 million loss, reflecting ongoing but modestly reduced operating losses.

Q: What is Xcel Brands’ liquidity position as of March 31, 2026?

As of March 31, 2026, Xcel Brands held $0.18 million in unrestricted cash and $1.08 million in restricted cash. Term loan debt had a carrying amount of $12.59 million , leaving the company reliant on refinancings, asset sales, and cost controls to support operations.

Q: Did Xcel Brands issue a going concern warning in this 10-Q?

Yes. Management states there is substantial doubt about Xcel Brands’ ability to meet financial obligations within twelve months. Despite restructuring, new financings, and asset sales, recurring losses and limited cash led to this going concern conclusion in the Q1 2026 report.

Q: What major financing steps did Xcel Brands take after Q1 2026?

On April 13, 2026, Xcel Brands issued 12.5% Senior Secured Notes with $2.60 million in cash proceeds and used these funds plus $1.00 million of restricted cash to repay $3.25 million of Term Loan A, reshaping near-term debt maturities while adding high-coupon secured notes.

Q: What are Xcel Brands’ key non-GAAP results for Q1 2026?

For Q1 2026, Xcel Brands reported a non-GAAP net loss of $1.39 million, or $0.24 per diluted share, and Adjusted EBITDA of negative $0.70 million. These metrics exclude amortization, stock-based compensation, equity investment losses, impairment, and income taxes.

Filing Impact

(Moderate)

Filing Sentiment

(Neutral)

Form Type

10-Q

Rhea-AI Filing Summary

Xcel Brands, Inc. reports Q1 2026 results showing continued losses and tight liquidity. Net licensing revenue was $1.14 million, down from $1.33 million a year earlier, and net loss was $2.49 million versus $2.80 million. Unrestricted cash fell to $0.18 million at March 31, 2026 against $12.59 million of term loan debt, and management states there is substantial doubt about the company’s ability to meet obligations within twelve months. Xcel refinanced part of its term loan in April 2026 with $2.60 million of new 12.5% senior secured notes and used restricted cash to repay $1.00 million of debt, and sold the Judith Ripka brand for $2.30 million plus potential earn-outs. Non-GAAP net loss was $1.39 million and Adjusted EBITDA was a loss of $0.70 million, reflecting a still-challenged but slightly improved loss profile.

Positive

None.

Negative

Going concern risk: Management states there is substantial doubt about Xcel Brands’ ability to meet its financial obligations within twelve months, despite recent financings and cost reductions.
Weak liquidity versus debt: Unrestricted cash of $0.18 million at March 31, 2026 sits against $12.59 million of term loan debt and ongoing operating losses, indicating a strained balance sheet.

Insights

Low cash, high leverage and a going concern warning make this quarter high risk.

Xcel Brands generated Q1 2026 net licensing revenue of $1.14 million and a net loss of $2.49 million. The business remains asset-light, but earnings and cash generation are insufficient to comfortably service its capital structure.

Unrestricted cash was only $0.18 million at March 31, 2026, versus term loan debt with a carrying amount of $12.59 million. Management explicitly concludes there is substantial doubt about the company’s ability to meet obligations within twelve months, despite prior cost cuts and financings.

Subsequent actions matter: the company issued $3.01 million of 12.5% Senior Secured Notes, repaid $3.25 million of Term Loan A using proceeds and restricted cash, and sold the Judith Ripka brand for $2.30 million plus contingent consideration. These steps improve near-term liquidity but add expensive debt and reduce brand assets, so overall credit risk remains elevated until future filings show sustained positive cash flow.

Key Figures

Net licensing revenue: $1.14M Net loss: $2.49M Unrestricted cash: $0.18M +5 more

8 metrics

Net licensing revenue $1.14M For the three months ended March 31, 2026

Net loss $2.49M For the three months ended March 31, 2026

Unrestricted cash $0.18M Balance at March 31, 2026

Term loan debt carrying amount $12.59M Including unpaid PIK interest at March 31, 2026

Non-GAAP net loss $1.39M Q1 2026 non-GAAP net loss attributable to stockholders

Adjusted EBITDA -$0.70M For the three months ended March 31, 2026

Judith Ripka sale proceeds $2.30M Cash consideration at April 27, 2026 closing

Senior Secured Notes proceeds $2.60M Cash received from 12.5% Senior Secured Notes issued April 13, 2026

Key Terms

going concern, Adjusted EBITDA, non-GAAP net loss, equity line facility, +2 more

6 terms

going concern financial

"management has determined that there is nonetheless substantial doubt about the Company’s ability to meet its financial obligations as they become due"

A going concern is a business that is expected to continue its operations and meet its obligations for the foreseeable future, rather than shutting down or selling off assets. This assumption matters to investors because it indicates stability and ongoing profitability, making the business a more reliable investment. Think of it as believing a restaurant will stay open and serve customers, rather than closing down suddenly.

Adjusted EBITDA financial

"We had Adjusted EBITDA of approximately $(0.70) million for the current quarter"

Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.

non-GAAP net loss financial

"We had a non-GAAP net loss of approximately $1.39 million for the current quarter"

Non-GAAP net loss is a company’s reported loss that has been adjusted by removing certain costs or one-time items that the company believes hide its core operating performance. Think of it like looking at a household budget but excluding an unusual repair or sale; it can show a clearer view of everyday results, which helps investors judge ongoing profitability, but it can also omit real expenses so it should be compared with the standard GAAP loss.

equity line facility financial

"the Company entered into a common stock purchase agreement with White Lion Capital, LLC pursuant to an equity line facility"

An equity line facility is a financing arrangement that lets a company raise money over time by selling newly issued shares to an investor or through a market program, similar to drawing on a credit line but paid with stock instead of cash. It matters to investors because it provides the company with flexible access to cash for growth or obligations, but it can dilute existing shareholders’ ownership and affect the share price as new shares are issued.

paid in-kind interest financial

"interest on the Term Loan B will be paid in-kind (“PIK”) by being capitalized and added to the principal"

Senior Secured Notes financial

"the Company issued and sold to the Purchasers 12.5% Senior Secured Notes due April 13, 2027"

Senior secured notes are loans a company sells to investors that are backed by specific assets and given first priority for repayment if the company defaults. Because they have a claim on collateral and are paid before other debts, they usually offer lower risk and correspondingly lower interest than unsecured debt; investors use them to judge how safe repayment and recovery of principal might be, like holding a mortgage instead of an unsecured credit card balance.

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05/14/2026 - 04:15 PM

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

For the transition period from ___ to ___

Commission File Number: 001-37527

XCEL BRANDS, INC.

(Exact name of registrant as specified in its charter)

Delaware		76-0307819
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

	550 Seventh Avenue, 11th Floor, New York, NY 10018
	(Address of Principal Executive Offices)

(347) 727-2474

(Issuer’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.001 par value per share	XELB	NASDAQ Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 7, 2026, there were 6,048,621 shares of common stock, $.001 par value per share, of the issuer outstanding.

Table of Contents

XCEL BRANDS, INC.

INDEX

	a
		Page

PART I - FINANCIAL INFORMATION		3

Item 1.	Financial Statements	3

	Unaudited Condensed Consolidated Balance Sheets	3

	Unaudited Condensed Consolidated Statements of Operations	4

	Unaudited Condensed Consolidated Statements of Stockholders’ Equity	5

	Unaudited Condensed Consolidated Statements of Cash Flows	6

	Notes to Unaudited Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32

Item 4.	Controls and Procedures	32

PART II - OTHER INFORMATION		33

Item 1.	Legal Proceedings	33

Item 1A.	Risk Factors	33

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33

Item 3.	Defaults Upon Senior Securities	33

Item 4.	Mine Safety Disclosures	33

Item 5.	Other Information	33

Item 6.	Exhibits	34

	Signatures	34

Table of Contents

PART I. FINANCIAL INFORMATION

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.

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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.

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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.

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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.

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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

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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.

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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.

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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

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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

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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.

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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.

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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%.

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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.

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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.

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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.

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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.

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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)

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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%

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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.

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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.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995. The statements that are not historical facts contained in this report are forward-looking statements that involve a number of known and unknown risks, uncertainties and other factors, all of which are difficult or impossible to predict and many of which are beyond our control, which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks are detailed in the Risk Factors section of our Form 10-K for the fiscal year ended December 31, 2024, as filed with the SEC on May 28, 2025. The words “believe,” “anticipate,” “expect,” “continue,” “estimate,” “appear,” “suggest,” “goal,” “potential,” “predicts,” “seek,” “will,” “confident,” “project,” “provide,” “plan,” “likely,” “future,” “ongoing,” “intend,” “may,” “should,” “would,” “could,” “guidance,” and similar expressions identify forward-looking statements.

Overview

Xcel Brands, Inc. (“Xcel,” the “Company,” “we,” “us,” or “our”) 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. Xcel was founded in 2011 with a vision to reimagine shopping, entertainment, and social media as social commerce.

Xcel owns the Halston and C Wonder brands, as well as the co-branded collaboration brands Tower Hill by Christie Brinkley, Trust. Respect. Love by Cesar Millan, GemmaMade by Gemma Stafford, and Off/Duty by Coco Rocha brand, and holds the television rights through a long-term license agreement with Mesa Mia by Jenny Martinez. Xcel also owns and manages the Longaberger by Shannon Doherty brand through its controlling interest in Longaberger Licensing, LLC.

Also, as of March 31, 2026, our brand portfolio also included the Judith Ripka brand, which was wholly owned by Xcel; this brand was sold to a third party as of April 27, 2026. Additionally, through October 1, 2025, we held a noncontrolling ownership interest in the Isaac Mizrahi brand.

Xcel is pioneering a modern consumer products sales strategy which includes the promotion and sale of products under its brands through interactive television, digital live-stream shopping, social commerce, brick-and-mortar retailers, and e-commerce channels to be everywhere its customers shop. The Company’s previously owned and current brands have generated more than $5 billion in retail sales via livestreaming in interactive television and digital channels alone and have over 20,000 hours of content production time in live-stream and social commerce. The Company’s brand portfolio reaches more than 46 million social media followers with broadcast reaching 200 million households.

Xcel currently operates in a working-capital light model, with our licensees and/or retail partners responsible for the procurement and sale of inventory. As such, our revenues primarily consist of royalty revenues, and we do not have risk of carrying aged inventory. As a result, fluctuations in product costs and tariffs do not have a direct impact on us, but do impact us indirectly as our royalty revenues are typically based on the net sales and success of our licensees.

Our objective is to build a diversified portfolio of lifestyle consumer products brands through organic growth and the strategic acquisition of new brands. To grow our brands, we are focused on the following primary strategies:

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licensing of our brands for sale through interactive television (e.g., QVC, HSN, etc.);

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licensing of our brands to retailers that sell to the end consumer;

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licensing our brands to manufacturers and retailers for promotion and distribution through e-commerce, social commerce, live streaming, and traditional brick-and-mortar retail channels; and

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acquiring additional consumer brands and integrating them into our operating platform, and leveraging our operating infrastructure and distribution relationships.

We believe that Xcel offers a unique value proposition to our retail and direct-to-consumer customers and our licensees for the following reasons:

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our management team, including our officers’ and directors’ experience in, and relationships within the industry;

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our deep knowledge, expertise, and proprietary technology in live streaming and social commerce;

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our design, sales, marketing, and technology platform that enables us to design trend-right product; and

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our significant media and internet presence.

Summary of Operating Results

Three months ended March 31, 2026 (the “current quarter”) compared with the three months ended March 31, 2025 (the “prior year quarter”)

Revenues

Current quarter net revenue decreased by $0.19 million to $1.14 million from $1.33 million for the prior year quarter. This decrease was primarily driven by Qurate’s transition to a new apparel supplier for the C Wonder brand in December 2025, which negatively impacted Qurate sales for this brand and our associated licensing revenues during the current quarter.

Direct Operating Costs and Expenses

Direct operating costs and expenses decreased approximately $0.21 million, from $2.28 million in the prior year quarter to $2.07 million in the current quarter. This decrease was primarily attributable to cost reduction actions taken by management in 2025, which reduced the Company’s payroll and benefits costs. Other selling, general, and administrative expenses for the current quarter were essentially flat compared to the prior year quarter.

Other Operating Costs and Expenses (Income)

Depreciation and amortization expense was reasonably consistent with the prior year, approximating $0.89 million in the current quarter and $0.90 million in the prior year quarter.

During the current quarter, we recognized a $0.06 million impairment charge to write down the intangible assets related to the Judith Ripka brand to their estimated fair value less cost to sell. These assets were subsequently sold in April 2026.

For the three months ended March 31, 2025, we recognized a $0.34 million loss related to our 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. As all remaining IM Topco equity interests were transferred to WHP on October 1, 2025, there were no earnings or losses from equity investments for the three months ended March 31, 2026.

Interest and Finance Expense

Interest and finance expense was approximately $0.59 million for the current quarter, compared with approximately $0.56 million for the prior year quarter. This increase was primarily attributable to the higher principal balance on outstanding

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term loan debt in the current quarter as compared to the prior year quarter, partially offset by lower interest rates on outstanding term loan debt in the current quarter as compared to the prior year quarter.

Income Taxes

The estimated annual effective income tax rate for the current quarter and the prior year quarter was approximately -0.5% and -1.8% respectively, resulting in an income tax provision (benefit) of $0.01 million and $0.05 million, respectively. 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.

Net Loss Attributable to Xcel Brands, Inc. Stockholders

We had a net loss of $2.49 million for the current quarter, compared with a net loss of $2.80 million for the prior year quarter, due to the combination of the factors outlined above.

Non-GAAP Net Income (Loss), Non-GAAP Diluted EPS, and Adjusted EBITDA

We had a non-GAAP net loss of approximately $1.39 million, or $(0.24) per diluted share (“non-GAAP diluted EPS”), for the current quarter and a non-GAAP net loss of $1.37 million, or $(0.58) per diluted share, for the prior year quarter. Non-GAAP net income (loss) is a non-GAAP unaudited term, which we define as net income (loss) attributable to Xcel Brands, Inc. stockholders, exclusive of amortization of trademarks, income (loss) from equity investments, stock-based compensation and cost of licensee warrants, loss on early extinguishment of debt (if any), gains on sales of assets and investments (if any), asset impairment charges (if any), and income taxes (if any). Non-GAAP net income (loss) and non-GAAP diluted EPS measures do not include the tax effect of the aforementioned adjusting items, due to the nature of these items and the Company’s tax strategy.

We had Adjusted EBITDA of approximately $(0.70) million for the current quarter, compared with approximately $(0.70) million for the prior year quarter. Adjusted EBITDA is a non-GAAP unaudited measure, which we define as net income (loss) attributable to Xcel Brands, Inc. stockholders before interest and finance expense (including loss on extinguishment of debt, if any), accretion of lease liability for exited leases, income taxes, other state and local franchise taxes, depreciation and amortization, income (loss) from equity investments, asset impairment charges (if any), stock-based compensation and cost of licensee warrants, gains on sales of assets and investments (if any), and costs associated with restructuring of operations.

Management uses non-GAAP net income (loss), non-GAAP diluted EPS, and Adjusted EBITDA as measures of operating performance to assist in comparing performance from period to period on a consistent basis and to identify business trends relating to the Company’s results of operations. Management believes non-GAAP net income (loss), non-GAAP diluted EPS, and Adjusted EBITDA are also useful because these measures adjust for certain costs and other events that management believes are not representative of our core business operating results, and thus, these non-GAAP measures provide supplemental information to assist investors in evaluating the Company’s financial results.

Non-GAAP net income (loss), non-GAAP diluted EPS, and Adjusted EBITDA should not be considered in isolation or as alternatives to net income, earnings per share, or any other measure of financial performance calculated and presented in accordance with GAAP. Given that non-GAAP net income (loss), non-GAAP diluted EPS, and Adjusted EBITDA are financial measures not deemed to be in accordance with GAAP and are susceptible to varying calculations, our non-GAAP net income (loss), non-GAAP diluted EPS, and Adjusted EBITDA may not be comparable to similarly titled measures of other companies, including companies in our industry, because other companies may calculate non-GAAP net income (loss), non-GAAP diluted EPS, and Adjusted EBITDA in a different manner than we calculate these measures.

In evaluating non-GAAP net income (loss), non-GAAP diluted EPS, and Adjusted EBITDA, you should be aware that in the future we may or may not incur expenses similar to some of the adjustments in this report. Our presentation of non-GAAP net income (loss), non-GAAP diluted EPS, and Adjusted EBITDA does not imply that our future results will be unaffected by these expenses or any other unusual or non-recurring items. When evaluating our performance, you should

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consider non-GAAP net income (loss), non-GAAP diluted EPS, and Adjusted EBITDA alongside other financial performance measures, including our net income and other GAAP results, and not rely on any single financial measure.

The following table is a reconciliation of net loss attributable to Xcel Brands, Inc. stockholders (our most directly comparable financial measure presented in accordance with GAAP) to non-GAAP net loss:


	Three Months Ended
	March 31,
($ in thousands)	2026		2025
Net loss attributable to Xcel Brands, Inc. stockholders	$	(2,489)	$	(2,797)
Amortization of trademarks		876		875
Loss from equity investments		—		336
Stock-based compensation and cost of licensee warrants		150		166
Asset impairment charges		61		—
Income tax provision (benefit)		12		50
Non-GAAP net loss	$	(1,390)	$	(1,370)

The following table is a reconciliation of diluted loss per share (our most directly comparable financial measure presented in accordance with GAAP) to non-GAAP diluted EPS:


	Three Months Ended
	March 31,
	2026		2025
Diluted loss per share	$	(0.42)	$	(1.18)
Amortization of trademarks		0.15		0.37
Loss from equity investments		—		0.14
Stock-based compensation and cost of licensee warrants		0.02		0.07
Asset impairment charges		0.01		0.00
Income tax provision (benefit)		0.00		0.02
Non-GAAP diluted EPS	$	(0.24)	$	(0.58)
Non-GAAP weighted average diluted shares		5,903,599		2,373,583


	Three Months Ended
	March 31,
($ in thousands)	2026		2025
Net loss attributable to Xcel Brands, Inc. stockholders	$	(2,489)	$	(2,797)
Interest and finance expense		593		560
Accretion of lease liability for exited lease		40		61
Income tax provision (benefit)		12		50
State and local franchise taxes		36		8
Depreciation and amortization		893		900
Loss from equity investments		—		336
Asset impairment charges		61		—
Stock-based compensation and cost of licensee warrants		150		166
Costs associated with restructuring of operations		—		17
Adjusted EBITDA	$	(704)	$	(699)

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Liquidity and Capital Resources

General

As of March 31, 2026 and December 31, 2025, our unrestricted cash and cash equivalents were approximately $0.18 million and $1.15 million, respectively.

Subsequently, in April 2026, we sold the intangible assets of the Judith Ripka brand in exchange for $2.30 million of cash at closing, plus up to an additional $0.75 million of potential future contingent consideration.

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. 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 and $1.00 million of cash deposited in a bank account to satisfy a liquidity covenant in the Company’s term loan debt agreement.

Our principal capital requirements have generally been to fund working capital needs and acquire new brands. Our current “licensing plus” operating model is a working capital light business model, and generally does not require material capital expenditures. As of March 31, 2026, we have no significant commitments for future capital expenditures.

Working Capital

Our working capital (which we calculate in a non-GAAP manner as current assets less current liabilities, excluding the current portions of lease obligations, deferred revenue, and any contingent obligations payable in shares or via other non-cash means) surplus/(deficit) was approximately $(0.17) million and $(0.80) million as of March 31, 2026 and December 31, 2025, respectively. These working capital deficit amounts notably included the current portion of Term Loan A debt ($2.75 million as of March 31, 2026 and $3.25 million as of December 31, 2025), which was subsequently refinanced in April 2026 (see below for additional details related to this refinancing transaction).

Going Concern

The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As of March 31, 2026 we have incurred recurring losses, a history of cash flows used in operating activities, and an accumulated deficit. While we have undertaken significant restructuring and cost reduction efforts, obtained additional funding through a combination of equity issuances and debt financing, and continue to explore strategic financing alternatives and operational efficiencies to improve liquidity, 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.

In April 2026, we refinanced a portion of our term loan debt, and also sold intangible assets related to one of our brands in exchange for cash. While these transactions have significantly improved our liquidity position, the proceeds received may still be insufficient to fully address our liquidity needs.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management intends to continue exploring strategic financing alternatives and operational efficiencies to improve liquidity. The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Commentary on the components of our cash flows for the current quarter as compared with the prior year quarter is set forth below.

Operating Activities

Net cash used in operating activities was approximately $0.88 million in the current quarter, compared with approximately $1.43 million in the prior year quarter.

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The current quarter net cash used in operating activities was primarily attributable to the combination of the net loss of $(2.49) million plus non-cash items of approximately $1.51 million and the net change in operating assets and liabilities of approximately $0.10 million. Non-cash items were primarily comprised of $0.89 million of depreciation and amortization expense, and $0.45 million of aggregate non-cash interest expenses. The net change in operating assets and liabilities was primarily driven by approximately $0.85 million of net increases in accounts payable, accrued expenses, accrued income taxes payable, and other current liabilities, and a decrease in accounts receivable of approximately $0.30 million, partially offset by an increase in prepaid expenses and other current and non-current assets of $(0.60) million, a decrease in deferred revenue of $(0.23) million and a decrease in lease-related assets and liabilities of $(0.21) million.

The prior year quarter net cash used in operating activities was primarily attributable to the combination of the net loss of $(2.80) million plus non-cash items of approximately $1.45 million and the net change in operating assets and liabilities of approximately $(0.08) million. Non-cash items were comprised of approximately $0.90 million of depreciation and amortization expense, $0.34 million of losses related to our equity investments, $0.11 million of stock-based compensation and cost of licensee warrants, and $0.10 million of amortization of deferred finance costs. The net change in operating assets and liabilities was primarily comprised of a decrease in deferred revenue of $(0.21) million and a decrease in lease-related assets and liabilities of $(0.08) million, partially offset by a decrease in accounts receivable of approximately $0.16 million.

Investing Activities

There was no net cash used in investing activities in the current quarter. Net cash used in investing activities in the prior year quarter was comprised of purchases of equipment totaling approximately $0.01 million.

Financing Activities

Net cash used in financing activities in the current quarter was primarily attributable to (i) $0.50 million of cash used to make a prepayment on the Term Loan A in advance of the April 2026 refinancing of our term loan debt (as described further below) and (ii) $0.21 million of fees and expenses (consisting of legal and accounting fees) associated with our equity line facility (as described further below).

Net cash provided by financing activities in the prior year quarter was primarily attributable to $2.05 million of proceeds received from the delayed draw portion of the Company’s December 2024 term loan agreement.

Equity Line Facility

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 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; on May 6, 2026, the Company issued 16,094 shares of common stock to White Lion in full satisfaction of this condition. Additionally, pursuant to the terms of an advisory agreement between the Company and Maxim Group LLC,

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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.

Debt Transactions and Refinancings

On April 21, 2025, the Company and its lenders and FEAC Agent, LLC entered into an amendment of the December 12, 2024 loan and security agreement, which provided for $1.5 million repayment of the $3.95 million Term Loan A and an additional Term Loan B in the amount of $5.12 million. The term loans outstanding after giving effect to the April 21, 2025 amendment and the application of the proceeds of the additional Term Loan B are as follows: (1) Term Loan A in the amount of $4.50 million, and (2) Term Loan B in the amount of $9.12 million. The proceeds from the additional Term Loan B were used to repay a portion of Term Loan A, as well as to pay fees, costs, and expenses incurred in connection with entering into the April 21, 2025 amendment, and the balance will be used for working capital purposes.

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 this refinancing transaction, IPX’s participation in Term Loan B was repaid and IPX purchased a $0.50 million undivided, last-out, subordinated participation interest in Term Loan A.

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 the (i) the agents and lenders (as defined in the loan and security agreement) consented to the transfer and the release of the termination of the pledge agreement and the release of the agents’ liens on the equity interests of IM Topco, LLC; (ii) the liquid asset covenant requirement was reduced to $1.00 million; 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.

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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.

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 $0.50 million 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 $0.50 million 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 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.

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

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 $0.50 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

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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.

Other Factors

We continue to seek to expand and diversify the types of licensed products being produced under our brands. We plan to continue to diversify the distribution channels within which licensed products are sold, in an effort to reduce dependence on any particular retailer, consumer, or market sector within each of our brands. The Halston brand, C Wonder brand, and TowerHill by Christie Brinkley brand, which together currently represent a majority of our revenues, have a core business in fashion apparel and accessories, as will the Off/Duty by Coco Rocha brand when it launches later this year. Our other brands – including the Longaberger by Shannon Doherty brand, which focuses on home good products; GemmaMade by Gemma Stafford and Mesa Mia by Jenny Martinez, which focus on cooking and baking related products; and Trust.Respect.Love by Cesar Millan brand, which focuses on pet-related products – help to diversify our industry focus while at the same time complement our business operations and relationships.

While the 2022 sale of a majority interest in the Isaac Mizrahi brand and the 2024 divestiture of the LOGO by Lori Goldstein brand resulted in significant decreases in our licensing revenues, we have taken and continue to take actions to replace those revenues with new strategic business initiatives, as we concentrate our resources on growing our brands, launching new brands, and entering into new business partnerships. We continue to seek new opportunities, including expansion through interactive television, live streaming, and additional domestic and international licensing arrangements, and acquiring and collaborating with additional brands. The successful launch of the TowerHill by Christie Brinkley brand in 2024 is an example of this. We recently launched two new cobranded collaborations in April 2026, and plan to launch two more before the end of the year.

Additionally, during 2023 and 2024, we restructured our business by shifting from a wholesale/licensing hybrid model to a “licensing plus” business model, divesting certain brands, and undertaking various cost-cutting measures to more efficiently operate our business and reduce and better manage our exposure to operating risks. During 2025, we continued to implement additional measures to further optimize our cost structure. As a result, we have reduced our direct operating expenses to an expected run rate of less than $10 million per annum, which represents approximately $21 million of cost savings on an annualized basis compared to our cost structure in 2022.

Nonetheless, we continue to face a number of headwinds in the current macroeconomic environment. Poor economic and market conditions, including the cumulative impacts of inflation and rising consumer debt levels, along with the impact of tariffs on goods imported into the U.S., may negatively impact consumer sentiment, decreasing the demand for apparel, footwear, accessories, fine jewelry, home goods, and other consumer products, which would adversely affect our operating income and results of operations. If we are unable to take effective measures in a timely manner to mitigate the impact of these conditions and/or a potential recession, our business, financial condition, and results of operations could be adversely affected.

Our long-term success, however, will still remain largely dependent on our ability to build and maintain our brands’ awareness and attract customers, and contract with and retain key licensees and business partners, as well as our and our licensees’ ability to accurately predict upcoming fashion and design trends within their respective customer bases and fulfill the product requirements of the particular retail channels within the global marketplace. Unanticipated changes in consumer fashion preferences and purchasing patterns, slowdowns in the U.S. economy, and other factors noted in Item 1A of our most recent Annual Report on Form 10-K could adversely affect our licensees’ ability to meet and/or exceed their contractual commitments to us and thereby adversely affect our future operating results.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, results of operations, or liquidity.

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Critical Accounting Policies and Estimates

The preparation of our unaudited condensed consolidated financial statements in conformity with GAAP requires management to exercise judgment. We exercise considerable judgment with respect to establishing sound accounting policies and in making estimates and assumptions that affect the reported amounts of our assets and liabilities, our recognition of revenues and expenses, and disclosure of commitments and contingencies at the date of the financial statements. We evaluate our estimates and judgments on an on-going basis. We base our estimates and judgments on a variety of factors, including our historical experience, knowledge of our business and industry, and current and expected economic conditions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We periodically re-evaluate our estimates and assumptions with respect to these judgments and modify our approach when circumstances indicate that modifications are necessary. While we believe that the factors we evaluate provide us with a meaningful basis for establishing and applying sound accounting policies, we cannot guarantee that the results will always be accurate. Because the determination of these estimates requires the exercise of judgment, actual results could differ from such estimates.

Please refer to our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on April 15, 2026, for a discussion of our critical accounting policies and estimates. During the three months ended March 31, 2026, there were no material changes to our critical accounting policies or estimates.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES

A. EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES:

Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of March 31, 2026, the end of the period covered by this report.

Based on, and as of the date of such evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of March 31, 2026 such that the information required to be disclosed in our SEC reports is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.

B. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING:

There have not been any changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

ITEM 1A. RISK FACTORS

We operate in a highly competitive industry that involves numerous known and unknown risks and uncertainties that could impact our operations. The risks described in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2025 are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our financial condition and/or operating results.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides information with respect to stock purchased and retired by the Company during the three months ended March 31, 2026.


				Total Number of Shares	Maximum Number (or
				of Common Stock	Approximate Dollar
	Total Number of			Purchased as	Value) of Common
	Shares of	Average		Part of a Publicly	Stock That May Yet
	Common Stock	Price per		Announced	Be Purchased Under
Period	Purchased	Share		Plan or Program	the Plan or Program
January 1, 2025 to January 30, 2025 (i)	13,866	$	1.10	—	—
February 1, 2025 to February 28, 2025 (i)	20,895		1.46	—	—
March 1, 2025 to March 31, 2025 (i)	—		—	—	—
Total	34,761	$	1.32	—	—

(i) The shares were exchanged from executives in connection with the income tax withholding obligations on behalf of such executives from the receipt of stock awards. The 2011 Plan and 2021 Plan allow for award holders to surrender vested shares to cover withholding tax liabilities.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

Table of Contents

ITEM 6. EXHIBITS

The following exhibits are filed herewith:

31.1 Rule 13a-14(a)/15d-14(a) Certification (CEO)

31.2 Rule 13a-14(a)/15d-14(a) Certification (CFO)

32.1 Section 1350 Certification (CEO) *

32.2 Section 1350 Certification (CFO) *

101.INS Inline XBRL Instance Document

101.SCH Inline XBRL Taxonomy Extension Schema Document

101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF Inline XBRL Taxonomy Extension Definitions Linkbase Document

101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document

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

* Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: May 14, 2026	By:	/s/ Robert W. D’Loren
		Name: Robert W. D’Loren
		Title: Chairman and Chief Executive Officer

	By:	/s/ James F. Haran
		Name: James F. Haran
		Title: Chief Financial Officer and Vice President

Source: View Original Filing on SEC EDGAR

FAQ

How did Xcel Brands (XELB) perform financially in Q1 2026?

Xcel Brands posted Q1 2026 net licensing revenue of $1.14 million, down from $1.33 million a year earlier. Net loss attributable to stockholders was $2.49 million, slightly improved from a $2.80 million loss, reflecting ongoing but modestly reduced operating losses.

What is Xcel Brands’ liquidity position as of March 31, 2026?

As of March 31, 2026, Xcel Brands held $0.18 million in unrestricted cash and $1.08 million in restricted cash. Term loan debt had a carrying amount of $12.59 million, leaving the company reliant on refinancings, asset sales, and cost controls to support operations.

Did Xcel Brands issue a going concern warning in this 10-Q?

Yes. Management states there is substantial doubt about Xcel Brands’ ability to meet financial obligations within twelve months. Despite restructuring, new financings, and asset sales, recurring losses and limited cash led to this going concern conclusion in the Q1 2026 report.

What major financing steps did Xcel Brands take after Q1 2026?

On April 13, 2026, Xcel Brands issued 12.5% Senior Secured Notes with $2.60 million in cash proceeds and used these funds plus $1.00 million of restricted cash to repay $3.25 million of Term Loan A, reshaping near-term debt maturities while adding high-coupon secured notes.

How did the Judith Ripka brand sale affect Xcel Brands?

On April 27, 2026, Xcel Brands closed the sale of substantially all assets of the Judith Ripka brand for $2.30 million in cash plus potential contingent earn-outs. The brand’s intangibles had been classified as assets held for sale and partially impaired in Q1 2026.

What are Xcel Brands’ key non-GAAP results for Q1 2026?

For Q1 2026, Xcel Brands reported a non-GAAP net loss of $1.39 million, or $0.24 per diluted share, and Adjusted EBITDA of negative $0.70 million. These metrics exclude amortization, stock-based compensation, equity investment losses, impairment, and income taxes.

Debt load and cash strain at Xcel Brands (NASDAQ: XELB) in Q1 2026

Rhea-AI Filing Summary

Positive

Negative

Insights

Credit & restructuring analyst negative

Key Figures

Key Terms

FAQ

How did Xcel Brands (XELB) perform financially in Q1 2026?

What is Xcel Brands’ liquidity position as of March 31, 2026?

Did Xcel Brands issue a going concern warning in this 10-Q?

What major financing steps did Xcel Brands take after Q1 2026?

How did the Judith Ripka brand sale affect Xcel Brands?

What are Xcel Brands’ key non-GAAP results for Q1 2026?