XCel Brands, Inc.

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, 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:

Also, through April 27, 2026, the Company’s brand portfolio included the Judith Ripka brand, which was wholly owned by Xcel; this brand was sold to a third party in April 2026 (see Note 2 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 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, 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, the Company refinanced a portion of its term loan debt, and also sold intangible assets related to one of its brands in exchange for cash. While these transactions have significantly improved the Company’s liquidity position, the proceeds received may still be insufficient to fully address the Company’s liquidity needs

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 June 30, 2026 consisted of $0.62 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 asingle reportable segment, which generates revenue from the design and licensing of branded apparel 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.

2. Divestitures, 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, andthe 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 June 30, 2025, the Company recognized a $0.18 million loss related to its investment in IM Topco, comprised of (i) a $0.03 million equity method loss, and (ii) other related costs and adjustments totaling $0.15 million.

For the six months ended June 30, 2025, the Company recognized a $0.52 million loss related to its investment in IM Topco, comprised of (i) a $0.21 million equity method loss, (ii) a $(0.24) million adjustment to the carrying value of a contingent contractual obligation related to IM Topco, and (iii) other related costs and adjustments totaling $0.55 million.

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 (which expire October 31, 2027) for a period offive years; in such event, the Buyer shall be obligated to make quarterly payments to the Company over athree-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 $0.44 million, of which $0.04 million was paid prior to closing, $0.30 million was paid at closing, and $0.10 million will be paid in future periods.

For the three and six months ended June 30, 2026, the Company recognized net charges related to the sale of the Judith Ripka brand (consisting of impairment charges to write-down the carrying value of the Judith Ripka trademarks prior to their sale, and costs of the sale) of $0.04 million and $0.10 million, respectively.

Upon the sale of the Judith Ripka brand, the Company recognized $0.64 million of earn-out consideration receivable from the Buyer, based on the Company’s estimate of probable future payments to be received under the terms of the asset purchase agreement; as of June 30, 2026, $0.14 million of this amount was recorded within prepaid expenses and other current assets in the condensed consolidated balance sheet, and $0.50 million was recorded within other assets (non-current) in the condensed consolidated balance sheet. The Company also recognized a liability of $0.10 million related to remaining commission payments due, which is included within accrued expenses and other current liabilities in the condensed consolidated balance sheet as of June 30, 2026.

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 and six months ending June 30, 2026 was $0 for each period. The amount of LL's losses attributed to Hilco Global's non-controlling interest for the three and six months ending June 30, 2025 was approximately $3,000 for each period.

3. Trademarks and Other Intangibles

Trademarks and other intangibles, net consist of the following:

Amortization expense for intangible assets was approximately $0.80 million for the three-month period ended June 30, 2026 (the "current quarter") and approximately $0.88 million for the three-month period ended June 30, 2025 (the "prior year quarter").

Amortization expense for intangible assets was approximately $1.68 million for the six-month period ended June 30, 2026 (the "current six months") and approximately $1.77 million for the six-month period ended June 30, 2025 (the "prior year six months").

As of March 31, 2026, the intangible assets related to the Judith Ripka brand – which 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 – were reclassified to “assets held for sale,” and were subsequently sold in April 2026 (see Note 2 for additional details). 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 six months of approximately $0.06 million.

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 atwenty-five-year term (consisting of an initial five-year period, followed by atwenty-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 thetwenty-five-year term, which right may be accelerated under certain conditions associated with an uncured material breach in accordance with the terms of the Halston Master License. The Licensor granted G-III a security interest in the Halston trademarks to secure the Licensor’s obligations under the Halston Master License, including to honor the obligations under the purchase option.

As a result of the upfront cash payment and guaranteed minimum royalties under this agreement, the Company has recognized$2.22 million and$3.09 million of deferred revenue contract liabilities on its condensed consolidated balance sheets as of June 30, 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 June 30, 2026, approximately$0.89 million of the contract liability balance was classified as a current liability and approximately$1.33 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 2.50 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 57% and 48% of the Company’s total net revenue for the current quarter and prior year quarter, respectively. Net licensing revenue recognized from the Halston Master License was $1.28 million for both the current six months and prior year six months, representing approximately 56% and 48% of the Company’s total net revenue for the current six months and prior year six months, 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 $0.30 million and $0.24 million for the current quarter and prior year quarter, respectively, representing approximately 27% and 18% of the Company’s total net revenue for the current quarter and prior year quarter, respectively.

Net licensing revenue from the Qurate Agreements totaled $0.49 million and $0.58 million for the current six months and prior year six months, respectively, representing approximately 21% and 22% of the Company’s total net revenue for the current six months and prior year six months, respectively.

As of June 30, 2026 and December 31, 2025, the Company had receivables from Qurate of $0.30 million and $0.21 million, respectively, representing approximately 48% and 22% 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 June 30, 2026, the Company’s real estate leases have a weighted-average remaining lease term of approximately 3.87 years, and the lease liabilities are measured using a weighted-average discount rate of 8.33%.

Total lease expense (net of sublease income) included in selling, general and administrative expenses on the Company’s unaudited condensed consolidated statements of operations wasapproximately$0.2 million for both the current quarter and prior year quarter, and approximately$0.4 million for both the current six months and prior year six months.

Cash paid for amounts included in the measurement of operating lease liabilities was approximately$0.5 million both for the current quarter and for the prior year quarter,$1.0 million for the current six months, and$0.9 million for the prior year six months.

As of June 30, 2026, the maturities of future lease obligations were as follows:

6. Debt

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

Term Loan Debt

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.

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.

On April 21, 2025, the Company and certain of its subsidiaries and its lenders and FEAC entered into an amendment of the December 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.

In connection with the April 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 in December 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 entered into a further amendment of the December 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 $1.0 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.

On November 18, 2025, the Company and certain of its subsidiaries and its lenders and FEAC entered into the fourth amendment of the December 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 $0.50 million was changed to be due on December 31, 2026 which shall be held by IPX Capital, LLC (“IPX”), 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. 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 FEAC (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, 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 $1.35, 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’s role to include certain limitations. In connection with the seventh amendment, FEAC’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 $0.325 million amendment fee as specified in the fourth amendment.

With respect to the April 13, 2026 changes in terms related to the $0.50 million of Term Loan A debt held by IPX, and considering that IPX was a common lender for both a portion of the Term Loan A debt and a portion of the new senior secured notes (as described below), the Company evaluated and determined that the changes related to the debt held by

IPX represented an extinguishment under ASC 470-50. Accordingly, the Company recognized a $0.01 million loss on early extinguishment of debt for the three and six months ended June 30, 2026, due to the write-off of unamortized deferred finance costs related to such debt. The Company also evaluated the aforementioned conversion feature that was added to the Term Loan A debt held by IPX, and determined that it is not required to be separated and accounted for as a derivative under ASC 815; the Term Loan A debt is being accounted for as a single liability under ASC 470-20.

Also on April 13, 2026, the Company repaid a total of $3.25 million of Term Loan A debt – of which, $2.25 million was repaid using the net proceeds received from the issuance of the senior secured notes (as described below) and $1.00 million was paid with the Company’s restricted cash. This resulted in the repayment of all remaining principal owed to FEAC under the term loans; in connection with this repayment, the Company paid $0.14 million of fees to FEAC, which were recorded as loss on early extinguishment of debt for the three and six months ended June 30, 2026.

Principal

As of June 30, 2026, the remaining principal balance of Term Loan A was $0.50 million and is due on September 20, 2027.

As of June 30, 2026, the remaining principal balance of Term Loan B was $10.35 million (which includes $9.12 million of original proceeds borrowed plus $1.23 million of accumulated paid in-kind (“PIK”) interest, as discussed below) and is due at the maturity date of December 12, 2028.

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 and current six months, the Company recognized PIK interest approximately $0.26 million and $0.52 million, respectively. For the prior year quarter and prior year six months, the Company recognized approximately $0.19 million of PIK interest.

For the current quarter and current six months, the Company incurred interest expense (including interest paid in cash, PIK, and the amortization of deferred finance costs) related to term loan debt of approximately $0.42 million and $0.91 million, respectively.

For the prior year quarter and prior year six months, the Company incurred total interest expense (including interest paid in cash, PIK, and the amortization of deferred finance costs) related to term loan debt of approximately$0.46 million and$0.93 million, respectively.

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 June 30, 2026, the amount of accrued exit fees with respect to Term Loan A was $0.13 million, while the amount of accrued exit fees with respect to Term Loan B was $0.32 million; both amounts are presented within Other long-term liabilities on the condensed consolidated balance sheet as of June 30, 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.

Senior Secured Notes

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 net cash proceeds received by the Company after the discount were $2.60 million. 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 in the case of SFT and Quick or $1.435 per share in the case of IPX, 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 the case of SFT and Quick or $1.435 per share in the case of IPX. 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 19.99% 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.

Under the conversion feature described above, because the post-May 17, 2026 conversion price varies with the market price of the Company’s common stock, this feature is not considered indexed to the Company’s own stock under ASC 815-40 and therefore represents an embedded derivative. As the feature is exercisable only upon an event of default, and management considers the likelihood of such an occurrence to be remote, the Company concluded that the fair value of the embedded derivative was not material and has therefore not recorded a separate liability. The Company will reassess this conclusion each reporting period.

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

As part of the transactions described above, IPX (a related party) 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.

Principal

The Company is required to make $0.10 million monthly payments on the Secured Notes commencing October 13, 2026, with the balance due at maturity. In addition, the terms of the Secured Notes require mandatory prepayments in certain specified situations, including the sale of any brand or license, or the sale of any debt or equity securities by the Company.

The Company made additional principal payments to the lenders during the current quarter and current six months totaling $0.45 million. The remaining principal balance due under the Secured Notes at June 30, 2026 was $2.55 million.

Interest

Interest is payable monthly, on the thirteenth day of each calendar month, beginning on May 13, 2026 and on the maturity date, at a rate of 12.5% per annum.

For the current quarter and current six months, the Company incurred interest expense (including interest paid in cash, and the amortization of deferred finance costs and OID) related to the Secured Notes of approximately $0.25 million.

Deferred Finance Costs and Other Reductions to Carrying Value of Debt

In connection with the issuance of the Secured Notes in April 2026, the Company incurred various fees and costs totaling $0.35 million, which were deferred on the Company’s balance sheet as a reduction of the carrying value of the related debt. Also in connection with the issuance of the Secured Notes in April 2026, the Company issued shares of common stock as described above. In accordance with applicable GAAP, the Company allocated the value of the total proceeds between the debt and the shares of common stock, based on the relative fair values of each; as a result, the Company recognized a $0.12 million increase to stockholders’ equity as additional paid-in capital for the allocated fair value of the shares, and an offsetting decrease to the net carrying value of the debt. These reductions to the carrying value of the Secured Notes (plus the impact of the original issue discount of $0.41 million) totaling $0.88 million are being amortized to interest expense over the term of the debt using the effective interest method.

7. Stockholders’ Equity

Equity Line Facility

On January 21, 2026, the Company entered into a common stock purchase agreement with White Lion Capital, LLC (“White Lion”), pursuant to which White Lion has committed to purchase up to $15.0 million of the Company’s common stock. Under the terms and conditions of this agreement, the Company has the right, but not the obligation, to sell to White Lion, and White Lion is obligated to purchase, up to $15.0 million of the Company’s common stock. The actual amount and timing of any sales of Common Stock will be determined by the Company at its discretion.

The aggregate number of shares that the Company can sell White Lion under this agreement is limited to and may not exceed 1,178,173 shares (subject to adjustment for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split, or other similar transaction), which is equal to 19.99% of the total shares of the Company’s common 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; accordingly, the Company issued 16,094 shares to White Lion on May 6, 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.

For the three and six months ended June 30, 2026, the Company issued an aggregate of 348,000 shares under the equity line facility arrangement and received aggregate net proceeds of approximately $0.67 million.

Also, during the current six months, 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.

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,10,000 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 previously granted under the 2011 Plan, althoughno 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 $0.17 million and $0.18 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$0.07 million related to directors and consultants. Of the prior year quarter expense amount, approximately $0.15 million related to employees and approximately $0.03 million related to directors and consultants.

Total expense recognized for all forms of stock-based compensation was approximately $0.31 million and $0.33 million for the current six months and prior year six months, respectively. Of the current six months expense amount, approximately$0.20 million related to employees and approximately$0.11 million related to directors and consultants. Of the prior year six months expense amount, approximately $0.27 million related to employees and approximately $0.06 million related to directors and consultants.

Stock Options

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

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, andno compensation was paid to the executives in exchange for such cancellation.

On April 20, 2026, the Company granted options to purchase an aggregate of 14,000 shares of common stock to non-management directors. The exercise price of the options is$2.24 per share;50% of the options will vest on April 1, 2027 and the remaining 50% will vest on April 1, 2028.

Compensation expense related to stock options for the current quarter and the prior year quarter was approximately $0.01 million and $0.04 million, respectively. Compensation expense related to stock options for the current six months and the prior year six months was approximately $0.03 million and $0.06 million, respectively. Total unrecognized compensation expense related to unvested stock options at June 30, 2026 was approximately $0.18 million and is expected to be recognized over a weighted average period of approximately 3.74 years.

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

Of the non-vested stock options outstanding at June 30, 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 14,000 options is subject to service-based criteria.

Stock Awards

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

On April 20 2026, the Company issued an aggregate of 5,000 shares of common stock to non-management directors, of which 50% vests on each of April 1, 2026 and April 1, 2027.

On April 24, 2026, the Company issued 62,112 shares of common stock to a consultant, which vested immediately.

In accordance with the amended employment agreement with Mr. D’Loren, the Company is paying 40% of 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 29,905 and 62,640 shares of common stock (net of shares exchanged for withholding taxes)to Mr. D’Loren for the current quarter and current six months, respectively, all of which vested immediately.

Compensation expense related to stock awards was approximately $0.16 million for the current quarter and approximately $0.14 million for the prior year quarter. Compensation expense related to stock awards was approximately $0.28 million for the current six months and approximately $0.27 million for the prior year six months. Total unrecognized compensation expense related to unvested restricted stock grants at June 30, 2026 was approximately $0.01 million and is expected to be recognized over a weighted average period of approximately 1.45 years.

Restricted Stock Units

There wereno restricted stock units outstanding as of June 30, 2026 and December 31, 2025, andno restricted stock units have been issued since the inception of the 2021 Plan.

Shares Available Under the Company’s Equity Incentive Plans

At June 30, 2026, there were 111,863 shares of common stock available for future award grants under the 2021 Plan.

Shares Reserved for Issuance

As of June 30, 2026, there were 729,564 shares of common stock reserved for issuance under the Company’s Equity Incentive Plans, including 10,000 shares reserved pursuant to unexercised stock options previously granted under the 2011 Plan,607,701 shares reserved pursuant to unexercised stock options granted under the 2021 Plan, and 111,863 shares available for issuance under the 2021 Plan.

As of June 30, 2026, there were also the following shares of common stock reserved for issuance that were unrelated to the Company’s Equity Incentive Plans:

Warrants

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

In connection with the entrance into the Halston Master License in 2023 (see Note 4), the Company issued to G-III aten-year warrant to purchase up to 100,000 shares of the Company’s common stock at an exercise price of$15.00 per share, which vests based upon certain annual royalty targets being satisfied under the license agreement. The fair value of this warrant is being recognized as a reduction of revenue over the term of the related license agreement, with an offsetting increase to stockholders’ equity as additional paid-in capital. The amount of contra-revenue recognized related to this

warrant during the current quarter and prior year quarter was approximately$0.01 million in each period, and the amount of contra-revenue recognized was during the current six months end prior year six months was approximately$0.02 million in each period. As of June 30, 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 and six months ended June 30, 2026 and 2025:

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:

9. Income Taxes

The estimated annual effective income tax rate for the current quarter and the prior year quarter was approximately -0.8% and 0.0%, respectively, resulting in an income tax provision (benefit) of $0.02 million and $0, respectively.

The estimated annual effective income tax rate for the current six months and the prior year six months was approximately -0.6% and -0.7%, respectively, resulting in an income tax provision (benefit) of $0.03 million and $0.05 million, respectively.

For all periods presented, the federal statutory rate differed from the effective tax rate primarily 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 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 by FEAC to IPX in connection with the refinancing of the Company’s term loan debt, and continues to be held by IPX as of June 30, 2026.

Additionally, in April 2026, IPX participated in the Company’s issuance of new 12.5% Senior Secured Notes due April 13, 2027. As part of this transaction, IPX purchased $57,803 original principal amount of the Senior Secured Notes and purchased 1,742 shares of common stock, on the same terms as the other purchasers participating the issuance, except that the shares of common stock purchased by IPX were priced at the then current market value. See Note 6 for additional details related to this debt issuance.

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% 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 13,279 shares of common stock to Mr. D’Loren on July 31, 2026.

Shares Issued Under Equity Line of Credit

During the month of July 2026, the Company issued an aggregate of 34,500 shares to White Lion under the terms of the equity line of credit facility (see Note 7 for details) for which it received net proceeds of approximately $0.04 million.