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What changed in XCel Brands, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of XCel Brands, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+331 added−300 removedSource: 10-K (2025-05-28) vs 10-K (2024-04-19)

Top changes in XCel Brands, Inc.'s 2024 10-K

331 paragraphs added · 300 removed · 191 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

45 edited+17 added−18 removed40 unchanged
Biggest changeCurrently, our brand portfolio consists of the LOGO by Lori Goldstein brand (the “Lori Goldstein Brand”), the Halston brands (the "Halston Brand"), the Judith Ripka brands (the "Ripka Brand"), the C Wonder brands (the "C Wonder Brand"), the Longaberger brand (the “Longaberger Brand”), the Isaac Mizrahi brands (the "Isaac Mizrahi Brand"), the TowerHill by Christie Brinkley brand (the “CB Brand”), and other proprietary brands, including: ● the Lori Goldstein Brand, Halston Brand, Ripka Brand, and C Wonder Brand, which are wholly owned by the Company; ● the Longaberger Brand, which we manage through our 50% ownership interest in Longaberger Licensing, LLC, and the CB Brand, which is a co-owned brand between Xcel and Christie Brinkley; and ● the Isaac Mizrahi Brand, which we wholly owned and managed through May 31, 2022.
Biggest changeCurrently, our brand portfolio consists of the following: ● the Halston brands (the "Halston Brand"), the Judith Ripka brands (the "Ripka Brand"), and the C Wonder brands (the "C Wonder Brand"), which are wholly owned by the Company; ● the TowerHill by Christie Brinkley brand (the “CB Brand”), which is a co-branded collaboration between Xcel and Christie Brinkley that launched in May 2024; ● the LB70 by Lloyd Boston brand (the “LB Brand”), which is a co-branded collaboration between Xcel and Lloyd Boston that launched in August 2024; ● the Longaberger brand (the “Longaberger Brand”), which we manage through our 50% ownership interest in Longaberger Licensing, LLC; and ● the Isaac Mizrahi brands (the “Isaac Mizrahi Brand”), in which we hold a noncontrolling interest through our 17.5% ownership interest in IM Topco, LLC (“IM Topco”) and continue to contribute to the operations of the brand through a service agreement with IM Topco.
While we will not consolidate ORME’s financial results of operations with our own (given our minority noncontrolling position in the company) and do not anticipate receiving regular dividends or other distributions from ORME in the near future, we believe that ORME has significant growth potential and would add significant value to Xcel, both through our equity interest in ORME as well as our ability to leverage ORME in order to grow additional direct-to-consumer brands that would perform well in social commerce pursuant to our aforementioned brand development and acquisition strategies.
While we do not consolidate ORME’s financial results of operations with our own (given our minority noncontrolling position in the company) and do not anticipate receiving regular dividends or other distributions from ORME in the near future, we believe that ORME has significant growth potential and will add significant value to Xcel, both through our equity interest in ORME as well as our ability to leverage ORME in order to grow additional direct-to-consumer brands that would perform well in social commerce pursuant to our aforementioned brand development and acquisition strategies.
On September 29, 2011, we changed our name to Xcel Brands, Inc. Our principal office is currently located at 550 Seventh Avenue, 11th Floor, New York, NY 10018. Our telephone number is (347) 727-2474. Our corporate website is www.xcelbrands.com. Additionally, we maintain websites for our respective brands at www.lorigoldstein.com, www.halston.com, www.judithripka.com, www.cwonder.com, www.longaberger.com, and www.isaacmizrahi.com.
On September 29, 2011, we changed our name to Xcel Brands, Inc. Our principal office is currently located at 550 Seventh Avenue, 11th Floor, New York, NY 10018. Our telephone number is (347) 727-2474. Our corporate website is www.xcelbrands.com. Additionally, we maintain websites for our respective brands at www.halston.com, www.judithripka.com, www.cwonder.com, www.longaberger.com, and www.isaacmizrahi.com.
The brand is available across various distribution channels – including premium and better department stores, e-commerce, interactive television, and national specialty retailers – through our long-term master license agreement with G-III Apparel Group. Judith Ripka Judith Ripka is a luxury jewelry brand founded by Judith Ripka in 1977.
The Halston brand is available across various distribution channels – including premium and better department stores, e-commerce, interactive television, and national specialty retailers – through our long-term master license agreement with G-III Apparel Group. Judith Ripka Judith Ripka is a luxury jewelry brand founded by Judith Ripka in 1977.
In 2023, we signed master license agreements for our Halston Brand and Judith Ripka Brand, and license agreements for the supply of products under certain on our brands to HSN, that enabled us to outsource a majority of our wholesale and direct-to-consumer operations and revert to a working capital light business model.
In 2023, we signed master license agreements for our Halston Brand and Ripka Brand, and license agreements for the supply of products under certain of our brands to HSN, that enabled us to outsource a majority of our wholesale and direct-to-consumer operations and revert to a working capital light business model.
Other Licensing Agreements We have entered into numerous other licensing agreements for sales and distribution through e-commerce and traditional brick-and-mortar retailers. Authorized distribution channels include department stores, mass merchant retailers, clubs, and national specialty retailers.
Other Licensing Agreements We have entered into certain other licensing agreements for sales and distribution through e-commerce and traditional brick-and-mortar retailers. Authorized distribution channels include department stores, mass merchant retailers, clubs, and national specialty retailers.
Our other license agreements cover various categories, including but not limited to women’s apparel, footwear, and accessories; bath and body; jewelry; home products; men’s apparel and accessories; children’s and infant apparel, footwear, and accessories; and electronics cases and accessories. The terms of the agreements generally range from three to six years with renewal options.
Our other license agreements cover 9 Table of Contents various categories, including but not limited to women’s apparel, footwear, and accessories; bath and body; jewelry; home products; men’s apparel and accessories; children’s and infant apparel, footwear, and accessories; and electronics cases and accessories. The terms of the agreements generally range from three to six years with renewal options.
The Company and its licensees do not presently earn a material amount of revenue from either the licensing of our trademarks internationally or the sale of products under our trademarks internationally. However, the Company has 11 Table of Contents registered its trademarks in certain territories where it expects that it may do business in the foreseeable future.
The Company and its licensees do not presently earn a material amount of revenue from either the licensing of our trademarks internationally or the sale of products under our trademarks internationally. However, the Company has registered its trademarks in certain territories where it expects that it may do business in the foreseeable future.
While many of the new and proposed licensing agreements will likely require us to provide seasonal design services, most of our new and prospective licensing partners have their own design staff, and we therefore expect low incremental overhead costs related to expanding 9 Table of Contents our licensing business.
While many of the new and proposed licensing agreements will likely require us to provide seasonal design services, most of our new and prospective licensing partners have their own design staff, and we therefore expect low incremental overhead costs related to expanding our licensing business.
Effective January 1, 2022, the agreement entered a sell-off period, under which Qurate was allowed to continue to license the Ripka brand on a non-exclusive basis for as long as necessary to sell off any of its remaining inventory. The sell-off period ended in 2023.
Effective January 1, 2022, the agreement entered a sell-off period, under which Qurate was allowed to continue to license the Ripka brand on a non-exclusive basis for as long as necessary to sell off any of its remaining inventory.
Because many of our competitors have significantly greater cash, revenues, and resources than we do, we must work to differentiate ourselves from our direct and indirect competitors to successfully compete for market share with the brands we own and for future acquisitions.
Because many of our competitors have significantly greater cash, revenues, and resources than we do, we must work to differentiate ourselves from our direct and indirect competitors to successfully compete for market share with the brands 10 Table of Contents we own and for future acquisitions.
We manage and have a 50% ownership interest in the brands and trademarks of the Longaberger brand through our business venture with Hilco Global. We also have a 30% ownership interest in IM Topco, which owns the Mizrahi brands, including the trademarks and brands Isaac Mizrahi, Isaac Mizrahi New York, IMNYC Isaac Mizrahi, and IsaacMizrahiLIVE.
We manage and have a 50% ownership interest in the brands and trademarks of the Longaberger brand through our business venture with Hilco Global. We also have a 17.5% ownership interest in IM Topco, which owns the Mizrahi brands, including the trademarks and brands Isaac Mizrahi, Isaac Mizrahi New York, IMNYC Isaac Mizrahi, and IsaacMizrahiLIVE.
Under certain of the Qurate Agreements, we may, with the permission of 8 Table of Contents Qurate, sell the respective branded products via certain specified sales channels in exchange for making reverse royalty payments to Qurate based on the net retail sales of such products through such channels.
Under certain of the Qurate Agreements, we may, with the permission of Qurate, sell the respective branded products via certain specified sales channels in exchange for making reverse royalty payments to Qurate based on the net retail sales of such products through such channels.
To grow our brands, we are focused on the following primary strategies: ● distribution and/or licensing our brands for sale through interactive television (e.g., QVC, HSN, The Shopping Channel, JTV, etc.); ● licensing of our brands to retailers that sell to the end consumer; ● direct-to-consumer distribution of our brands through e-commerce and live streaming; ● licensing our brands to manufacturers and retailers for promotion and distribution through e-commerce, social commerce, and traditional brick-and-mortar retail channels; and ● acquiring additional consumer brands and integrating them into our operating platform, and leveraging our operating infrastructure and distribution relationships. 4 Table of Contents We believe that Xcel offers a unique value proposition to our retail and direct-to-consumer customers and our licensees for the following reasons: ● our management team, including our officers’ and directors’ experience in, and relationships within the industry; ● our deep knowledge, expertise, and proprietary technology in live streaming and social commerce; ● our design, sales, marketing, and technology platform that enables us to design trend-right product; and ● our significant media and digital presence.
To grow our brands, we are focused on the following primary strategies: ● distribution and/or licensing our brands for sale through interactive television (e.g., QVC, HSN, America’s Collectible Network, Inc. d/b/a JTV (“JTV”), etc.); ● licensing of our brands to retailers that sell to the end consumer; ● licensing our brands to manufacturers and retailers for promotion and distribution through e-commerce, social commerce, and traditional brick-and-mortar retail channels; and ● acquiring additional consumer brands and integrating them into our operating platform, and leveraging our operating infrastructure and distribution relationships. 4 Table of Contents We believe that Xcel offers a unique value proposition to our retail and direct-to-consumer customers and our licensees for the following reasons: ● our management team, including our officers’ and directors’ experience in, and relationships within the industry; ● our deep knowledge, expertise, and proprietary technology in live streaming and social commerce; ● our design, sales, marketing, and technology platform that enables us to design trend-right product; and ● our significant media and digital presence.
We were also previously party to similar agreements with Qurate related to the IsaacMizrahiLIVE brand and the Judith Ripka brand. Qurate owns the rights to all designs produced under these agreements, and the agreements include the sale of products across various categories through Qurate’s television media and related internet sites.
We were also previously party to similar agreements with Qurate related to the IsaacMizrahiLIVE brand, the Judith Ripka brand, and the LOGO by Lori Goldstein brand. Qurate owns the rights to all designs produced under these agreements, and the agreements include the sale of products across various categories through Qurate’s television media and related internet sites.
Potential acquisitions may include established or newer brands that do or would perform well in live streaming or social commerce, direct-to-consumer brands or platforms with significant consumer following, or established media companies which could benefit from our expertise in direct-response television, live streaming, and social commerce.
Potential acquisitions may include established or newer brands that do or would perform well in live streaming or social commerce, direct-to-consumer brands or platforms with significant consumer following, or established media 7 Table of Contents companies which could benefit from our expertise in direct-response television, live streaming, and social commerce.
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 discussed above, the Company has recognized $4.44 million of deferred revenue contract liabilities on its consolidated balance sheet as of December 31, 2023 related to this contract, of which $0.89 million was classified as a current liability and $3.55 million was classified as a long-term liability.
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 discussed above, the Company has recognized deferred revenue contract liabilities on its consolidated balance sheet as of December 31, 2024 and 2023 of $3.56 million and $4.44 million, respectively, of which $0.89 million was classified as a current liability at each balance sheet date and the remainder was classified as a long-term liability.
The brand is available across various distribution channels to reach customers wherever they shop: better department stores, such as Saks and 6 Table of Contents Hudson’s Bay; interactive television, including QVC and The Shopping Channel; and national specialty retailers. The brand is also sold in various global locations, including Canada, Italy, the United Kingdom, and Japan.
The brand is available across various distribution channels to reach customers wherever they shop: better department stores, such as Saks and Hudson’s Bay; interactive television, including QVC and HSN; and national specialty retailers. The brand is also sold in various global locations, including Canada, Italy, the United Kingdom, and Japan.
None of the content on our websites is incorporated by reference into this Annual Report on Form 10-K. Our Brand Portfolio Currently, our brand portfolio consists of the Lori Goldstein, Halston, Judith Ripka, C Wonder, Longaberger, CB, and Isaac Mizrahi Brands, and other proprietary brands, including the various labels under these brands.
None of the content on our websites is incorporated by reference into this Annual Report on Form 10-K. 5 Table of Contents Our Brand Portfolio Currently, our brand portfolio consists of the Halston, Ripka, C Wonder, CB, LB, Longaberger, and Isaac Mizrahi Brands, and other proprietary brands, including the various labels under these brands.
Through our wholly owned subsidiaries, we have entered into direct-to-retail license agreements with Qurate, collectively referred to as the Qurate Agreements (individually, each a “Qurate Agreement”), pursuant to which we design, and Qurate sources and sells, various products under our LOGO by Lori Goldstein brand, the Longaberger brand, and the C Wonder brand.
Through our wholly owned subsidiaries and joint ventures, we have entered into direct-to-retail license agreements with Qurate, collectively referred to as the Qurate Agreements (individually, each a “Qurate Agreement”), pursuant to which we design, and Qurate sources and sells, various products under the C Wonder Brand, the CB Brand, the LB Brand, and the Longaberger Brand.
In addition to licensing out the brands described above, we outsourced the operations of Longaberger through a license agreement with a third party to operate and manage the Longaberger e-commerce website in the fourth quarter of 2023, and have recently launched Longaberger on ORME in early 2024.
In addition to licensing out the brands described above, we outsourced the operations of Longaberger through a license agreement with a third party to operate and manage the Longaberger e-commerce website in the fourth quarter of 2023.
(“ORME”), a short-form video and social commerce marketplace that launched in the first quarter of 2024. Xcel continues to pioneer 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, traditional brick-and-mortar retailers, and e-commerce channels, to be everywhere its customers shop.
Xcel continues to pioneer 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, traditional brick-and-mortar retailers, and e-commerce channels, to be everywhere its customers shop.
C Wonder The C Wonder brand was founded by J. Christopher Burch in 2011. This brand is built upon a foundation of bold, vibrant colors and exceptional, eye-catching prints that celebrate the art of everyday dressing. C Wonder offers women’s clothing, footwear, jewelry and accessories, and delightful surprises at every turn. We acquired the C Wonder Brand in July 2015.
This brand is built upon a foundation of bold, vibrant colors and exceptional, eye-catching prints that celebrate the art of everyday dressing. C Wonder offers women’s clothing, footwear, jewelry and accessories, and delightful surprises at every turn. We acquired the C Wonder Brand in July 2015. The brand is currently available through HSN.
While our strategy is not dependent on such acquisitions, we carefully consider potential acquisitions as a means to leverage our infrastructure and expertise and accelerate our growth. Finally, in December 2023, Xcel acquired a 30% interest in ORME, which is a brand new short-form video social commerce marketplace that launched in the first quarter of 2024.
While our overall long-term business strategy is not dependent on such acquisitions, we carefully consider potential acquisitions as a means to leverage our infrastructure and expertise and accelerate our growth. Finally, in December 2023, Xcel acquired a noncontrolling equity interest in ORME, which is a brand new short-form video social commerce marketplace that launched in April 2024.
We believe that we are in compliance in all material respects with all applicable governmental regulations. ​ 12 Table of Contents
We believe that we are in compliance in all material respects with all applicable governmental regulations. ​
The balance of the deferred revenue contract liabilities will be recognized ratably as revenue through December 31, 2028. For the year ended December 31, 2023, net licensing revenue from the Halston Master License accounted for approximately 9% of the total net revenue of the Company.
These deferred revenue contract liabilities are being recognized ratably as revenue through December 31, 2028. For the year ended December 31, 2024 and 2023, net licensing revenue from the Halston Master License accounted for approximately 31% and 9%, respectively, of the total net revenue of the Company.
Trademarks The Company, through its wholly owned subsidiaries, owns and exploits the Lori Goldstein brands, which include the trademarks and brands LOGO by Lori Goldstein, LOGO, LOGO Links, LOGO Lounge, LOGO Layers, and LOGO Luna; the Halston brands, which include the trademarks and brands Halston, Halston Heritage, Roy Frowick, H by Halston, and H Halston; the Ripka brands, which include the trademarks and brands Judith Ripka LTD, Judith Ripka Collection, Judith Ripka Legacy, Judith Ripka, and Judith Ripka Sterling; and the C Wonder brands, which include the trademarks and brands C Wonder and C Wonder Limited.
Trademarks The Company, through its wholly owned subsidiaries, owns and exploits the Halston brands, which include the trademarks and brands Halston, Halston Heritage, Roy Frowick, H by Halston, and H Halston; the Ripka brands, which include the trademarks and brands Judith Ripka LTD, Judith Ripka Collection, Judith Ripka Legacy, Judith Ripka, and Judith Ripka Sterling; the C Wonder brands, which include the trademarks and brands C Wonder and C Wonder Limited, the TowerHill brand, and the LB70 brand.
We acquired a 50% ownership interest in this brand through a business venture with Hilco Global in November 2019, and are actively managing this brand to build on its history and bring it into the future as a digital first live-streaming and social commerce business. We launched our Longaberger e-commerce and live-streaming operations in February 2020.
The brand is best known for its distinctive handwoven baskets. We acquired a 50% ownership interest in this brand through a business venture with Hilco Global in November 2019, and are actively managing this brand to build on its history and bring it into the future as a digital first live-streaming and social commerce business.
Additionally, based upon guaranteed minimum royalty provisions required under many of the license agreements, we are able to recognize revenue related to certain other licenses based on the greater of the sales-based royalty or the guaranteed minimum royalty.
Additionally, based upon guaranteed minimum royalty provisions required under many of the license agreements, we are able to recognize revenue related to certain other licenses based on the greater of the sales-based royalty or the guaranteed minimum royalty. Marketing Marketing is a critical element to maximize brand value to our licensees and our Company.
Growth Strategy We plan to continue to grow our brands and business through three primary strategies: ● organic growth in our existing brands; ● developing new brands that are well positioned in social commerce; and ● the acquisition of brands and businesses that fit our long-term strategy.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Obligations and Commitments – Contingent Obligations – Issaac Mizrahi Transaction.” Growth Strategy We plan to continue to grow our brands and business through three primary strategies: ● organic growth in our existing brands; ● developing new brands that are well positioned in social commerce; and ● the acquisition of brands and businesses that fit our long-term strategy.
Through our websites, we are able to present the products under our brands to customers with branding that reflects each brand’s heritage and unique point of view. ​ 10 Table of Contents Competition Each of our current brands has and any future acquired brand will likely have many competitors within each of its specific distribution channels that span a broad variety of product categories, including the apparel, footwear, accessories, jewelry, home furnishings and décor, food products, and sporting goods industries.
Competition Each of our current brands has and any future acquired brand will likely have many competitors within each of its specific distribution channels that span a broad variety of product categories, including the apparel, footwear, accessories, jewelry, home furnishings and décor, food products, and sporting goods industries.
The Company seeks to require its licensing partners to advise the Company of any violations of its trademark rights of which its licensing partners become aware and relies primarily upon a combination of federal, state, and local laws, as well as contractual restrictions to protect its intellectual property rights both domestically and internationally.
The Company seeks to require its licensing partners to advise the Company of any violations of its trademark rights of which its licensing partners become aware and relies primarily upon a combination of federal, state, and local laws, as well as contractual restrictions to protect its intellectual property rights both domestically and internationally. 11 Table of Contents Human Capital Our employees’ knowledge, social, and personality attributes enable our company to achieve its goals, develop our business, and remain innovative.
In connection with the Qurate Agreements and during the same periods, Qurate and its subsidiaries have the exclusive, worldwide right to use the names, likenesses, images, voices, and performances of our spokespersons to promote the respective products. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Xcel Commenced ​ Qurate Agreement Current Term Expiry Automatic Renewal Brand with Qurate Product Launch LOGO Qurate Agreement (QVC) ​ November 1, 2024 ​ one-year period ​ April 2021 ​ 2009 Longaberger Qurate Agreement (QVC) ​ October 31, 2025 two-year period November 2019 2019 C Wonder Qurate Agreement (HSN) ​ December 31, 2024 ​ two-year period ​ March 2023 ​ 2023 ​ ● On May 31, 2022, in connection with our sale of a majority interest in the Isaac Mizrahi brand to a third party, the agreement with Qurate related to the IsaacMizrahiLIVE brand was assigned to IM Topco, LLC. ● On August 30, 2022, Qurate and Xcel amended the licensing agreement for the Judith Ripka brand to terminate the license period effective December 31, 2021.
In connection with the Qurate Agreements and during the same periods, Qurate and its subsidiaries have the exclusive, worldwide right to use the names, likenesses, images, voices, and performances of our spokespersons to promote the respective products. ​ ​ ​ ​ ​ ​ ​ Agreement Current Term Expiry Automatic Renewal Product Launch C Wonder Qurate Agreement (HSN) ​ December 31, 2026 ​ two-year period ​ March 2023 TowerHill by Christie Brinkley Qurate Agreement (HSN) ​ May 30, 2027 ​ three-year period ​ May 2024 LB70 by Lloyd Boston Qurate Agreement (HSN) ​ December 31, 2025 two-year period August 2024 Longaberger Qurate Agreement (QVC) ​ October 31, 2025 two-year period November 2019 ​ ● On June 30, 2024, in connection with the divestiture of the Lori Goldstein Brand, the agreement with Qurate related to the LOGO by Lori Goldstein brand was assigned to assumed by the counterparties to the divestiture transaction. 8 Table of Contents ● On August 30, 2022, Qurate and Xcel amended the licensing agreement for the Judith Ripka brand to terminate the license period effective December 31, 2021.
We acquired the Isaac Mizrahi brand in September 2011, and in May 2022, we sold a majority interest in the brand to a third party, retaining a 30% noncontrolling interest in the brand.
We acquired the Isaac Mizrahi brand in September 2011, and in May 2022, we sold a majority interest in the brand to a third party, retaining a 30% noncontrolling interest in the brand. In April 2025, our interest in the brand was reduced to 17.5% due to contractual arrangements with the third-party buyer.
We acquired the Ripka brand in April 2014. In 2017 and 2018, we launched our Judith Ripka Fine Jewelry e-commerce operations and wholesale operations; these businesses were subsequently licensed to JTV in the first quarter of 2023. In 2021, we opened a retail store for Judith Ripka Fine Jewelry in Westchester, New York, which was subsequently closed in 2022.
We acquired the Ripka brand in April 2014. In 2017 and 2018, we launched our Judith Ripka Fine Jewelry e-commerce operations and wholesale operations; these businesses were subsequently licensed to JTV in the first quarter of 2023. C Wonder The C Wonder brand was founded by J. Christopher Burch in 2011.
While this is a new brand for Xcel, it is an example of a brand that we developed with low up-front costs and that we were able to leverage our unique experience, relationships, and social commerce knowledge to launch.
While these are both new brands for Xcel, they represent brands that we co-developed with low up-front costs and for which we were able to leverage our unique experience, relationships, and social commerce knowledge to launch.
For certain key employees, including our executives, brand ambassadors, and spokespersons, we typically enter into multi-year employment agreements. Overall, we believe that our relationship with our employees is good. None of our employees are represented by a labor union.
As of December 31, 2024, we had 21 employees. We value our employees and are committed to providing a healthy and safe work environment. For certain key employees, including our executives, brand ambassadors, and spokespersons, we typically enter into multi-year employment agreements. Overall, we believe that our relationship with our employees is good.
We are excited about launching this brand with Christie Brinkley, and expect to launch at least one other similarly-developed brand later in 2024. We have a proven track record of acquiring brands and/or businesses that are strategically important to and synergistic with our business, and are consistently reviewing potential acquisition targets.
With respect to acquisitions of brands and/or businesses, we have a proven track record of acquiring brands and businesses that are strategically important to and synergistic with our business, and are consistently reviewing potential acquisition targets.
In the fourth quarter of 2023, we outsourced the operations and management of the brand’s e-commerce business to a third party. TowerHill by Christie Brinkley TowerHill by Christie Brinkley is a new brand announced December 2023 as a co-branded collaboration between Xcel Brands, Inc. and Christie Lee Brinkley, an iconic American supermodel with over one million followers on social media.
TowerHill by Christie Brinkley TowerHill by Christie Brinkley is a new co-branded collaboration between Xcel Brands, Inc. and Christie Lee Brinkley, an iconic American supermodel with over one million followers on social media. The brand launched on HSN in May 2024, with plans to license and launch products outside of HSN starting in 2025.
The brand is currently available through HSN. Longaberger Longaberger is an iconic American heritage home and collectibles brand that began making baskets in 1896 and launched a direct sales company in 1973 by the Longaberger family. The brand is best known for its distinctive handwoven baskets.
The brand launched on HSN in August 2024, with plans to launch accessories on HSN in 2025 and additional retail distribution in Fall 2025. Longaberger Longaberger is an iconic American heritage home and collectibles brand that began making baskets in 1896 and launched a direct sales company in 1973 by the Longaberger family.
The Halston master license agreement is with G-III Apparel Group (“G-III”), which is a publicly traded company and one of the largest designers and suppliers of wholesale apparel and accessories in the world, with annual revenues of over $3 billion.
With respect to organic growth in our existing brands, we entered into master license agreements for our Halston Brand and Judith Ripka Brand in 2023, and launched the C Wonder Brand on HSN. ● The Halston master license agreement is with G-III Apparel Group (“G-III”), which is one of the largest designers and suppliers of wholesale apparel and accessories in the world, with annual revenues of over $3 billion.
For the years ended December 31, 2023 and 2022, net licensing revenue from Qurate collectively accounted for approximately 34% and 44%, respectively, of the total net revenue of the Company.
However, we are generally restricted from selling products under the specified respective brands or trademarks to certain mass merchants. For the years ended December 31, 2024 and 2023, net licensing revenue from Qurate collectively accounted for approximately 44% and 34%, respectively, of the total net revenue of the Company.
ORME licenses the technology utilized by its marketplace from KonnectBio Inc., of which Robert D’Loren, our Chairman of the Board, Chief Executive Officer, and President, owns an approximate 20% noncontrolling interest. 7 Table of Contents Licensing Our working-capital-light “licensing plus” business model allows us to focus on our core competencies of design, marketing, and brand management without the investment requirements in inventory associated with traditional consumer product companies.
In 2024 we launched our initial brand, the Longaberger brand, on ORME. Licensing Our working-capital-light “licensing plus” business model allows us to focus on our core competencies of design, marketing, and brand management without the investment requirements in inventory associated with traditional consumer product companies.
We employ and manage on-air spokespersons under each of these brands in order to promote products under our brands on QVC and HSN. Qurate’s programming currently reaches over 200 million homes worldwide.
Qurate is the largest licensee for our C Wonder, Towerhill by Christie Brinkley, and LB70 by Lloyd Boston brands. We employ and manage on-air spokespersons under each of these brands in order to promote products under our brands on QVC and HSN.
We also market the Lori Goldstein brand through www.lorigoldstein.com, the Halston Brand through www.halston.com, the Judith Ripka brand through www.judithripka.com, the C Wonder brand through www.cwonder.com, and the Longaberger brand through www.longaberger.com.
We also market Halston Brand through www.halston.com, the Judith Ripka brand through www.judithripka.com, the C Wonder brand through www.cwonder.com, and the Longaberger brand through www.longaberger.com. Through our websites, we are able to present the products under our brands to customers with branding that reflects each brand’s heritage and unique point of view.
Removed
On May 31, 2022, we sold a majority interest in the brand to a third party, but retained a 30% noncontrolling interest in the brand and continue to contribute to the operations of the brand through a service agreement. We also own a 30% interest in ORME Live Inc.
Added
We also own a 19% interest in ORME Live Inc. (“ORME”), a short-form video and social commerce marketplace that launched in April 2024.
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Lori Goldstein Lori Goldstein helped the fashion industry recognize the value and influence of a visionary stylist by telling powerful, transformative, and authentic stories through the static image. After 35 years behind the camera, Lori ventured in front of it in 2009 when she launched LOGO by Lori Goldstein, an exclusive collection for QVC.
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In 2024, we launched the Longaberger Brand on ORME, a short-form video and social commerce marketplace, and launched the new TowerHill by Christie Brinkley brand as well as the LB70 by Lloyd Boston brand on HSN.
Removed
LOGO was born from Lori's lifelong passion for layering clothes and her "anything goes with everything" approach to fashion, and is a sophisticated lifestyle brand that embraces Lori's aesthetic and speaks to everyday women.
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On June 30, 2024, we divested the LOGO by Lori Goldstein brand (the “Lori Goldstein Brand”), which was a wholly owned brand from April 1, 2021 through June 30, 2024.
Removed
LOGO draws inspiration from the beauty of women of all ages and sizes and gives them the tools and fashion pieces to be their most fabulous selves. We acquired the 5 Table of Contents Lori Goldstein brands, including LOGO by Lori Goldstein, in April 2021, and the brand is currently available through the QVC channel.
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On March 24, 2025, the Company filed an amendment to its Amended and Restated Certificate of Incorporation to effect a one-for-ten (1:10) reverse stock split of the shares of the Company’s common stock.
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The brand is scheduled to launch in May 2024 on HSN, with plans to license and launch products outside of HSN starting in 2025. Isaac Mizrahi Isaac Mizrahi is an iconic American brand that stands for timeless, cosmopolitan style.
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As a result of this reverse stock split, effective March 24, 2025, every ten (10) shares of our issued and outstanding common stock were automatically combined into one (1) issued and outstanding share of common stock, without any change in the par value per share or number of shares authorized.
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With respect to organic growth in our existing brands, we have recently entered into master license agreements for our Halston Brand and Judith Ripka Brand.
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No fractional shares were issued, and the shares of common stock underlying the Company’s outstanding stock options and warrants were also proportionately adjusted along with corresponding adjustments to their exercise prices.
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While the license provides for guaranteed minimum royalties to us during the term (which extends for 25 years, including an initial term of five years plus renewal options), G-III is expected to launch the brand through its existing distribution channels in Fall 2024, and we expect that the business and corresponding royalty revenues to Xcel will ramp up beginning with the launch.
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The reverse stock split was primarily intended to bring the Company in compliance with the minimum bid requirement to maintain listing of its common stock on the NASDAQ Capital Market. We have reflected the reverse split on a retroactive basis to all applicable amounts contained in this Annual Report on Form 10-K.
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Additionally, we entered into an interactive television license and an e-commerce license in 2023 with America’s Collectible Network, Inc., d/b/a JTV, for our Judith Ripka Brand, which officially launched on JTV’s television channel in October 2023 and which we expect to continue to ramp up in 2024 and beyond, as JTV has expressed plans to make Judith Ripka one of the core brands on its network.
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LB70 by Lloyd Boston LB70 by Lloyd Boston is a new co-branded collaboration between Xcel Brands, Inc. and Lloyd Boston, a 30-year veteran of the fashion industry and former Vice President of the multibillion-dollar Tommy Hilfiger brand, as well as a best-selling author.
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Finally, the C Wonder Brand launched on HSN in mid-2023, and performed extremely well in its launch year. HSN has advised us that it has planned increases in the business in 2024, which we expect will result in increased revenues from the brand in 2024 and beyond.
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We launched our Longaberger e-commerce and live-streaming operations in February 2020. In the fourth quarter of 2023, we outsourced the operations and management of the brand’s e-commerce business to a third party. 6 Table of Contents Isaac Mizrahi Isaac Mizrahi is an iconic American brand that stands for timeless, cosmopolitan style.
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We are also working on licensing other categories under the C Wonder Brand for distribution both on HSN and outside of the network. TowerHill by Christie Brinkley is a brand that we are scheduled to launch in May 2024 on HSN, and with plans to license and launch products outside of HSN starting in 2025.
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With G-III’s successful launch of Halston apparel in the third quarter of 2024, and their anticipated launch of Halston footwear and handbags in Spring 2025, we expect that the business and corresponding royalty revenues to Xcel will increase in 2025 and beyond. ● The master license agreement for our Judith Ripka Brand is with America’s Collectible Network, Inc. d/b/a JTV (“JTV”) and covers both interactive television and e-commerce operations.
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Qurate Agreements Qurate Retail Group (“Qurate”) is an important strategic partner in our interactive television business, and is the largest licensee for the Lori Goldstein, C Wonder, and Isaac Mizrahi brands. Qurate’s business model is to promote and sell products through its interactive television programs featured on QVC and HSN and related e-commerce and mobile platforms.
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Since JTV’s successful launch of the Ripka Brand on JTV’s television channel in October 2023, the Ripka Brand has become one of the core brands on the JTV network, and has shown continual quarterly sequential and year-over-year revenue growth. ● The C Wonder Brand launched on HSN in mid-2023, performed well in its launch year, and has continued to show strong performance throughout 2024.
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Our agreements with Qurate allow our on-air spokespersons to promote our non-Qurate product lines and certain strategic partnerships through QVC’s and HSN’s programs, subject to certain parameters including, in certain cases, the payment of a portion of our non-Qurate revenues to Qurate.
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We expect retail sales volume for the brand to continue to increase in 2025 and beyond. With respect to developing new brands, we recently developed and successfully launched the TowerHill by Christie Brinkley and LB70 by Lloyd Boston brands in 2024.
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We believe that our ability to continue to leverage Qurate’s media platform, reach, and attractive customer base to cross-promote products in and drive traffic to our other channels of distribution provides us a unique advantage.
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Based on the performance of the brands launched in 2024, we believe this is a viable strategy that will help drive short-term and long-term growth for our company.
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However, we are generally restricted from selling products under the specified respective brands or trademarks to certain mass merchants.
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Qurate Agreements Qurate Retail Group (“Qurate”) is an important strategic partner in our interactive television business.
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Also, under certain of the Qurate Agreements, we may be required for a period of time to pay a royalty participation fee to Qurate on revenue earned from the sale, license, consignment, or any other form of distribution of any products, bearing, marketed in connection with, or otherwise associated with the specified trademarks and brands.
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Qurate’s business model is to promote and sell products through its interactive television programs, reaching more than 200 million homes worldwide via 15 television channels (including QVC and HSN), as well as millions of customers via its QVC+ and HSN+ streaming experience, websites, mobile apps, social pages, print catalogs, and in-store destinations.
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Collaborations In certain cases, the Company collaborates with and provides promotional services to other brands or companies, which arrangements may include the use of our brands for the promotion of such company or brands through the internet, television, or other digital content, print media, or other marketing campaigns featuring in-person appearances by our celebrity spokespersons, the development of limited collections of products (which may include co-branded products) for such company, or other services as determined on a case-by-case basis.
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The sell-off period ended in 2023. ● On May 31, 2022, in connection with our sale of a majority interest in the Isaac Mizrahi brand to a third party, the agreement with Qurate related to the IsaacMizrahiLIVE brand was assigned to IM Topco, LLC.
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These have included promotions with Sesame Street, Crayola, Hewlett Packard, Revlon, Johnson & Johnson, and Kleenex. We also provide certain technology services to our retail partners and certain of our licensees under our proprietary integrated technology platform. Marketing Marketing is a critical element to maximize brand value to our licensees and our Company.
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None of our employees are represented by a labor union.
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Human Capital Our employees’ knowledge, social, and personality attributes enable our company to achieve its goals, develop our business, and remain innovative. As of December 31, 2023, we had 34 full-time employees and 2 part-time employees. We value our employees and are committed to providing a healthy and safe work environment.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThis could significantly affect the value of the LOGO by Lori Goldstein brand and our ability to market the brand, and could impede our ability to fully implement our business plan and future growth strategy for the Lori Goldstein brands, which would harm our business and prospects and adversely impact our results of operations, financial conditions, and cash flows. ​ The failure of our licensees to adequately produce, market, source, and sell quality products bearing our brand names in their license categories or to pay their obligations under their license agreements could result in a decline in our results of operations.
Biggest changeThe failure of our licensees to adequately produce, market, source, and sell quality products bearing our brand names in their license categories or to pay their obligations under their license agreements could result in a decline in our results of operations. Our revenues are dependent on payments made to us under our licensing agreements.
These risks include, among others: ● unanticipated costs associated with the target acquisition, joint venture, or collaboration, or its integration with our company; ● our ability to identify or consummate additional quality business opportunities, including potential licenses and new product lines and markets; ● negative effects on reported results of operations from acquisition related charges and costs, and amortization of acquired intangibles; ● diversion of management’s attention from other business concerns; ● the challenges of maintaining focus on, and continuing to execute, core strategies and business plans as our brand and license portfolio grows and becomes more diversified; ● adverse effects on existing licensing and other relationships; ● potential difficulties associated with the retention of key employees, and difficulties, delays and unanticipated costs associated with the assimilation of personnel, operations, systems and cultures, which may be retained by us in connection with or as a result of our acquisitions; 20 Table of Contents ● risks of entering new domestic and international markets (whether it be with respect to new licensed product categories or new licensed product distribution channels) or markets in which we have limited prior experience; and ● increased concentration in our revenues with one or more customers in the event that the brand has distribution channels in which we currently distribute products under one or more of our brands.
These risks include, among others: ● unanticipated costs associated with the target acquisition, joint venture, or collaboration, or its integration with our company; 20 Table of Contents ● our ability to identify or consummate additional quality business opportunities, including potential licenses and new product lines and markets; ● negative effects on reported results of operations from acquisition related charges and costs, and amortization of acquired intangibles; ● diversion of management’s attention from other business concerns; ● the challenges of maintaining focus on, and continuing to execute, core strategies and business plans as our brand and license portfolio grows and becomes more diversified; ● adverse effects on existing licensing and other relationships; ● potential difficulties associated with the retention of key employees, and difficulties, delays and unanticipated costs associated with the assimilation of personnel, operations, systems and cultures, which may be retained by us in connection with or as a result of our acquisitions; ● risks of entering new domestic and international markets (whether it be with respect to new licensed product categories or new licensed product distribution channels) or markets in which we have limited prior experience; and ● increased concentration in our revenues with one or more customers in the event that the brand has distribution channels in which we currently distribute products under one or more of our brands.
As a result of the magnitude of our licensees’ foreign sourcing, our business is subject to the following risks: ● political and economic instability in countries or regions, especially Asia, including heightened terrorism and other security concerns, which could subject imported or exported goods to additional or more frequent inspections, leading to delays win deliveries or impoundment of goods; ● imposition of regulations, quotas and other trade restrictions relating to imports, including quotas imposed by bilateral textile agreements between the U.S. and foreign countries; ● currency exchange rates; ● imposition of increased duties, taxes and other charges on imports; ● pandemics and disease outbreaks such as COVID-19; ● labor union strikes at ports through which our products enter the U.S.; ● labor shortages in countries where contractors and suppliers are located; ● restrictions on the transfer of funds to or from foreign countries; ● disease epidemics and health-related concerns, which could result in closed factories, reduced workforces, scarcity of raw materials and scrutiny or embargoing of goods produced in infected areas; ● the migration and development of manufacturing contractors, which could affect where our brands are or are planned to be produced; ● increases in the costs of fuel, travel and transportation; and ● violations by foreign contractors of labor and wage standards and resulting adverse publicity.
As a result of the magnitude of our licensees’ foreign sourcing, our business is subject to the following risks: ● political and economic instability in countries or regions, especially Asia, including heightened terrorism and other security concerns, which could subject imported or exported goods to additional or more frequent inspections, leading to delays win deliveries or impoundment of goods; ● imposition of regulations, quotas and other trade restrictions relating to imports, including quotas imposed by bilateral textile agreements between the U.S. and foreign countries; ● currency exchange rates; ● imposition of increased duties, tariffs, taxes, and other charges on imports; ● pandemics and disease outbreaks such as COVID-19; ● labor union strikes at ports through which our products enter the U.S.; ● labor shortages in countries where contractors and suppliers are located; ● restrictions on the transfer of funds to or from foreign countries; ● disease epidemics and health-related concerns, which could result in closed factories, reduced workforces, scarcity of raw materials and scrutiny or embargoing of goods produced in infected areas; ● the migration and development of manufacturing contractors, which could affect where our brands are or are planned to be produced; ● increases in the costs of fuel, travel and transportation; and 23 Table of Contents ● violations by foreign contractors of labor and wage standards and resulting adverse publicity.
An investment in our securities is subject to a number of risks, which include, but are not limited to, risks related to: ● management’s significant control over matters requiring shareholder approval; ● potential difficulty in liquidating an investment in shares of our common stock; ● the potential impact of SEC “penny stock” rules on trading of our shares of our common stock; ● declines of and volatility in the market price of our common stock; ● the potential issuance of a substantial number of shares of common stock upon exercise of warrants and options; 13 Table of Contents ● the potential impact of Rule 144 restrictions on our shares of common stock as a former shell company; ● our intent to not pay any cash dividends for the foreseeable future; and ● provisions of our corporate charter documents which could delay or prevent change of control.
An investment in our securities is subject to a number of risks, which include, but are not limited to, risks related to: ● management’s significant control over matters requiring shareholder approval; ● potential difficulty in liquidating an investment in shares of our common stock; ● the potential impact of SEC “penny stock” rules on trading of our shares of our common stock; ● declines of and volatility in the market price of our common stock; ● the potential issuance of a substantial number of shares of common stock upon exercise of warrants and options; ● the potential impact of Rule 144 restrictions on our shares of common stock as a former shell company; ● our intent to not pay any cash dividends for the foreseeable future; and ● provisions of our corporate charter documents which could delay or prevent change of control.
Our cash flow would also be significantly impacted if there were significant delays in our collection of receivables from Qurate. Additionally, we have limited control over the programming that Qurate devotes to our brands or its promotional sales with our brands (such as “Today’s Special Value” sales).
Our cash flow would also be significantly impacted if there were significant delays in our collection of receivables from these licensees. Additionally, we have limited control over the programming that Qurate devotes to our brands or its promotional sales with our brands (such as “Today’s Special Value” sales).
Consumer spending is impacted by a number of factors which are beyond our control, including actual and perceived economic conditions affecting disposable consumer income (such as unemployment, wages, energy costs and consumer debt levels), customer traffic within shopping and selling environments, business conditions, interest rates and availability of credit and tax rates in the general economy and in the international, regional and local markets in which our products are sold and the impact of natural disasters and pandemics and disease outbreaks such as the COVID-19 pandemic.
Consumer spending is impacted by a number of factors which are beyond our control, including actual and perceived economic conditions affecting disposable consumer income (such as unemployment, wages, energy costs and consumer debt levels), customer traffic within shopping and selling environments, business conditions, interest rates and availability of credit and tax rates in the general economy and in the international, regional and local markets in which our products are sold and the impact of natural disasters and pandemics and disease outbreaks.
Our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting until we are no longer a “smaller reporting company.” At such time that an attestation is required, 32 Table of Contents our independent registered public accounting firm may issue a report that is adverse or qualified in the event that they are not satisfied with the level at which our controls are documented, designed or operating.
Our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting until we are no longer a “smaller reporting company.” At such time that an attestation is required, our independent registered public accounting firm may issue a report that is adverse or qualified in the event that they are not satisfied with the level at which our controls are documented, designed or operating.
Our growth may be limited by a number of factors including increased competition among branded products at brick-and-mortar, internet and interactive retailers, decreased airtime on QVC, HSN, and JTV, competition for retail licenses and brand acquisitions, joint ventures and collaborations, and insufficient capitalization for future transactions. 19 Table of Contents We are dependent upon our Chief Executive Officer and other key executives.
Our growth may be limited by a number of factors including increased competition among branded products at brick-and-mortar, internet and interactive retailers, decreased airtime on QVC, HSN, and JTV, competition for retail licenses and brand acquisitions, joint ventures and collaborations, and insufficient capitalization for future transactions. We are dependent upon our Chief Executive Officer and other key executives.
To the extent that any disruption or security breach resulted in a loss of, or damage to, our data or systems, or inappropriate disclosure of confidential, proprietary, or personal information, we could be exposed to a risk of 31 Table of Contents loss, enforcement measures, penalties, fines, indemnification claims, litigation and potential civil or criminal liability, which could materially adversely affect our business, financial condition and results of operations.
To the extent that any disruption or security breach resulted in a loss of, or damage to, our data or systems, or inappropriate disclosure of confidential, proprietary, or personal information, we could be exposed to a risk of loss, enforcement measures, penalties, fines, indemnification claims, litigation and potential civil or criminal liability, which could materially adversely affect our business, financial condition and results of operations.
Risks Related to Our Business We have a limited amount of cash to grow our operations. If we cannot obtain additional sources of cash, our growth prospects and future profitability may be materially adversely affected, and we may not be able to implement our business plan.
Risks Related to Our Business We have a limited amount of cash to grow our operations. If we cannot obtain additional sources of cash, our growth prospects and future profitability will likely be materially adversely affected, and we may not be able to implement our business plan.
Creating and maintaining market acceptance of our licensees’ products and creating market acceptance of new products and categories of products bearing our marks may require substantial marketing efforts, which may, from time to time, also include our expenditure of significant additional 17 Table of Contents funds to keep pace with changing consumer demands, which funds may or may not be available on a timely basis, on acceptable terms or at all.
Creating and maintaining market acceptance of our licensees’ products and creating market acceptance of new products and categories of products bearing our marks may require substantial marketing efforts, which may, from time to time, also include our expenditure of significant additional funds to keep pace with changing consumer demands, which funds may or may not be available on a timely basis, on acceptable terms or at all.
In the case of a disaster affecting our information technology systems, we may experience 30 Table of Contents delays in recovery of data, inability to perform vital corporate functions, tardiness in required reporting and compliance, failures to adequately support our operations, and other breakdowns in normal communication and operating procedures that could materially and adversely affect our financial condition and results of operations.
In the case of a disaster affecting our information technology systems, we may experience delays in recovery of data, inability to perform vital corporate functions, tardiness in required reporting and compliance, failures to adequately support our operations, and other breakdowns in normal communication and operating procedures that could materially and adversely affect our financial condition and results of operations.
We believe that such measures afford only limited protection and, accordingly, there can be no assurance that the actions taken by us to establish, protect, and enforce our trademarks and other proprietary rights will prevent 23 Table of Contents infringement of our intellectual property rights by others, or prevent the loss of licensing revenue or other damages caused therefrom.
We believe that such measures afford only limited protection and, accordingly, there can be no assurance that the actions taken by us to establish, protect, and enforce our trademarks and other proprietary rights will prevent infringement of our intellectual property rights by others, or prevent the loss of licensing revenue or other damages caused therefrom.
Moreover, we could incur significant expenses or disruptions of our operations in connection with system failures or breaches. In addition, sophisticated hardware and operating system software and applications that we procure from third parties may contain defects in design or manufacture, including “bugs” and other problems that could unexpectedly interfere with the operation of our systems.
Moreover, we could incur significant expenses or disruptions of our operations in connection with system failures or breaches. In addition, 30 Table of Contents sophisticated hardware and operating system software and applications that we procure from third parties may contain defects in design or manufacture, including “bugs” and other problems that could unexpectedly interfere with the operation of our systems.
Competition is based on many factors including, without limitation, the following: ● establishing and maintaining favorable brand recognition; ● developing products that appeal to consumers; ● pricing products appropriately; ● determining and maintaining product quality; ● obtaining access to sufficient floor space in retail locations; ● providing appropriate services and support to retailers; 21 Table of Contents ● maintaining and growing market share; ● developing and maintaining a competitive e-commerce site; ● hiring and retaining key employees; and ● protecting intellectual property.
Competition is based on many factors including, without limitation, the following: ● establishing and maintaining favorable brand recognition; ● developing products that appeal to consumers; ● pricing products appropriately; ● determining and maintaining product quality; ● obtaining access to sufficient floor space in retail locations; ● providing appropriate services and support to retailers; ● maintaining and growing market share; ● developing and maintaining a competitive e-commerce site; ● hiring and retaining key employees; and ● protecting intellectual property.
Negative claims or publicity regarding Xcel, IM Topco, LLC, any future joint ventures, our or their brands, or products could adversely affect our reputation and sales regardless of whether such claims are accurate. Social media, which accelerates the dissemination of information, can increase the challenges of responding to negative claims.
Negative claims or publicity regarding Xcel, IM Topco, LLC, our brand co-developers, any future joint ventures, our or their brands, or products could adversely affect our reputation and sales regardless of whether such claims are accurate. Social media, which accelerates the dissemination of information, can increase the challenges of responding to negative claims.
We have dedicated a significant amount of time and resources to comply with this legislation for the years ended December 31, 2023 and 2022, and will continue to do so for future fiscal periods. However, our management has concluded that our internal control over financial reporting was not effective as of December 31, 2023 due to the material weakness.
We have dedicated a significant amount of time and resources to comply with this legislation for the years ended December 31, 2024 and 2023, and will continue to do so for future fiscal periods. However, our management has concluded that our internal control over financial reporting was not effective as of December 31, 2024 and 2023 due to material weaknesses.
The harm may be immediate, without affording us and our joint ventures an opportunity for redress or correction. 18 Table of Contents If we are unable to anticipate and respond to changing customer preferences and shifts in fashion and industry trends in a timely manner, our business, financial condition, and operating results could be harmed.
The harm may be immediate, without affording us and our joint ventures an opportunity for redress or correction. If we are unable to anticipate and respond to changing customer preferences and shifts in fashion and industry trends in a timely manner, our business, financial condition, and operating results could be harmed.
In addition, our credit facility limits the amount of cash dividends we may pay while amounts under the credit facility are outstanding. Provisions of our corporate charter documents could delay or prevent change of control.
In addition, our credit facility limits the amount of cash dividends we may pay while amounts under the credit facility are outstanding. 27 Table of Contents Provisions of our corporate charter documents could delay or prevent change of control.
Further, these cybersecurity incidents can lead to the public disclosure of personal information (including sensitive personal information) of our employees, customers, and others and result in demands for ransom or other forms of blackmail.
Further, these cybersecurity incidents can lead to the public disclosure of personal information (including sensitive personal information) of our employees, customers, and others and result in demands for ransom or 31 Table of Contents other forms of blackmail.
If our competition for licenses increases, it may take us longer to procure additional licenses, which could slow our growth rate. 22 Table of Contents Difficulties with foreign sourcing may adversely affect our business. Our licensees work with several manufacturers overseas, primarily located overseas, including in China and Thailand.
If our competition for licenses increases, it may take us longer to procure additional licenses, which could slow our growth rate. Difficulties with foreign sourcing may adversely affect our business. Our licensees work with several manufacturers overseas, primarily located overseas, including in China and Thailand.
Any delay in reporting reduces our visibility into the results of operations for IM Topco, LLC and any future joint ventures, and our inability to collect timely and accurate information may affect our ability to timely complete our financial statements and timely file reports and other information with the SEC and may adversely affect our business and results of operations.
Any delay in reporting reduces our visibility into the results of operations for our current and any future joint ventures, and our inability to collect timely and accurate information may affect our ability to timely complete our financial statements and timely file reports and other information with the SEC and may adversely affect our business and results of operations.
Tax years that remain open for assessment for federal and state purposes include the years ended December 31, 2020 through December 31, 2023.
Tax years that remain open for assessment for federal and state purposes include the years ended December 31, 2020 through December 31, 2024.
The anticipated synergies or other benefits of a joint venture may fail to materialize due to changing business conditions or changes in our business priorities or those of our joint venture partners.
The anticipated synergies or other benefits 16 Table of Contents of a joint venture may fail to materialize due to changing business conditions or changes in our business priorities or those of our joint venture partners.
The success of our company, however, will remain largely dependent on our ability to build and maintain broad market acceptance of our brands, to contract with and retain key licensees and on our licensees’ ability to accurately predict upcoming fashion and design trends within customer bases and fulfill the product requirements of retail channels within the global marketplace.
The success of our company, however, will remain largely dependent on our ability to build and maintain broad market acceptance of our brands, co-developed brands, and joint venture brands to contract with and retain key licensees and on our licensees’ and join venture partners’ ability to accurately predict upcoming fashion and design trends within customer bases and fulfill the product requirements of retail channels within the global marketplace.
We are also subject to general risks, which include, but are not limited to, risks related to: ● a pandemic or outbreak of disease or similar public health threat, or fear of such an event; ● supply chain disruptions; ● the Ukrainian-Russian conflict; ● a decline in general economic conditions or consumer spending levels; ● inflation and/or a potential recession; ● extreme or unseasonable weather conditions; ● potential impairment of our trademarks and other intangible assets under accounting guidelines; ● changes in our effective tax rates or adverse outcomes resulting from examination of our tax returns; ● maintenance and security of our information technology systems; ● changes in laws and regulations; ● maintaining an effective system of internal control; and ● limitations on liabilities of our directors and executive officers.
We are also subject to general risks, which include, but are not limited to, risks related to: ● a pandemic or outbreak of disease or similar public health threat, or fear of such an event; ● a decline in general economic conditions, international trade, or consumer spending levels; ● extreme or unseasonable weather conditions; ● potential impairment of our trademarks and other intangible assets under accounting guidelines; ● changes in our effective tax rates or adverse outcomes resulting from examination of our tax returns; ● maintenance and security of our information technology systems; ● changes in laws and regulations; ● maintaining an effective system of internal control; and ● limitations on liabilities of our directors and executive officers.
Summary of Risk Factors Our business is subject to a number of risks, which include, but are not limited to, risks related to: ● our limited amount of cash; ● our concentration of revenue with a limited number of licensees; ● restrictions related to certain key licensing agreements; ● conducting operations through joint ventures and our dependence on the joint ventures; ● our dependency upon our spokespersons; ● the operational performance and/or strategic initiatives of our licensees and retail partners; ● continued market acceptance of our brands and products; ● the use of social media and influencers to market brands and products; ● changing consumer preferences and shifting industry trends; ● execution of our growth strategy, including the acquisition of new brands; ● our dependency on our Chief Executive Officer and other key executives; ● intense competition in the apparel, fashion, and jewelry industries, and within our licensees’ markets; and ● protection of our trademarks and other intellectual property rights.
Summary of Risk Factors Our business is subject to a number of risks, which include, but are not limited to, risks related to: ● our debt obligations and our limited amount of cash; ● material weaknesses in our internal controls over financial reporting; ● our concentration of revenue with a limited number of licensees; ● restrictions related to certain key licensing agreements; ● conducting operations through joint ventures and our dependence on the joint ventures; ● the operational performance and/or strategic initiatives of our licensees and retail partners; ● continued market acceptance of our brands and products; ● the use of social media and influencers to market brands and products; ● changing consumer preferences and shifting industry trends; ● execution of our growth strategy, including the acquisition of new brands; ● our dependency on our Chief Executive Officer and other key executives; ● intense competition in the apparel, fashion, and jewelry industries, and within our licensees’ markets; and 12 Table of Contents ● protection of our trademarks and other intellectual property rights.
Because we are dependent on these agreements with Qurate for a significant portion of our revenues, if Qurate were to have financial difficulties, or if Qurate decides not to renew or extend its existing agreements with us, our revenue and cash flows could be reduced substantially.
Because we are dependent on these agreements for a significant portion of our revenues, if Qurate or G-III were to have financial difficulties, or if Qurate and/or G-III decide not to renew or extend their existing agreements with us, our revenue and cash flows could be reduced substantially.
In addition, if such devaluation of our trademarks were to occur, a material impairment in the carrying value of one or more of our trademarks, which had an aggregate carrying value of $41.5 million as of December 31, 2023, could also occur and be charged as an expense to our operating results.
In addition, if such devaluation of our trademarks were to occur, a material impairment in the carrying value of one or more of our trademarks, which had an aggregate carrying value of $34.8 million as of December 31, 2024, could also occur and be charged as an expense to our operating results.
Joint ventures could fail to meet our expectations or cease to deliver anticipated benefits. There could also be disagreements with our joint venture partners that could adversely affect our interest a joint venture. We hold a 30% interest in each of IM Topco, LLC and ORME. We may enter into additional joint ventures in the future.
Joint ventures could fail to meet our expectations or cease to deliver anticipated benefits. There could also be disagreements with our joint venture partners that could adversely affect our interest a joint venture. We currently hold a 17.5% interest in IM Topco, LLC and a 19% interest in ORME. We may enter into additional joint ventures in the future.
If we are unable to take effective measures in a timely manner to mitigate the impact of the inflation as well as a potential recession, our business, financial condition, and results of operations could be adversely affected. Extreme or unseasonable weather conditions could adversely affect our business.
If we are unable to take effective measures in a timely manner to mitigate the impact of the inflation as well as a potential recession, our business, financial condition, and results of operations could be adversely affected.
In addition, poor economic and market conditions, including a potential recession, may negatively impact market 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.
Macroeconomic conditions and international trade conditions could adversely impact our business and results of operations. Poor economic and market conditions, including a potential recession, may negatively impact market 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.
We continue to seek new opportunities and international expansion through interactive television and licensing arrangements, as well as joint ventures and collaborations.
We continue to seek new opportunities and international expansion through interactive television and licensing arrangements, 19 Table of Contents as well as joint ventures and collaborations.
This market volatility could reduce the market price of the common stock, regardless of our operating performance.
This market volatility could reduce the market price of the common stock, regardless of our 26 Table of Contents operating performance.
Such additional financing may not be available on satisfactory terms or it may not be available when needed, or at all. As of December 31, 2023, we had cash and cash equivalents of approximately $3.0 million, and during the year ended December 31, 2023, we used $6.5 million of cash in operating activities.
Such additional financing may not be available on satisfactory terms or it may not be available when needed, or at all. As of December 31, 2024, we had cash and cash equivalents of approximately $1.3 million, and during the year ended December 31, 2024, we used $4.7 million of cash in operating activities.
The impacts of the ongoing COVID-19 pandemic (including actions taken by national, state, and local governments in response to COVID-19) negatively impacted the U.S. and global economy, disrupted consumer spending and global supply chains, and created significant volatility and disruption of financial markets.
The COVID-19 pandemic caused a disruption to our business, beginning in March 2020. ​ The impacts of the COVID-19 pandemic (including actions taken by national, state, and local governments in response to COVID-19) negatively impacted the U.S. and global economy, disrupted consumer spending and global supply chains, and created significant volatility and disruption of financial markets.
As of December 31, 2023, we had an aggregate of 3,103,941 shares of common stock available for grants under our 2021 Equity Incentive Plan (the "2021 Plan") to our directors, executive officers, employees, and consultants.
As of December 31, 2024, we had an aggregate of 279,957 shares of common stock available for grants under our 2021 Equity Incentive Plan (the "2021 Plan") to our directors, executive officers, employees, and consultants.
To the extent that any key customer reduces the number of its vendors or allocates less floor space for our products and, as a result, reduces or eliminates purchases from us, there could be a material adverse effect on us.
There is a trend among major retailers to concentrate purchasing among a narrowing group of vendors. To the extent that any key customer reduces the number of its vendors or allocates less floor space for our products and, as a result, reduces or eliminates purchases from us, there could be a material adverse effect on us.
Any such action could adversely affect our financial results and the market price of our common stock. Moreover, if we discover a material weakness, the disclosure of that fact, even if quickly remedied, could reduce the market’s confidence in our financial statements and harm our stock price.
Moreover, if we discover a material weakness, the disclosure of that fact, even if quickly remedied, could reduce the market’s confidence in our financial statements and harm our stock price.
A pandemic or outbreak of disease or similar public health threat, such as the COVID-19 pandemic, or fear of such an event, could have a material adverse impact on our business, operating results, and financial condition. The COVID-19 pandemic caused a disruption to our business, beginning in March 2020.
General Risks A pandemic outbreak of disease or similar public health threat, or fear of such an event, could have a material adverse impact on the Company's business, operating results and financial condition. ​ A pandemic or outbreak of disease or similar public health threat, such as the COVID-19 pandemic, or fear of such an event, could have a material adverse impact on our business, operating results, and financial condition.
Accordingly, any prolonged economic slowdown or a lengthy or severe recession with respect to either the U.S. or the global economy is likely to have a material adverse effect on our results of operations, financial condition, and business prospects. Inflation and/or a potential recession could adversely impact our business and results of operations.
The risks associated with our business are more acute during periods of economic slowdown or recession. Accordingly, any prolonged economic slowdown or a lengthy or severe recession with respect to either the U.S. or the global economy is likely to have a material adverse effect on our results of operations, financial condition, and business prospects.
Customers’ strategic initiatives, including developing their own private labels brands, selling national brands on an exclusive basis, reducing the number of vendors they purchase from, or reducing the floor space dedicated to our brands could also impact our sales to these customers. There is a trend among major retailers to concentrate purchasing among a narrowing group of vendors.
Customers’ strategic initiatives, including developing their own private labels brands, selling national brands on an exclusive basis, reducing the number of vendors they purchase from, or reducing the floor space dedicated to our brands could also impact our sales to these 17 Table of Contents customers.
As a result, there is no guarantee that our stockholders will achieve greater returns as a result of any future acquisitions we complete. Intense competition in the apparel, fashion, and jewelry industries could reduce our sales and profitability. As a fashion company, we face intense competition from other domestic and foreign apparel, footwear, accessories, and jewelry manufacturers and retailers.
As a result, there is no guarantee that our stockholders will achieve greater returns as a result of any future acquisitions we complete. ​ 21 Table of Contents Intense competition in the apparel, fashion, and jewelry industries could reduce our sales and profitability.
Furthermore, as laws and regulations and public opinion rapidly evolve to govern the use of these platforms and devices, the failure by us, our employees, our network of social media influencers, our sponsors or third parties acting at our direction to abide by applicable laws and regulations in the use of these platforms and devices or otherwise could subject us to regulatory investigations, class action lawsuits, liability, fines or other penalties and have a material adverse effect on our business, financial condition and operating results.
Furthermore, as laws and regulations and public opinion rapidly evolve to govern the use of these platforms and devices, the failure by us, our employees, our network of social media influencers, our sponsors or third parties acting at our direction to abide by applicable laws and regulations in the use of these platforms and devices or otherwise could subject us to regulatory investigations, class action lawsuits, liability, fines or other penalties and have a material adverse effect on our business, financial condition and operating results. 18 Table of Contents In addition, an increase in the use of social media for product promotion and marketing may cause an increase in the burden on us and our joint ventures to monitor compliance of such materials, and increase the risk that such materials could contain problematic product or marketing claims in violation of applicable regulations.
IM Topco, LLC and ORME are, and we expect any future joint ventures will be, contractually obligated to provide timely and accurate information regarding their sales and operations. We rely on this information to prepare our consolidated financial statements.
We are dependent on our joint ventures to provide timely and accurate information about their sales and operations, which we rely upon to effectively manage their brands. IM Topco, LLC and ORME are, and we expect any future joint ventures will be, contractually obligated to provide timely and accurate information regarding their sales and operations.
The proxy holder shall vote in favor of matters recommended or approved by the board of directors. The combined voting power of the common stock ownership of our directors and executive officers is approximately 45% of our voting securities as of March 31, 2024.
The proxy holder shall vote in favor of matters recommended or approved by the board of directors. 24 Table of Contents The combined voting power of the common stock ownership of our directors and executive officers was approximately 40% of our voting securities as of April 5, 2025.
If our competition for licenses increases, or any of our current licensees elect not to renew their licenses or renew on terms less favorable than today, our growth plans could be slowed and our business, financial condition and results of operations would be adversely affected.
Our licensees may be unable to successfully compete in the markets for their products, and we may not be able to continue to compete successfully with respect to our contractual arrangements. 22 Table of Contents If our competition for licenses increases, or any of our current licensees elect not to renew their licenses or renew on terms less favorable than today, our growth plans could be slowed and our business, financial condition and results of operations would be adversely affected.
There is also a risk that our existing management and a limited number of stockholders may have interests which are different from certain stockholders and that they will pursue an agenda which is beneficial to themselves at the expense of other stockholders. 24 Table of Contents Our failure to meet the continued listing requirements of the Nasdaq Capital Market could result in a delisting of our common stock, which could negatively impact the market price and liquidity of our common stock and our ability to access the capital markets. ​ On April 16, 2024, we received a letter from the Listing Qualifications Department of The Nasdaq Stock Market (“Nasdaq”) notifying us that the minimum bid price per share for our common stock fell below $1.00 for a period of 30 consecutive business days.
Our failure to meet the continued listing requirements of the Nasdaq Capital Market could result in a delisting of our common stock, which could negatively impact the market price and liquidity of our common stock and our ability to access the capital markets. ​ On April 16, 2024, we received a letter from the Listing Qualifications Department of The Nasdaq Stock Market (“Nasdaq”) notifying us that the minimum bid price per share for our common stock fell below $1.00 for a period of 30 consecutive business days.
The market price of the common stock could also be reduced by general market price declines or market volatility in the future or future declines or volatility in the prices of stocks for companies in the trademark licensing business or companies in the industries in which our licensees compete. 26 Table of Contents We may issue a substantial number of shares of common stock upon exercise of outstanding warrants and options.
The market price of the common stock could also be reduced by general market price declines or market volatility in the future or future declines or volatility in the prices of stocks for companies in the trademark licensing business or companies in the industries in which our licensees compete.
In addition, our growth strategy includes the acquisition of additional brands, and we may issue shares of our common stock as consideration for acquisitions. Sales or the potential for sale of a substantial number of such shares could adversely affect the market price of our common stock, particularly if our common stock remains thinly traded at such time.
Sales or the potential for sale of a substantial number of such shares could adversely affect the market price of our common stock, particularly if our common stock remains thinly traded at such time.
Competition has and may continue to result in pricing pressures, reduced profit margins, lost market share, or failure to grow our market share, any of which could substantially harm our business and results of operations.
As a fashion company, we face intense competition from other domestic and foreign apparel, footwear, accessories, and jewelry manufacturers and retailers. Competition has and may continue to result in pricing pressures, reduced profit margins, lost market share, or failure to grow our market share, any of which could substantially harm our business and results of operations.
The global pandemic affected the financial health of certain of our customers, and the bankruptcy of certain other customers; as a result, we may be required to make additional adjustments for doubtful accounts which would increase our operating expenses in future periods and negatively impact our operating results.
The global pandemic affected the financial health of certain of our customers, and the bankruptcy of certain other customers; as a result, we may be required to make additional adjustments to our allowances for credit losses in future periods, which would increase our operating expenses and negatively impact our operating results. ​ In addition, the effects of the COVID-19 pandemic on the shipping industry negatively impacted our licensees’ ability to import products in a manner that allowed for timely delivery to customers.
If prolonged, such extreme or unseasonable weather conditions could adversely affect our business, financial condition, and results of operations. 29 Table of Contents Our trademarks and other intangible assets are subject to impairment charges under accounting guidelines.
If prolonged, such extreme or unseasonable weather conditions could adversely affect our business, financial condition, and results of operations. Our trademarks and other intangible assets are subject to impairment charges under accounting guidelines. Our intangible assets including our trademarks had a net carrying value of $34.8 million as of December 31, 2024 and represent a substantial portion of our assets.
We cannot be certain that our internal controls will become effective or that future material changes to our internal control over financial reporting will be effective. If we cannot adequately obtain and maintain the effectiveness of our internal control over financial reporting, we may be subject to sanctions or investigation by regulatory authorities, such as the SEC.
If we cannot adequately obtain and maintain the effectiveness of our internal control over financial reporting, we may be subject to sanctions or investigation by regulatory authorities, such as the SEC. Any such action could adversely affect our financial results and the market price of our common stock.
In order to approve a person’s account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience and objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and that that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
In order to approve a person’s account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience and objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and that that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. 25 Table of Contents The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, which, in highlight form, sets forth: ● the basis on which the broker or dealer made the suitability determination; and ● that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, which, in highlight form, sets forth: ● the basis on which the broker or dealer made the suitability determination; and ● that the broker or dealer received a signed, written agreement from the investor prior to the transaction. 25 Table of Contents Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and commission payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions.
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and commission payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions.
The designation of preferred stock in the future could make it difficult for third parties to gain control of our company, prevent or substantially delay a change in control, discourage bids for the common stock at a premium, or otherwise adversely affect the market price of the common stock. 27 Table of Contents General Risks A pandemic outbreak of disease or similar public health threat, or fear of such an event, could have a material adverse impact on the Company's business, operating results and financial condition .
The designation of preferred stock in the future could make it difficult for third parties to gain control of our company, prevent or substantially delay a change in control, discourage bids for the common stock at a premium, or otherwise adversely affect the market price of the common stock.
Therefore, exercises of warrants and options will result in a decrease in the net tangible book value per share of our common stock and such decrease could be material. The issuance of shares upon exercise of outstanding warrants and options will dilute our then-existing stockholders’ percentage ownership of our company, and such dilution could be substantial.
The holders of warrants and options will likely exercise such securities at a time when the market price of our common stock exceeds the exercise price. Therefore, exercises of warrants and options will result in a decrease in the net tangible book value per share of our common stock and such decrease could be material.
If our licensees are unable to mitigate these supply chain disruptions, their ability to meet customer expectations, manage inventory and complete sales could be materially adversely affected, which could adversely affect our results of operations. The Ukrainian-Russian conflict could have a material adverse impact on our business.
If our licensees are unable to mitigate any potential future supply chain disruptions, their ability to meet customer expectations, manage inventory and complete sales could be materially adversely affected, which could adversely affect our results of operations. ​ A decline in general economic conditions resulting in a decrease in consumer spending levels and an inability to access capital may adversely affect our business.
Any such disagreement could have a material adverse effect on our interest in the joint venture, the business of the joint venture, or the portion of our growth strategy related to the joint venture. 15 Table of Contents We are dependent on our joint ventures to provide timely and accurate information about their sales and operations, which we rely upon to effectively manage their brands.
Any such disagreement could have a material adverse effect on our interest in the joint venture, the business of the joint venture, or the portion of our growth strategy related to the joint venture.
In addition, the new securities may have rights senior to those of our common stock. 14 Table of Contents A substantial portion of our revenue is concentrated with a limited number of licensees such that the loss of any of such licensees could decrease our revenue and impair our cash flows.
We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses A substantial portion of our revenue is concentrated with a limited number of licensees such that the loss of any of such licensees could decrease our revenue and impair our cash flows.
A substantial portion of our revenue has been paid by Qurate, through the respective agreements with Qurate through QVC and HSN. During the years ended December 31, 2023 and 2022, Qurate accounted for approximately 34% and 44%, respectively, of our total net revenue.
During the years ended December 31, 2024 and 2023, Qurate accounted for approximately 44% and 34%, respectively, of our total net revenue, while the Halston Master License represented approximately 31% and 9% of our total net revenue, respectively.
Furthermore, changes in the credit and capital markets, including market disruptions, limited liquidity, and interest rate fluctuations, may increase the cost of financing or restrict our access to potential sources of capital for future acquisitions. The risks associated with our business are more acute during periods of economic slowdown or recession.
In addition, domestic and international political situations also affect consumer confidence, including the threat, outbreak or escalation of terrorism, military conflicts or other hostilities around the world. 28 Table of Contents Furthermore, changes in the credit and capital markets, including market disruptions, limited liquidity, and interest rate fluctuations, may increase the cost of financing or restrict our access to potential sources of capital for future acquisitions.
There can be no assurance that the Company will be able to regain compliance with the minimum bid price requirement or will otherwise be in compliance with other Nasdaq listing criteria. ​ Our common stock may be subject to the penny stock rules adopted by the SEC that require brokers to provide extensive disclosure to their customers prior to executing trades in penny stocks.
These factors could result in lower prices and larger spreads in the bid and ask prices for our common stock. ​ Our common stock may be subject to the penny stock rules adopted by the SEC that require brokers to provide extensive disclosure to their customers prior to executing trades in penny stocks.
As of December 31, 2023, we had outstanding warrants and options to purchase 6,264,605 shares of our common stock with a weighted average exercise price of $1.96. The holders of warrants and options will likely exercise such securities at a time when the market price of our common stock exceeds the exercise price.
We may issue a substantial number of shares of common stock upon exercise of outstanding warrants and options. As of December 31, 2024, we had outstanding warrants and options to purchase 736,349 shares of our common stock with a weighted average exercise price of $15.69.
Truck driver shortages, shortages of truck equipment and the inability of ports to provide reliable pick up times, also negatively impacted our and our licensees’ ability to timely receive goods in the past. If our licensees are unable to mitigate supply chain disruptions, their ability to meet customer expectations, manage inventory and complete sales could be materially adversely affected.
Congestion at ports of loading and ports of entry caused significant delays in deliveries and changes to the itineraries of steamship carriers. Truck driver shortages, shortages of truck equipment and the inability of ports to provide reliable pick up times, also negatively impacted our and our licensees’ ability to timely receive goods in the past.
Removed
Although we believe that our current levels of cash and our anticipated cash flow from operations will be sufficient to sustain our operations at our current expense levels for at least twelve months subsequent to the date of the filing of this Annual Report on Form 10-K, we may require significant additional cash to satisfy our working capital requirements, expand our operations, or acquire and develop additional brands.
Added
In December 2024, we refinanced our debt by entering into a new loan agreement for an aggregate amount of $10.0 million of term loans, resulting in the net receipt of $2.8 million of cash after repayment of expenses and repayment 13 Table of Contents of our prior loan agreement.
Removed
We are dependent upon the promotional services of Lori Goldstein and our other spokespersons as they relate to our respective brands.
Added
In April 2025, we refinanced our debt with a new lender, resulting in the net receipt of approximately $3.0 million of cash after repayment of principal and payment of fees and expenses. We may require significant additional cash to satisfy our working capital requirements, expand our operations, or acquire and develop additional brands.
Removed
If we lose the services of Lori Goldstein, we may not be able to fully comply with the terms of our agreement with Qurate, and it may result in significant reductions in the value of the LOGO by Lori Goldstein brand and our prospects, revenues, and cash flows.
Added
In addition, the new securities may have rights senior to those of our common stock. Our financial statements have been prepared assuming that we will continue as a going concern.
Removed
Lori Goldstein is a key individual in our continued promotion of the LOGO by Lori Goldstein brand and the principal salesperson of the LOGO by Lori Goldstein brand on Qurate. Failure of Lori Goldstein to provide services to Qurate could result in a termination of related agreements with Qurate, which could trigger an event of default under our credit facility.
Added
We incurred net losses of approximately $22.6 million and $22.2 million during the years ended December 31, 2024 and 2023, respectively (which included non-cash expenses of approximately $20.3 million and $9.0 million, respectively), and had an accumulated deficit of approximately $76.2 million and $53.8 million as of December 31, 2024 and 2023, respectively.
Removed
Although we have entered into an employment agreement with Ms. Goldstein, there is no guarantee that we will not lose her services. To the extent that any of Ms. Goldstein’s services become unavailable to us, we will likely need to find a replacement for Ms. Goldstein to promote the LOGO by Lori Goldstein brand.
Added
Net cash used in operating activities was $4.7 million in 2024 and $6.5 million in 2023.
Removed
Competition for skilled designers and high-profile brand promoters is intense, and compensation levels may be high, and there is no guarantee that we would be able to identify and attract a qualified replacement, or if Ms.
Added
Our audited financial statements for the fiscal year ended December 31, 2024 were prepared under the assumption that we will continue as a going concern; however, we have incurred significant losses over the past several years and have used a significant amount of cash in operating activities.
Removed
Goldstein’s services are not available to us, that we would be able to promote the LOGO by Lori Goldstein brand as well as we are able to with Ms. Goldstein.
Added
These factors raise significant uncertainties regarding our ability to meet our financial obligations and financing requirements. As such, there is substantial doubt about our ability to continue as a going concern.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur Board of Directors has oversight for the most significant risks facing us and for our processes to identify, prioritize, assess, manage, and mitigate those risks. The Board of Directors receives periodic updates on cybersecurity and information technology matters and related risk exposures from management. ​
Biggest changeOur Board of Directors has oversight for the most significant risks facing us and for our processes to identify, prioritize, assess, manage, and mitigate those risks. The Board of Directors receives periodic updates on cybersecurity and information technology matters and related risk exposures from management. ​ 33 Table of Contents

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThis lease commenced in April 2024 and shall expire seven years from the commencement date, in 2031. We also currently lease approximately 29,600 square feet of office space at 1333 Broadway, 10th floor, New York, New York; this location represented our former corporate offices and operations facility and shall expire on October 30, 2027.
Biggest changeWe also currently lease approximately 29,600 square feet of office space at 1333 Broadway, 10th floor, New York, New York; this location represented our former corporate offices and operations facility and this lease shall expire on October 30, 2027. We have subleased this office space to a third-party subtenant through October 30, 2027. ​
Item 2. Properties We currently lease and maintain our corporate offices and operations facility located at 550 Seventh Avenue, 11th floor, New York, New York. We entered into a lease agreement effective February 29, 2024 for such offices of approximately 12,000 square feet of office space.
Item 2. Properties We currently lease and maintain our corporate offices and operations facility located at 550 Seventh Avenue, 11th floor, New York, New York. We entered into a lease agreement effective February 29, 2024 for such offices of approximately 12,000 square feet of office space. This lease commenced in April 2024 and shall expire in 2031.
Removed
We have subleased this office space to a third-party subtenant through October 30, 2027. ​ 33 Table of Contents

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+6 added−0 removed16 unchanged
Biggest changeRecent Sales of Unregistered Securities There were no sales of unregistered or registered securities during the years ended December 31, 2023 and 2022. Purchases of equity securities by the issuer and affiliated purchasers We did not repurchase any shares of common stock during the fourth fiscal quarter ended December 31, 2023. ​
Biggest changeThere were no sales of unregistered securities during the year ended December 31, 2023.
The stock options may be incentive stock options or non-qualified stock options. ● A total of 4,000,000 shares of common stock are eligible for issuance under the 2021 Plan. ● The 2021 Plan may be administered by the Board of Directors (the “Board”) or a committee consisting of two or more members of the Board of Directors appointed by the Board (for purposes of this description, any such committee, a “Committee”). ● Officers and other employees of our Company or any parent or subsidiary of our Company who are at the time of the grant of an Award employed by us or any parent or subsidiary of our Company are eligible to be granted 34 Table of Contents options or other Awards under the 2021 Plan.
The stock options may be incentive stock options or non-qualified stock options. 34 Table of Contents ● A total of 400,000 shares of common stock are eligible for issuance under the 2021 Plan. ● The 2021 Plan may be administered by the Board of Directors (the “Board”) or a committee consisting of two or more members of the Board of Directors appointed by the Board (for purposes of this description, any such committee, a “Committee”). ● Officers and other employees of our Company or any parent or subsidiary of our Company who are at the time of the grant of an Award employed by us or any parent or subsidiary of our Company are eligible to be granted options or other Awards under the 2021 Plan.
There were no RSUs outstanding as of December 31, 2023. ● Certain Awards made under the Plan may be granted so that they qualify as “performance-based compensation” (as this term is used in Internal Revenue Code Section 162(m) and the regulations thereunder) and are exempt from the deduction limitation imposed by Code Section 162(m) (these Awards are referred to as “Performance-Based Awards”).
There were no RSUs outstanding as of December 31, 2024. ● Certain Awards made under the Plan may be granted so that they qualify as “performance-based compensation” (as this term is used in Internal Revenue Code Section 162(m) and the regulations thereunder) and are exempt from the deduction limitation imposed by Code Section 162(m) (these Awards are referred to as “Performance-Based Awards”).
Each cash award shall be confirmed by, and shall be subject to the terms of, an agreement executed ● No Awards may be granted on or after the tenth anniversary of the effective date of the 2021 Plan. 35 Table of Contents 2011 Equity Incentive Plan The key terms and provisions of our Amended and Restated 2011 Equity Incentive Plan, which we refer to as the 2011 Plan, were substantially similar to the 2021 Plan described above, with the major difference being the number of shares of common stock reserved for issuance under the 2011 Plan.
Each cash award shall be confirmed by, and shall be subject to the terms of, an agreement executed ● No Awards may be granted on or after the tenth anniversary of the effective date of the 2021 Plan. 2011 Equity Incentive Plan The key terms and provisions of our Amended and Restated 2011 Equity Incentive Plan, which we refer to as the 2011 Plan, were substantially similar to the 2021 Plan described above, with the major difference being the number of shares of common stock reserved for issuance under the 2011 Plan.
The Board or Committee shall determine the eligible persons to whom, and the time or times at which, cash awards will be made, the amount that is subject to the cash award, the circumstances and conditions under which such amount shall be paid, in whole or in part, the time of payment, and all other terms and conditions of the Awards.
The Board or Committee shall determine the eligible persons to whom, and the time or times at which, cash awards will be made, the amount that is subject to the cash award, the circumstances and conditions under which such amount 35 Table of Contents shall be paid, in whole or in part, the time of payment, and all other terms and conditions of the Awards.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is listed on the NASDAQ Capital Market, under the trading symbol “XELB.” Holders As of December 31, 2023, the number of our stockholders of record was 556 (excluding beneficial owners and any shares held in street name or by nominees).
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is listed on the NASDAQ Capital Market, under the trading symbol “XELB.” Holders As of December 31, 2024, the number of our stockholders of record was 518 (excluding beneficial owners and any shares held in street name or by nominees).
The following table sets forth information as of December 31, 2023 regarding compensation plans under which our equity securities are authorized for issuance: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of Securities ​ ​ Number of Securities ​ ​ ​ ​ Remaining Available for ​ ​ to be Issued Upon ​ Weighted Average ​ Future Issuance Under ​ ​ Exercise of ​ Exercise Price of ​ Equity Compensation Plans ​ ​ Outstanding Options, ​ Outstanding Options, ​ (Excluding Securities ​ ​ Warrants and Rights ​ Warrants and Rights ​ Reflected in Column (a)) Plan Category (a) (b) (c) Equity compensation Plans (1) ​ 5,264,605 ​ $ 2.05 ​ 3,103,941 (1) Pursuant to our 2011 and 2021 Equity Incentive Plans.
The following table sets forth information as of December 31, 2024 regarding compensation plans under which our equity securities are authorized for issuance: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of Securities ​ ​ Number of Securities ​ ​ ​ ​ Remaining Available for ​ ​ to be Issued Upon ​ Weighted Average ​ Future Issuance Under ​ ​ Exercise of ​ Exercise Price of ​ Equity Compensation Plans ​ ​ Outstanding Options, ​ Outstanding Options, ​ (Excluding Securities ​ ​ Warrants and Rights ​ Warrants and Rights ​ Reflected in Column (a)) Plan Category (a) (b) (c) Equity compensation Plans (1) ​ 472,392 ​ $ 19.01 ​ 279,957 ​ (1) Pursuant to our 2011 and 2021 Equity Incentive Plans.
Added
Recent Sales of Unregistered Securities On March 14, 2024, the Company entered into subscription agreements with each of Robert W.
Added
D’Loren, Chairman and Chief Executive Officer of the Company; an affiliate of Mark DiSanto, a director of the Company; and Seth Burroughs, Executive Vice President of Business Development and Treasury of the Company to purchase 13,258, 13,258, and 2,946 shares, respectively (collectively, the “Private Placement Shares”), at a price of $9.80 per Private Placement Share.
Added
The total number of Private Placement Shares purchased was 29,462. Net proceeds after payment of agent fees to the representative were approximately $0.3 million.
Added
The purchase of the Private Placement Shares closed on March 19, 2024. 36 Table of Contents On December 12, 2024, the Company issued warrants to purchase 145,664 shares of common stock to lenders as additional consideration for entering into a loan and security agreement. The warrants are immediately exercisable and expire on December 12, 2034.
Added
Purchases of equity securities by the issuer and affiliated purchasers The following table provides information with respect to restricted stock purchased and retired by the Company during the year ended December 31, 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of Shares ​ ​ ​ ​ ​ ​ ​ of Common Stock ​ ​ Total Number of ​ ​ ​ ​ Purchased as ​ ​ Shares of ​ Average ​ Part of a Publicly ​ ​ Common Stock ​ Price per ​ Announced Period ​ Purchased ​ Share ​ Plan or Program July 1, 2024 to July 31, 2024 (i) 1,344 ​ $ 7.20 — August 1, 2024 to August 31, 2024 (i) ​ 2,760 ​ ​ 7.03 ​ — September 1, 2024 to September 30, 2024 (i) ​ 2,594 ​ ​ 7.48 ​ — October 1, 2024 to October 31, 2024 (i) ​ 2,458 ​ ​ 7.89 ​ — November 1, 2024 to November 30, 2024 (i) ​ 2,824 ​ ​ 6.87 ​ — December 1, 2024 to December 31, 2024 (i) ​ 3,768 ​ ​ 5.15 ​ — Total year ended December 31, 2024 15,748 ​ $ 6.78 — ​ (i) The shares were exchanged from employees in connection with the income tax withholding obligations on behalf of such employees from the receipt of stock awards.
Added
The 2011 Plan and 2021 Plan allow for award holders to surrender vested shares to cover withholding tax liabilities. We did not repurchase any shares of common stock during the year ended December 31, 2023. ​

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeWhen evaluating our performance, you should consider non-GAAP net income, 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. ​ 43 Table of Contents 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ($ in thousands) 2023 2022 Net loss attributable to Xcel Brands, Inc. stockholders ​ $ (21,052) ​ $ (4,018) Asset impairments ​ ​ 100 ​ ​ 274 Amortization of trademarks ​ 6,085 ​ 6,079 Proportional share of trademark amortization of equity method investee ​ ​ 2,060 ​ ​ 1,202 Stock-based compensation and cost of licensee warrants ​ 242 ​ 620 Loss on early extinguishment of debt ​ ​ — ​ ​ 2,324 Certain adjustments to provision for doubtful accounts ​ ​ — ​ ​ 413 Gains on sales of assets and investments ​ ​ (359) ​ ​ (20,586) Gain on lease termination ​ ​ (445) ​ ​ — Gain on reduction of contingent obligation ​ ​ — ​ ​ (900) Income tax provision (benefit) ​ 1,212 ​ (431) Non-GAAP net loss ​ $ (12,157) ​ $ (15,023) ​ The following table is a reconciliation of diluted loss per share to non-GAAP diluted EPS: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 Diluted net loss attributable to Xcel Brands, Inc. stockholders ​ $ (1.07) ​ $ (0.20) Asset impairments ​ ​ 0.01 ​ ​ 0.01 Amortization of trademarks ​ 0.31 ​ 0.31 Proportional share of trademark amortization of equity method investee ​ ​ 0.10 ​ ​ 0.06 Stock-based compensation and cost of licensee warrants ​ 0.01 ​ 0.03 Loss on early extinguishment of debt ​ ​ — ​ ​ 0.12 Certain adjustments to provision for doubtful accounts ​ ​ — ​ ​ 0.02 Gains on sales of assets and investments ​ ​ (0.02) ​ ​ (1.05) Gain on lease termination ​ ​ (0.02) ​ ​ — Gain on reduction of contingent obligation ​ ​ — ​ ​ (0.05) Income tax provision (benefit) ​ 0.06 ​ (0.02) Non-GAAP diluted EPS ​ $ (0.62) ​ $ (0.77) Diluted weighted average shares outstanding ​ 19,711,637 ​ 19,624,669 ​ ​ 44 Table of Contents 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 Adjusted EBITDA: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ($ in thousands) 2023 2022 ​ Net loss attributable to Xcel Brands, Inc. stockholders ​ $ (21,052) ​ $ (4,018) ​ Asset impairments ​ 100 ​ 274 ​ Depreciation and amortization ​ 6,954 ​ 7,263 ​ Proportional share of trademark amortization of equity method investee ​ ​ 2,060 ​ ​ 1,202 ​ Interest and finance expense ​ 381 ​ 3,527 ​ Income tax provision (benefit) ​ 1,212 ​ (431) ​ State and local franchise taxes ​ 76 ​ 102 ​ Stock-based compensation and cost of licensee warrants ​ 242 ​ 620 ​ Certain adjustments to provision for doubtful accounts ​ ​ — ​ ​ 413 ​ Gains on sales of assets and investments ​ ​ (359) ​ ​ (20,586) ​ Gain on lease termination ​ ​ (445) ​ ​ — ​ Gain on reduction of contingent obligation ​ — ​ (900) ​ Costs associated with restructuring of operations ​ ​ 5,106 ​ ​ — ​ Adjusted EBITDA ​ $ (5,725) ​ $ (12,534) ​ ​ Liquidity and Capital Resources General As of December 31, 2023 and 2022, our cash and cash equivalents were $3.0 million and $4.6 million, respectively.
Biggest changeThe following table is a reconciliation of net loss attributable to Xcel Brands, Inc. stockholders (our most directly comparable financial measure presented in accordance with GAAP) to non-GAAP net loss: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ($ in thousands) 2024 2023 Net loss attributable to Xcel Brands, Inc. stockholders ​ $ (22,395) ​ $ (21,052) Asset impairment charges ​ ​ 3,483 ​ ​ 100 Amortization of trademarks ​ 4,790 ​ 6,085 Loss from equity method investments ​ ​ 7,623 ​ ​ 2,060 Contingent reduction in equity ownership of IM Topco, LLC ​ 4,213 ​ — Stock-based compensation and cost of licensee warrants ​ 509 ​ 242 Loss on extinguishment of debt ​ ​ 287 ​ ​ — Gains on sales of assets and investments ​ ​ (3,801) ​ ​ (359) Gain on lease termination ​ ​ — ​ ​ (445) Income tax provision ​ 220 ​ 1,212 Non-GAAP net loss ​ $ (5,071) ​ $ (12,157) ​ The following table is a reconciliation of diluted loss per share to non-GAAP diluted EPS: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 Diluted loss per share attributable to Xcel Brands, Inc. stockholders ​ $ (9.84) ​ $ (10.68) Asset impairment charges ​ ​ 1.53 ​ ​ 0.05 Amortization of trademarks ​ 2.10 ​ 3.09 Loss from equity method investments ​ ​ 3.35 ​ ​ 1.05 Contingent reduction in equity ownership of IM Topco, LLC ​ 1.85 ​ — Stock-based compensation and cost of licensee warrants ​ 0.22 ​ 0.12 Loss on extinguishment of debt ​ ​ 0.13 ​ ​ — Gains on sales of assets and investments ​ ​ (1.67) ​ ​ (0.18) Gain on lease termination ​ ​ — ​ ​ (0.23) Income tax provision ​ 0.10 ​ 0.61 Non-GAAP diluted EPS ​ $ (2.23) ​ $ (6.17) Diluted weighted average shares outstanding ​ 2,275,332 ​ 1,971,072 44 Table of Contents ​ 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 Adjusted EBITDA: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ($ in thousands) 2024 2023 ​ Net loss attributable to Xcel Brands, Inc. stockholders ​ $ (22,395) ​ $ (21,052) ​ Interest and finance expense ​ 931 ​ 381 ​ Accretion of lease liability for exited lease ​ ​ 240 ​ ​ — ​ Income tax provision ​ 220 ​ 1,212 ​ State and local franchise taxes ​ 40 ​ 76 ​ Depreciation and amortization ​ 4,947 ​ 6,954 ​ Loss from equity method investments ​ ​ 7,623 ​ ​ 2,060 ​ Contingent reduction in equity ownership of IM Topco, LLC ​ ​ 4,213 ​ ​ — ​ Asset impairment charges ​ 3,483 ​ 100 ​ Stock-based compensation and cost of licensee warrants ​ 509 ​ 242 ​ Gains on sales of assets and investments ​ ​ (3,801) ​ ​ (359) ​ Gain on lease termination ​ ​ — ​ ​ (445) ​ Costs associated with restructuring of operations ​ 537 ​ 5,106 ​ Adjusted EBITDA ​ $ (3,453) ​ $ (5,725) ​ ​ Liquidity and Capital Resources General As of December 31, 2024 and 2023, our cash and cash equivalents were $1.3 million and $3.0 million, respectively.
While our significant accounting policies and estimates are described in more detail in the notes to our consolidated financial statements, our most critical accounting policies and estimates, discussed below, pertain to revenue recognition, trademarks and other intangible assets, income taxes, and equity method investments.
While our significant accounting policies and estimates are described in more detail in the notes to our consolidated financial statements, our most critical accounting policies and estimates, discussed below, pertain to revenue recognition, trademarks and other intangible assets, equity method investments, and income taxes.
Shipping to customers was accounted for as a fulfillment activity and was recorded within other selling, general and administrative expenses.
Shipping to customers was accounted for as a fulfillment activity and was recorded within other selling, general and administrative expenses.
We recognized revenue from such transactions within net sales in the accompanying consolidated statements of operations when performance obligations identified under the terms of contracts with our customers were satisfied, which occurred upon the transfer of control of the merchandise in accordance with the contractual terms and conditions of the sale.
We recognized revenue from such transactions within net sales in our consolidated statements of operations when performance obligations identified under the terms of contracts with our customers were satisfied, which occurred upon the transfer of control of the merchandise in accordance with the contractual terms and conditions of the sale.
Wholesale Sales Prior to the restructuring of our business model and operations in 2023, we generated a portion of our revenue through sale of branded jewelry and apparel to both domestic and international customers who, in turn, sold the products to their consumers.
Wholesale Sales Prior to the restructuring of our business model and operations, we generated a portion of our revenue through sale of branded jewelry and apparel to both domestic and international customers who, in turn, sold the products to their consumers.
More specifically, we separately identify: (i) Contracts for which, based on experience, royalties are expected to exceed any applicable minimum guaranteed payments, and to which an output-based measure of progress based on the “right to invoice” practical expedient is applied because the royalties due for each period correlate directly with the value to the customer of our performance in each period (this approach is identified as “View A” by the FASB Revenue Recognition Transition Resource Group, “TRG”); and (ii) Contracts for which revenue is recognized based on minimum guaranteed payments using an appropriate measure of progress, in which minimum guaranteed payments are straight-lined over the term of the contract and recognized ratably based on the passage of time, and to which the royalty recognition constraint to the sales-based royalties in excess of minimum guaranteed is applied and such sales-based royalties are recognized to the distinct period only when the minimum guaranteed is exceeded on a cumulative basis (this approach is identified as “View C” by the TRG).
More specifically, we separately identify: (i) Contracts for which, based on experience, royalties are expected to exceed any applicable minimum guaranteed payments, and to which an output-based measure of progress based on the “right to invoice” practical expedient is applied because the royalties due for each period correlate directly with the value to the customer of our performance in each period (this approach is identified as “View A” by the FASB Revenue Recognition Transition Resource Group, “TRG”); and 39 Table of Contents (ii) Contracts for which revenue is recognized based on minimum guaranteed payments using an appropriate measure of progress, in which minimum guaranteed payments are straight-lined over the term of the contract and recognized ratably based on the passage of time, and to which the royalty recognition constraint to the sales-based royalties in excess of minimum guaranteed is applied and such sales-based royalties are recognized to the distinct period only when the minimum guaranteed is exceeded on a cumulative basis (this approach is identified as “View C” by the TRG).
Equity Method Investments We account for our investments in entities over which we have the ability to exercise significant influence, but do not control, under the equity method of accounting, and we recognize our proportionate share of income or losses from the entity within other operating costs and expenses (income) in the consolidated statement of operations.
Equity Method Investments We account for our investments in entities over which we have the ability to exercise significant influence, but do not control, under the equity method of accounting, and we recognize our proportionate share of income or losses from the entity within other operating costs and expenses (income) in our consolidated statements of operations.
Non-GAAP net income 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 $(5.7) million for the Current Year, compared with Adjusted EBITDA of approximately $(12.5) million for the Prior Year.
Non-GAAP net income 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 $(3.5) million for the Current Year, compared with Adjusted EBITDA of approximately $(5.7) million for the Prior Year.
Direct-to-Consumer Sales Our revenue associated with our e-commerce jewelry operations and the Longaberger brand (prior to the restructuring of our business model and operations in 2023) was recognized within net sales in the accompanying consolidated statements of operations at the point in time when product is shipped to the customer.
Direct-to-Consumer Sales Our revenue associated with our e-commerce jewelry operations and the Longaberger brand (prior to the restructuring of our business model and operations) was recognized within net sales in our consolidated statements of operations at the point in time when product is shipped to the customer.
Costs associated with restructuring of operations include the current year operating losses generated by certain of our businesses that have been restructured or discontinued (i.e., wholesale apparel and fine jewelry), as well as non-cash charges associated with the restructuring of certain contractual arrangements.
Costs associated with restructuring of operations include operating losses generated by certain of our businesses that have been restructured or discontinued (i.e., wholesale apparel and fine jewelry), as well as non-cash charges associated with the restructuring of certain contractual arrangements.
During the Current Year, 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.
During the Current Year, the effective tax rate differed from the federal statutory rate primarily due to the recording of a valuation allowance against the benefit that would have otherwise been recognized for the year, as it was considered not more likely than not that the net operating losses generated during the year will be utilized in future periods.
Management believes non-GAAP net income, 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.
Management believes non-GAAP net income, non-GAAP diluted EPS, 43 Table of Contents 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.
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. ​ 49 Table of Contents Other Factors We continue to seek to expand and diversify the types of licensed products being produced under our brands.
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. Other Factors We continue to seek to expand and diversify the types of licensed products being produced under our brands.
However, in cases where contractual agreements specify allocation ratios for profits and losses, specified costs and expenses, and/or distributions of cash from operations, that differ from our ownership interest, we use such specified allocation ratios for purposes of determining our share of income or losses from the investee if the agreement is considered substantive.
However, in cases where contractual agreements 40 Table of Contents specify allocation ratios for profits and losses, specified costs and expenses, and/or distributions of cash from operations, that differ from our ownership interest, we use such specified allocation ratios for purposes of determining our share of income or losses from the investee if the agreement is considered substantive.
We believe that Xcel offers a unique value proposition to our retail and direct-to-consumer customers and our licensees for the following reasons: ● our management team, including our officers’ and directors’ experience in, and relationships within the industry; 37 Table of Contents ● our deep knowledge, expertise, and proprietary technology in live streaming and social commerce; ● our design, sales, marketing, and technology platform that enables us to design trend-right product; and ● our significant media and digital presence.
We believe that Xcel offers a unique value proposition to our retail and direct-to-consumer customers and our licensees for the following reasons: ● our management team, including our officers’ and directors’ experience in, and relationships within the industry; ● our deep knowledge, expertise, and proprietary technology in live streaming and social commerce; ● our design, sales, marketing, and technology platform that enables us to design trend-right product; and ● our significant media and digital presence.
Our long-term success, however, will still remain largely dependent on our ability to build and maintain our brands’ awareness and continue to attract wholesale and direct-to-consumer 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.
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.
This discussion summarizes the significant factors affecting our consolidated operating results, financial condition and liquidity and cash flows for the years ended December 31, 2023 and 2022.
This discussion summarizes the significant factors affecting our consolidated operating results, financial condition and liquidity and cash flows for the years ended December 31, 2024 and 2023.
Except for historical information, the matters discussed in this Management’s Discussion 36 Table of Contents and Analysis of Financial Condition and Results of Operations are forward-looking statements that involve risks and uncertainties and are based upon judgments concerning factors that are beyond our control.
Except for historical information, the matters discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are forward-looking statements that involve risks and uncertainties and are based upon judgments concerning factors that are beyond our control.
Non-cash items were primarily comprised of, but not limited to, $7.0 million of depreciation and amortization, the $2.1 million undistributed proportional share of net loss of equity method investee, $1.1 million of deferred taxes, and $0.8 million of bad debt expense, partially offset by a $(0.4) million gain on the sale of a financial asset and a $(0.4) million gain on the settlement of a lease liability.
Non-cash items were primarily comprised of, but not limited to, $7.0 million of depreciation and amortization, the $2.1 million undistributed proportional share of net loss of equity method investee, and $1.1 million of deferred taxes, partially offset by a $(0.4) million gain on the sale of a financial asset and a $(0.4) million gain on the settlement of a lease liability.
If the undiscounted cash flows 39 Table of Contents do not indicate the carrying amount of the asset is recoverable, an impairment charge is measured as the amount by which the carrying amount of the asset group exceeds its fair value based on discounted cash flows analysis or appraisals.
If the undiscounted cash flows do not indicate the carrying amount of the asset is recoverable, an impairment charge is measured as the amount by which the carrying amount of the asset group exceeds its fair value based on discounted cash flows analysis or appraisals.
To grow our brands, we are focused on the following primary strategies: ● distribution and/or licensing our brands for sale through interactive television (e.g., QVC, HSN, The Shopping Channel, JTV, etc.); ● licensing of our brands to retailers that sell to the end consumer; ● direct-to-consumer distribution of our brands through e-commerce and live streaming; ● licensing our brands to manufacturers and retailers for promotion and distribution through e-commerce, social commerce, and traditional brick-and-mortar retail channels; and ● acquiring additional consumer brands and integrating them into our operating platform, and leveraging our operating infrastructure and distribution relationships.
To grow our brands, we are focused on the following primary strategies: ● distribution and/or licensing our brands for sale through interactive television (e.g., QVC, HSN, JTV, etc.); ● licensing of our brands to retailers that sell to the end consumer; ● licensing our brands to manufacturers and retailers for promotion and distribution through e-commerce, social commerce, and traditional brick-and-mortar retail channels; and ● acquiring additional consumer brands and integrating them into our operating platform, and leveraging our operating infrastructure and distribution relationships.
Poor economic and market conditions, including inflation, rising consumer debt levels, and a potential recession, may negatively impact market 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.
Poor economic and market conditions, including the impacts of recent inflation and rising consumer debt levels, may negatively impact market 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.
The Current Year’s cash used in operating activities was primarily attributable to the combination of the net loss of $(22.2) million, partially offset by non-cash items of approximately $10.5 million and a net change in operating assets and liabilities of approximately $5.2 million.
The Prior Year’s cash used in operating activities was primarily attributable to the combination of the net loss of $(22.2) million, partially offset by non-cash items of approximately $9.8 million and a net change in operating assets and liabilities of approximately $5.9 million.
In connection with the public offering, Robert W. D’Loren, Chairman and Chief Executive Officer of the Company; an affiliate of Mark DiSanto, a director of the Company; and Seth Burroughs, Executive Vice President of Business Development and Treasury of the Company, purchased 146,250, 146,250, and 32,500 shares of common stock, respectively. Robert W.
In connection with the public offering, Robert W. D’Loren, Chairman and Chief Executive Officer of the Company; an affiliate of Mark DiSanto, a director of the Company; and Seth Burroughs, Executive Vice President of Business Development and Treasury of the Company, purchased 14,625, 14,625, and 3,250 shares of common stock, respectively. Robert W.
Operating Activities Net cash used in operating activities was approximately $6.5 million and $14.2 million in the Current Year and Prior Year, respectively.
Operating Activities Net cash used in operating activities was approximately $4.7 million and $6.5 million in the Current Year and Prior Year, respectively.
In applying such policies, we must use some amounts that are based upon our informed judgments and best estimates. 38 Table of Contents Estimates, by their nature, are based upon judgments and available information. The estimates that we make are based upon historical factors, current circumstances, and the experience and judgment of management.
In applying such policies, we must use some amounts that are based upon our informed judgments and best estimates. Estimates, by their nature, are based upon judgments and available information. The estimates that we make are based upon historical factors, current circumstances, and the experience and judgment of management. We evaluate our assumptions and estimates on an ongoing basis.
(“ORME”), a short-form video and social commerce marketplace that launched in the first quarter of 2024. Xcel continues to pioneer 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, traditional brick-and-mortar retailers, and e-commerce channels, to be everywhere its customers shop.
Xcel continues to pioneer 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, traditional brick-and-mortar retailers, and e-commerce channels, to be everywhere its customers shop.
There were no impairment charges recorded for our intangible assets for the years ended December 31, 2023 and 2022. Income Taxes Income tax expense is the tax payable for the period and the change during the period in deferred tax assets and liabilities.
There were no such comparable impairment charges for the year ended December 31, 2023. Income Taxes Income tax expense is the tax payable for the period and the change during the period in deferred tax assets and liabilities.
Also during the Current Year, we recognized a gain of $0.36 million related to the sale of a limited partner ownership interest in an unconsolidated affiliate, which was entered into in 2016, and recognized a gain of $0.44 million related to a lease termination settlement with the landlord of our former retail store location.
During the Prior Year, we recognized a gain of $0.36 million related to the sale of a limited partner ownership interest in an unconsolidated affiliate, which was entered into in 2016, and a gain of $0.45 million related to a lease termination settlement with the landlord of our former retail store location. 42 Table of Contents Interest and Finance Expense Interest and finance expense for the Current Year was $0.93 million, compared with $0.38 million for the Prior Year.
The $0.2 million of additional consideration was paid to the seller during 2023. Based on the performance of the Lori Goldstein through December 31, 2023, approximately 1.0 million of incremental additional consideration was earned by the seller, which will be paid out in 2024.
Based on the performance of the Lori Goldstein Brand through December 31, 2023, approximately $1.0 million of incremental additional consideration was earned by the seller, which would have been paid out in 2024.
Accordingly, as of December 31, 2023, $1.0 million of the remaining balance was recorded as a current liability and approximately $5.4 million was recorded as a long-term liability.
Accordingly, as of December 31, 2023, $1.0 million of the remaining balance was recorded as a current liability and approximately $5.4 million was recorded as a long-term liability. During the first quarter of 2024, the Company paid approximately $0.3 million of the $1.0 million earned.
Such amount would be payable by us in either cash or equity interests in IM Topco, LLC held by us. In November 2023, this agreement was amended such that the purchase price adjustment provision was waived until the measurement period ending March 31, 2024. No amount has been recorded in the Company’s consolidated balance sheets related to this contingent obligation.
Such amount would be payable by us in either cash or equity interests in IM Topco held by us. In November 2023, this agreement was initially amended such that the purchase price adjustment provision was waived until the measurement period ending March 31, 2024.
While the 2022 sale of a majority interest in the Isaac Mizrahi brand has resulted in a decrease in our revenues, as that brand represented a significant portion of our historical revenues, we are taking actions to replace those revenues in the long-term with new strategic business initiatives, as we concentrate our resources on growing our brands, launching new brands, and entering into new business partnerships.
While the 2022 sale of a majority interest in the Isaac Mizrahi brand resulted in a substantial decrease in our licensing revenues, as that brand represented a significant portion of our historical licensing revenues, and the 2024 divestiture of the LOGO by Lori Goldstein brand also resulted in a notable decrease 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.
The Prior Year’s cash used in operating activities was primarily attributable to the combination of the net loss of $(5.4) million plus non-cash items of approximately $(10.2) million, partially offset by a net change in operating assets and liabilities of approximately $1.4 million.
The Current Year’s cash used in operating activities was primarily attributable to the combination of the net loss of $(22.6) million, partially offset by non-cash items of approximately $17.3 million and a net change in operating assets and liabilities of approximately $0.6 million.
Adjusted EBITDA is a non-GAAP unaudited measure, which we define as net income (loss) attributable to Xcel Brands, Inc. stockholders before asset impairments, depreciation and amortization, our proportional share of trademark amortization of equity method investees, interest and finance expenses (including loss on extinguishment of debt, if any), income taxes, other state and local franchise taxes, stock-based compensation and cost of licensee warrants, certain adjustments to the provision for doubtful accounts related to the bankruptcy of and economic impact on certain retail customers, gains on sales of assets and investments, gain on lease termination, gain on reduction of contingent obligation, and costs associated with restructuring of operations.
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 expenses (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 method investments, contingent reduction in equity ownership of IM Topco, LLC, asset impairment charges, stock-based compensation and cost of licensee warrants, gains on sales of assets and investments, gain on lease termination , and costs associated with restructuring of operations.
Financing Activities Net cash provided by financing activities for the Current Year was approximately $4.7 million, which primarily consisted of $5.0 million of proceeds from borrowings incurred under new term loan debt, partially offset by the payment of $0.3 million of debt issuance costs.
Also during the Current Year, we made $0.75 million of scheduled principal payments on term loan debt. 46 Table of Contents ​ Net cash provided by financing activities for the Prior Year was approximately $4.7 million, which primarily consisted of $5.0 million of proceeds from borrowings incurred under a new term loan debt agreement in October 2023, partially offset by the payment of $0.3 million of debt issuance costs.
Our principal capital requirements have been to fund working capital needs, acquire new brands, and to a lesser extent, capital expenditures. Notwithstanding certain investments made in 2020 and 2021, our current “licensing plus” operating model is a working capital light business model, and generally does not require material capital expenditures.
Our principal capital requirements have been to fund working capital needs, acquire new brands, and to a lesser extent, capital expenditures. Our current “licensing plus” operating model is a working capital light business model, and generally does not require material capital expenditures. As of December 31, 2024, we have no significant commitments for future capital expenditures.
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 Lori Goldstein brand, Halston brand, C Wonder brand, and TowerHill by Christie Brinkley brand have a core business in fashion apparel and accessories.
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.
Non-GAAP net income is a non-GAAP unaudited term, which we define as net income (loss) attributable to Xcel Brands, Inc. stockholders, exclusive of asset impairments, amortization of trademarks, our proportional share of trademark amortization of equity method investees, stock-based compensation and cost of licensee warrants, loss on extinguishment of debt, certain adjustments to the provision for doubtful accounts related to the bankruptcy of and economic impact on certain retail customers, gains on sales of assets and investments, gain on lease termination , gain on reduction of contingent obligation, and income taxes.
Non-GAAP net income is a non-GAAP unaudited term, which we define as net income (loss) attributable to Xcel Brands, Inc. stockholders, exclusive of asset impairment charges, amortization of trademarks, income (loss) from equity method investments, contingent reduction in equity ownership of IM Topco, LLC, stock-based compensation and cost of licensee warrants, loss on extinguishment of debt, gains on sales of assets and investments, gain on lease termination , and income taxes.
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, launching the C Wonder by Christian Siriano business on HSN, and the planned May 2024 launch of the TowerHill by Christie Brinkley brand.
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, including the recently-launched TowerHill by Christie Brinkley brand and LB70 by Lloyd Boston brand.
Net sales decreased by approximately $2.5 million in the Current Year to approximately $8.6 million, compared with approximately $11.1 million in the Prior Year. This decrease in net sales was primarily attributable to the exit from our wholesale apparel and fine jewelry sales operations in the Current Year as part of the restructuring and transformation of our business operating model.
This decline was primarily attributable to the $8.25 million decrease in net product sales from $8.60 million in the Prior Year to $0.35 million in the Current Year, due to the exit from our wholesale apparel and fine jewelry sales operations and outsourcing of our Longaberger business as part of the restructuring and transformation of our business operating model in 2023.
The decreases in inventory and other operating assets and liabilities were primarily reflective of the declines in our wholesale business due to retailers pausing or canceling orders during the Prior Year. 46 Table of Contents Investing Activities Net cash provided by investing activities for the Current Year was approximately $0.2 million, primarily driven by $0.5 million of proceeds received from the sale of a limited partner ownership interest in an unconsolidated affiliate, partially offset by approximately $0.2 million capital contributions made to a new equity method investee.
Net cash provided by investing activities for the Prior Year was approximately $0.2 million, primarily driven by $0.5 million of proceeds received from the sale of a limited partner ownership interest in an unconsolidated affiliate, partially offset by approximately $0.2 million capital contributions made to our equity investee ORME.
As of December 31, 2022, based on the performance of the Lori Goldstein brand to date, approximately $0.2 million of additional consideration was earned by the seller, and thus $0.2 million of the balance was recorded as a current liability and $6.4 million was recorded as a long-term liability.
As of January 1, 2023, based on the performance of the Lori Goldstein Brand to date, approximately $0.2 million of additional consideration was earned by the seller, and thus $0.2 million of the balance was paid to the seller during 2023.
These restructuring initiatives, on a go-forward basis, are expected to provide us with approximately $15 million of cost savings on an annualized basis compared to our previous operating model. However, we continue to face a number of headwinds in the current macroeconomic environment.
These restructuring initiatives were originally expected to provide us with approximately $15 million of cost savings on an annualized basis compared to our previous operating model.
Revenues Current Year net revenue decreased $8.0 million to $17.8 million from $25.8 million for the Prior Year. Net licensing revenue decreased by approximately $5.5 million in the Current Year to approximately $9.2 million, compared with approximately $14.7 million in the Prior Year.
Net licensing revenues decreased by approximately $1.25 million, from $9.16 million in the Prior Year to $7.91 million in the Current year.
Subsequently, in April 2024, the Company, WHP, and IM Topco, LLC entered into an amendment of this agreement, such that the purchase price adjustment provision within the membership purchase agreement was waived until the measurement period ending September 30, 2025.
On April 12, 2024, this agreement was further amended such that the purchase price adjustment provision within the membership purchase agreement was waived until the measurement period ending September 30, 2025.
Net Loss We had a net loss of approximately $21.1 million for the Current Year, compared with a net loss of approximately $4.0 million for the Prior Year, as a result of the factors discussed above. ​ 42 Table of Contents Non-GAAP Net Income, Non-GAAP Diluted EPS, and Adjusted EBITDA We had a non-GAAP net loss of $12.2 million or $(0.62) per share (“non-GAAP diluted EPS”) based on 19,711,637 weighted average shares outstanding for the Current Year, compared with a non-GAAP net loss of $15.0 million or $(0.77) per share based on 19,624,669 weighted average shares outstanding for the Prior Year.
Non-GAAP Net Income, Non-GAAP Diluted EPS, and Adjusted EBITDA We had a non-GAAP net loss of $5.1 million or $(2.23) per share (“non-GAAP diluted EPS”) based on 2,275,332 weighted average shares outstanding for the Current Year, compared with a non-GAAP net loss of $12.2 million or $(6.17) per share based on 1,971,072 weighted average shares outstanding for the Prior Year.
Future payments under this lease are expected to be approximately $1.6 million for each of the years ending December 31, 2024 – 2026, and $1.3 million for the year ending December 31, 2027.
Future payments under this lease are expected to be approximately $0.37 million for the year ending December 31, 2025, $0.51 million for the year ending December 31, 2026, $0.55 million for the year ending December 31, 2027, $0.57 million for the year ending December 31, 2028, $0.58 million for the year ending December 31, 2029, and $1.42 million thereafter.
Other Operating Costs and Expenses (Income) Depreciation and amortization expense was approximately $7.0 million and $7.3 million in the Current Year and Prior Year, respectively.
Other Operating Costs and Expenses (Income) Depreciation and amortization expense decreased approximately $2.00 million, from $6.95 million in the Prior Year to $4.95 million in the Current Year.
D’Loren, an affiliate of Mark DiSanto, and Seth Burroughs also purchased 132,589, 132,589, and 29,464 shares of common stock, respectively, in the private placement. The aggregate net proceeds from the equity transactions were approximately $2.0 million.
D’Loren, an affiliate of Mark DiSanto, and Seth Burroughs also purchased 13,258, 13,258, and 2,946 shares of common stock, respectively, in the private placement. The aggregate number of shares of common stock issued from the public offering and the private placement was 357,889 shares and the total net proceeds received was approximately $1.9 million.
Partially offsetting these net changes in operating assets and liabilities were decreases in various operating liabilities of approximately $(2.9) million.
Partially offsetting these net changes in operating assets and liabilities were decreases in various operating liabilities of approximately $(2.9) million. Investing Activities Net cash used in investing activities for the Current Year was comprised of purchases of furniture and fixtures totaling approximately $0.1 million.
Business Model and Operations Restructuring In the first quarter of 2023, we began to restructure and transition our business operations from a more capital-intensive wholesale/licensing hybrid model to a capital-light “licensing plus” model, by entering into new licensing agreements with best-in-class business partners.
Business Model and Operations Restructuring During 2023, we restructured our business operations by shifting our business from a more capital-intensive wholesale/licensing hybrid model to a capital-light “licensing plus” model.
Cost of Goods Sold and Gross Profit Current Year cost of goods sold was $6.9 million, compared with $8.0 million for the Prior Year. Gross profit margin from net product sales (net sales less cost of goods sold, divided by net sales) decreased from approximately 28% in the Prior Year to approximately 20% in the Current Year.
This decrease was driven by the aforementioned exit from our wholesale and direct-to-consumer operations as part of the 2023 business model restructuring. Gross profit margin from net product sales (net sales less cost of goods sold, divided by net sales) decreased from approximately 20% in the Prior Year to approximately negative 28% in the Current Year.
Currently, Xcel’s brand portfolio consists of the LOGO by Lori Goldstein Brand, the Halston Brand, the Ripka Brand, the C Wonder Brand, the Longaberger Brand, the CB Brand, the Isaac Mizrahi Brand, and other proprietary brands, including: ● the Lori Goldstein Brand, Halston Brand, Ripka Brand, and C Wonder Brand, which are wholly owned by the Company; ● the Longaberger Brand, which we manage through our 50% ownership interest in Longaberger Licensing, LLC, and the CB Brand, which is a co-owned brand between Xcel and Christie Brinkley; and ● the Isaac Mizrahi Brand, which we wholly owned and managed through May 31, 2022.
Currently, our brand portfolio consists of the following: ● the Halston Brand, the Ripka Brand, and the C Wonder Brand, which are wholly owned by the Company; 37 Table of Contents ● the TowerHill by Christie Brinkley brand, which is a co-branded collaboration between Xcel and Christie Brinkley that launched in May 2024; ● the LB70 by Lloyd Boston brand, which is a co-branded collaboration between Xcel and Lloyd Boston that launched in August 2024; ● the Longaberger Brand, which we manage through our 50% ownership interest in Longaberger Licensing, LLC; and ● the Isaac Mizrahi brands (the “Isaac Mizrahi Brand”), in which we hold a noncontrolling interest through our 17.5% ownership interest in IM Topco, LLC (“IM Topco”) and continue to contribute to the operations of the brand through a service agreement with IM Topco.
Additionally, the parties agreed that if IM Topco, LLC royalties are 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 shall transfer equity interests in IM Topco, LLC to WHP, such that Xcel’s ownership interest in IM Topco, 48 Table of Contents LLC would decrease from 30% to 17.5%, and WHP’s ownership interest in IM Topco, LLC would increase from 70% to 82.5% Contingent Obligation – Halston Heritage Earn-Out In connection with the February 11, 2019 purchase of the Halston Heritage trademarks, we agreed to pay the seller additional consideration of up to an aggregate of $6.0 million, based on royalties earned from 2019 through December 31, 2022.
This amendment also provided that if (i) IM Topco royalties are less than $13.5 million for the twelve-month period ending March 31, 2025 or (ii) IM Topco royalties are less than $18.0 million for the year ending December 31, 2025 or (iii) Xcel fails to make certain payments to IM Topco under the terms of a certain license agreement between Xcel and IM Topco on or before January 30, 2025, then Xcel shall 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%.
The adoption of this new guidance did not have a significant impact on our results of operations, cash flows, or financial condition. ​ 40 Table of Contents Summary of Operating Results The consolidated financial statements and related notes included elsewhere in this Form 10-K are as of or for the years ended December 31, 2023 (the “Current Year”), and December 31, 2022 (the “Prior Year”).
Summary of Operating Results The consolidated financial statements and related notes included elsewhere in this Form 10-K are as of or for the years ended December 31, 2024 (the “Current Year”), and December 31, 2023 (the “Prior Year”). Revenues Current Year net revenue decreased approximately $9.5 million to $8.3 million from $17.8 million for the Prior Year.
The future minimum payments under these contracts is expected to be approximately $17.7 million, of which, approximately $4.3 million is expected to be paid in 2024, approximately $2.1 million is expected to be paid for each of the years ending December 31, 2025 – 2030, and approximately $0.5 million is expected to be paid in 2031.
Employment Contracts We have entered into contracts with certain executives and key employees. The future minimum payments under these contracts is approximately $2.1 million, which is expected to be paid in 2025.
Working Capital Our working capital (current assets less current liabilities, excluding the current portion of lease obligations and any contingent liabilities payable in common stock) was $2.1 million and $8.8 million as of December 31, 2023 and 2022, respectively. Commentary on components of our cash flows for the Current Year compared with the Prior Year is set forth below.
Material cash requirements from known contractual and other obligations are discussed under “Obligations and Commitments” below. Working Capital Our working capital (current assets less current liabilities, excluding the current portions of lease obligations, deferred revenue, and any contingent obligations payable in shares) was $0.8 million and $3.0 million as of December 31, 2024 and 2023, respectively.
As of December 31, 2022, there were no amounts remaining under the Halston Heritage Earn-Out. Real Estate Leases As described in Item 2 of this Annual Report on Form 10-K, as of December 31, 2023 we had a lease for approximately 29,600 square feet of office space at 1333 Broadway, 10th floor, New York, New York.
On April 15, 2025, such equity interests were transferred to WHP. Real Estate Leases We are currently party to a lease (as lessee) for approximately 29,600 square feet of office space at 1333 Broadway, 10th floor, New York, New York.
Principal on the term loan is payable in quarterly installments of $250,000 on each of January 2, April 1, July 1, and October 1 of each year, commencing on April 1, 2024.
Principal on the Term Loan A is payable on a pro rata basis in quarterly installments of $250,000 on each of March 31, June 30, September 30, and December 31 of each year, commencing on March 31, 2026, with the unpaid balance due on the maturity date of December 12, 2028.
The proceeds of this term loan were used to pay fees, costs, and expenses incurred in connection with entering into the Loan Agreement of approximately $0.1 million (including a commitment fee paid to IDB in the amount of $50,000 and legal fees paid to counsel of IDB in the amount of $82,000), and may be used for working capital purposes. ​ In connection with the Loan Agreement, the Borrower and H Licensing, LLC (“H Licensing”), another wholly owned subsidiary of Xcel, entered into a security agreement in favor of IDB, and Xcel entered into a membership interest pledge agreement in favor of IDB.
The proceeds from Term Loan A and Term Loan B were used to repay the remaining balance of the Company’s October 2023 term loan with IDB, as well as to pay fees, costs, and expenses incurred in connection with entering into the new loan agreement, and the balance may be used for working capital purposes.
The effective income tax rate for the Prior Year was approximately 10%, resulting in a $0.4 million income tax benefit. During the Prior Year, the effective tax rate was primarily attributable to the impacts of stock-based compensation, which decreased the effective rate by approximately 6%, and federal tax true-ups, which decreased the effective tax rate by approximately 5%.
The effective income tax rate for the Prior Year was approximately -6%, resulting in a $1.21 million income tax provision.
These include but are not limited to the estimation of the useful lives of our trademarks, the estimation of the future cash flows related to our trademarks, and the estimation of our incremental borrowing rate (for purposes of accounting for leases).
These include but are not limited to: the estimation of the useful lives of our trademarks, and the estimation of future cash flows related to our trademarks; the estimation of the fair value of our equity method investments, and judgment as to whether any declines in value are temporary; and the estimation of our future income projections and the likelihood that we will be able to realize our deferred tax assets.
In October 2023, we entered into a new term loan agreement for a borrowing of $5.0 million at a floating interest rate, incurring total interest expense of only $0.4 million during the Current Year. Income Tax Provision (Benefit) The effective income tax rate for the Current Year was approximately -6%, resulting in a $1.2 million income tax provision.
Income Tax Provision The estimated annual effective income tax rate for the Current Year was approximately -1%, resulting in an income tax provision of $0.22 million.
We repaid all of such term loan debt on May 31, 2022 and recognized a loss on early extinguishment of debt of $2.3 million in the Prior Year. In contrast, during the Current Year we did not have any outstanding debt for most of the year.
This $0.55 million increase was primarily attributable to the fact that during the Prior Year, we did not have any outstanding debt for most of the year, until we entered into a $5.0 million term loan in October 2023.
The net change in operating assets and liabilities notably included a decrease in accounts receivable of $2.1 million, a decrease in inventory of $0.5 million, a decrease in prepaid expenses and other assets of $0.6 million, and decreases in various operating liabilities of $(1.4) million.
The net change in operating assets and liabilities was less significant, as the positive cash flow impacts from decreases in accounts receivable ($1.2 million) and inventory ($0.5 million) were largely offset by changes in deferred revenue and other current liabilities, along with changes in lease-related assets and liabilities.
We recognized an equity method loss related to our investment of $2.1 million and $1.2 million for the Current Year and Prior Year, respectively, based on the distribution provisions set forth in the related business venture agreement.
Equity method losses related to our equity investments in unconsolidated affiliates (IM Topco, LLC and Orme Live Inc.) were $1.73 million and $2.06 million for the Current Year and Prior Year, respectively, due to the operations of those businesses and the allocation and distribution provisions of the applicable operating agreements.
The term and declining notional amount of the swap agreement is aligned with the amortization of the term loan principal amount. ​ Contingent Obligation – Lori Goldstein Earn-Out In connection with the April 1, 2021 purchase of the Lori Goldstein trademarks, we agreed to pay the seller additional cash consideration of up to $12.5 million, based on royalties earned during the six calendar year period commencing in 2021.
The Company also issued warrants to purchase 30,000 shares of common stock to Restore Capital (EQ-W), LLC (“Restore”), another of the lenders, and amended warrants to purchase an aggregate of 107,333 shares of common stock held by Restore and warrants previously issued to warrants of FEAC Agent, LLC. ​ Also in connection with this refinancing transaction, IPX’s participation in Term Loan B was repaid and IPX purchased a $500,000 undivided, last-out, subordinated participation interest in Term Loan A. ​ Obligations and Commitments ​ Term Loan Debt ​ Refer to information outlined under ‘Debt Transactions – December 2024 Refinancing’ and ‘Debt Transactions – April 2025 Refinancing’ above. ​ 48 Table of Contents Contingent Obligation – Lori Goldstein Earn-Out In connection with the April 1, 2021 purchase of the Lori Goldstein trademarks, we had agreed to pay the seller additional cash consideration (the “Lori Goldstein Earn-Out”) of up to $12.5 million, based on royalties earned during the six calendar year period commencing in 2021.
The Borrower has the right to prepay all or any portion of the term loan at any time without penalty. ​ Interest on the term loan accrues at Term SOFR (defined in the Loan Agreement as the forward-looking term rate based on secured overnight financing rate as administered by the Federal Reserve Bank of New York for an interest period equal to one month on the day that is two U.S.
Interest on Term Loans accrues 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, 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.
Non-cash items were primarily comprised of, but not limited to, the net gain on sale of assets of $(20.6) million, $7.3 million of depreciation and amortization, a $2.3 million loss on extinguishment of debt, and the $1.2 million undistributed proportional share of net income of equity method investee.
Non-cash items were primarily comprised of, but not limited to, undistributed losses and other charges related to equity method investees totaling $11.8 million, $4.9 million of depreciation and amortization, $3.5 million of asset impairment charges, and $0.4 million of stock-based compensation and cost of licensee warrants, partially offset by a $(3.8) million gain on the divestiture of the Lori Goldstein Brand.
Removed
On May 31, 2022, we sold a majority interest in the brand to a third party, but retained a 30% noncontrolling interest in the brand and continue to contribute to the operations of the brand through a service agreement. We also own a 30% interest in ORME Live Inc.
Added
Our brand portfolio also included the Lori Goldstein Brand as a wholly owned brand from April 1, 2021 through June 30, 2024; the Lori Goldstein Brand was divested on June 30, 2024. We also own a 19% interest in ORME, a short-form video and social commerce marketplace that launched in April 2024.
Removed
We entered into a new interactive television licensing agreement with America’s Collectibles Network, Inc. d/b/a JTV (“JTV”) for the Ripka Brand, and a separate license with JTV for the Ripka Brand’s e-commerce business. For apparel, similar transactions were executed.
Added
These efforts included entering into new 38 Table of Contents structured contractual arrangements with best-in-class business partners (including G-III for the Halston Brand, JTV for the Ripka Brand, and One Jeanswear Group, LLC for wholesale production related to certain of our other brands) in order to more efficiently operate our wholesale and e-commerce businesses and reduce and better manage our exposure to operating risks.
Removed
In conjunction with the launch of the C Wonder Brand on HSN, we licensed the wholesale production operations related to that brand to One Jeanswear Group, LLC (“OJG”); this new license with OJG also includes other new celebrity brands that we plan to launch in 2024 and beyond.
Added
The restructuring initiatives, which were largely completed by June 30, 2023, provided us with approximately $15 million of cost savings on an annualized basis compared to our previous operating model.
Removed
In the second quarter of 2023, we entered into a new master license agreement with G-III Apparel Group, an industry-leading wholesale apparel company, for the Halston Brand, covering men’s, women’s, and children’s apparel and accessories, and other product categories, for distribution through department stores, e-commerce, and other retailers.
Added
During 2024, we took further actions to optimize our cost structure and manage our liquidity, including entering into a divestiture transaction (related to the Lori Goldstein Brand) which eliminated certain operating and compensation expenses, and relieved us of our contractual obligations to make certain future cash payments and as well as potential future contingent obligation to make future cash payments of up to approximately $11 million.
Removed
This master license for the Halston Brand provides for an upfront cash payment and royalties to the Company, including certain guaranteed minimum royalties, includes significant 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 the licensee’s right to terminate with at least 120 days’ notice prior to the end of each five-year period during the term.
Added
Based on these actions and initiatives taken by management over the past two years, we have reduced the Company’s direct operating costs on an annualized basis from approximately $8 million per quarter under our previous operating model to approximately $2.5 million to $3.0 million per quarter on a going-forward basis.

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