Overview

Xcel Brands is a media and consumer products company engaged in the design, licensing, marketing, live streaming, and social commerce sales of branded apparel, footwear, accessories, fine jewelry, home goods and other consumer products, and the acquisition of dynamic consumer lifestyle brands. Xcel was founded in 2011 with a vision to reimagine shopping, entertainment, and social media as social commerce.

Xcel’s brand portfolio currently consists of the Halston Brand, the Ripka Brand, the C Wonder Brand, the Longaberger Brand, the TowerHill by Christie Brinkley brand, the Trust-Respect-Love by Cesar Millan brand, the GemmaMade by Gemma Stafford brand, the Off/Duty by Coco Rocha brand, and the Mesa Mia by Jenny Martinez brand. Xcel formerly owned the LOGO by Lori Goldstein brand and holds a noncontrolling ownership interest in the Isaac Mizrahi brand.

Xcel is pioneering a true 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. Xcel operates under a working-capital light model, with its licensees and/or retail partners responsible for the procurement and sale of inventory.

Xcel’s objective is to build a diversified portfolio of lifestyle consumer products brands through organic growth and strategic acquisitions. Key strategies include licensing brands for sale through interactive television, licensing to retailers, and licensing to manufacturers and retailers for e-commerce, social commerce, and brick-and-mortar retail channels.

Critical Accounting Policies and Estimates

Xcel’s critical accounting policies and estimates relate to revenue recognition, trademarks and other intangible assets, investments in unconsolidated affiliates, and income taxes. Key areas include:

• Revenue recognition based on royalties exceeding minimum guaranteed payments or minimum guaranteed payments straight-lined over contract terms
• Estimating useful lives and future cash flows for trademarks and other intangible assets
• Accounting for investments in unconsolidated affiliates, including assessing for other-than-temporary impairments
• Estimating future income projections and the likelihood of realizing deferred tax assets

Summary of Operating Results

Revenues decreased from $8.26 million in 2024 to $4.94 million in 2025, primarily due to declines in licensing revenue from the divestiture of the Lori Goldstein brand and lower sales by licensees.

Direct operating costs and expenses decreased from $12.76 million in 2024 to $8.57 million in 2025, due to cost-cutting measures and the impact of the employee retention tax credit.

Xcel recognized losses related to its equity investments in unconsolidated affiliates of $6.01 million in 2025 and $11.69 million in 2024, primarily related to its investment in IM Topco, LLC.

Interest and finance expense increased from $0.93 million in 2024 to $4.27 million in 2025, due to higher interest rates, a higher principal balance on outstanding debt, and a $1.85 million loss on early extinguishment of debt.

Xcel had a net loss of $17.5 million in 2025 compared to a net loss of $22.4 million in 2024. On a non-GAAP basis, Xcel had a net loss of $5.2 million or $(1.52) per share in 2025 compared to a net loss of $5.1 million or $(2.23) per share in 2024. Adjusted EBITDA improved from $(3.5) million in 2024 to $(2.3) million in 2025.

Liquidity and Capital Resources

As of December 31, 2025, Xcel had $1.2 million in unrestricted cash and $1.7 million in restricted cash. Xcel’s working capital deficit was $0.8 million as of December 31, 2025.

Net cash used in operating activities was $7.0 million in 2025 compared to $4.7 million in 2024, primarily due to the net loss and changes in operating assets and liabilities.

Xcel generated $7.9 million in net cash from financing activities in 2025, including $5.1 million from debt financing and $3.8 million from equity financing. This compares to $3.8 million in net cash provided by financing activities in 2024.

Xcel’s principal capital requirements have generally been to fund working capital needs and acquire new brands. Xcel’s current “licensing plus” operating model is a working capital light business model that generally does not require material capital expenditures.

Obligations and Commitments

Xcel’s material obligations and commitments include:

• Term loan debt, with $3.75 million outstanding as of December 31, 2025
• $2.6 million in senior secured notes issued in April 2026
• A contingent obligation related to the Lori Goldstein brand earn-out, which was terminated in 2024
• A contingent obligation related to the Isaac Mizrahi brand transaction, which was settled in 2025
• Real estate leases for office space, with future payments of $1.55 million in 2026 and $1.29 million in 2027
• Employment contracts with certain executives and key employees, with future payments of $2.2 million

Other Factors

Xcel continues to seek opportunities to expand and diversify its brand portfolio and distribution channels. The company has taken actions to replace revenues lost from the divestiture of the LOGO by Lori Goldstein brand and the sale of a majority interest in the Isaac Mizrahi brand.

Xcel restructured its business in 2023-2024 to shift to a “licensing plus” model and reduce costs, which has lowered its expected annual direct operating expenses to less than $10 million. However, Xcel continues to face headwinds from the macroeconomic environment, including the potential impact of inflation, rising consumer debt, and tariffs on its licensees’ sales and operations.

Xcel’s long-term success will depend on its ability to build brand awareness, attract and retain key licensees and partners, and accurately predict and fulfill consumer demand. Unanticipated changes in consumer preferences and economic conditions could adversely impact Xcel’s results.