美国
证券交易委员会
华盛顿特区，20549
表格
(修订版 1)
| 根据1934年证券交易法第13条或15(d)条的规定的季度报告 |
截至季度结束
| 根据1934年证券交易法第13或第15(d)款的规定，根据过渡报告 |
过渡期从____到____
佣金
文件编号:
（公司章程中指定的准确公司名称）
| （注册地或组织所在管辖区） | （美国国税局雇主号码） | |
| 文件号码） | (主要 执行人员之地址) |
（总部地址，包括邮政编码）
电话：
根据交易所法规（17 CFR 240.14a-12）第14a-12规定的招股材料
不适用
(公司更名、更改地址和更改财年情况的以往名称、以前地址和以前财年，如与上次报告有所改变)
根据法案第12(b)节注册的证券:
| 每一类别的名称 | 交易符号 | 在每个交易所注册的名称 | ||
| 股 股票市场 有限责任公司 | ||||
| 股 股票市场 有限责任公司 |
请勾选标记以指示注册者是否（1）在过去12个月内（或注册者需要提交这些报告的更短时间内）已提交证券交易所法案第13或15（d）节要求提交的所有报告，及 （2）是否已被提交要求过去90天的提交要求所制约。
通过勾选圆圈表明注册者是否在过去12个月内(或注册者需要提交这些文件的较短期限内)已经递交规章S-T(本章第232.405条)规定的每个交互式数据文件。
用复选标记表示注册人是大型高速申报者、高速申报者、非高速申报者、小型报告公司还是新兴成长型公司。请参阅《交易所法案》第120亿.2条中“大型高速申报者”、“高速申报者”、“小型报告公司”和“新兴成长型公司”的定义。
| 大型加速文件提交人 | ☐ | 加速文件提交人 | ☐ |
| ☒ | 小型报告公司 | ||
| 新兴成长公司 |
如果是新兴成长公司，请在这里打勾，表示该注册人已选择不使用根据证券交易所法第13(a)条规定提供的遵守任何新的或修订财务会计准则所规定的延长过渡期。
请勾选适用的圆圈，表示注册登记者是否是空壳公司(根据交易所法案第12b-2条的定义)。是 ☐ 否
截至2024年11月14日，公司已经 普通股股票，$ 面值、发行和流通量。
解释说明
| (i) | 在随后的事件中插入关于发帖季度结束后股东权益的额外披露； |
| (ii) | 提供最新日期的认证； 和 |
| (iii) | 纠正目录中的一个不重要的错误。 |
以下项目已在此修正案第1号中修订：
| ● | 第一部分 — 项目1。 未经审计的综合财务报表附注的附注12（后续事项） | |
| ● | 第一部分 - 项目2。 “管理层对财务状况和经营结果的讨论 - 最近的发展” | |
| ● | 第二部分 - 项目6。 附件 |
数字品牌集团，股份有限公司。
10-Q表格
目录
| 页面 | |||
| 关于前瞻性陈述的警示性说明 | 3 | ||
| 第一部分财务信息 | 4 | ||
| 项目 1。 | 财务报表 | 4 | |
| 截至 2024 年 9 月 30 日（未经审计）和 2023 年 12 月 31 日的简明合并资产负债表 | 4 | ||
| 截至2024年9月30日和2023年9月30日的三个月和九个月未经审计的简明合并运营报表 | 5 | ||
| 截至2024年9月30日和2023年9月30日的三个月和九个月未经审计的简明合并股东权益（赤字）报表 | 6 | ||
| 截至2024年9月30日和2023年9月30日的九个月未经审计的简明合并现金流量表 | 7 | ||
| 未经审计的简明合并财务报表附注 | 8 | ||
| 物品 2。 | 管理层对财务状况和经营业绩的讨论和分析 | 20 | |
| 项目 3 | 关于市场风险的定量和定性披露 | 32 | |
| 项目 4。 | 控制和程序 | 32 | |
| 第二部分。其他信息 | 34 | ||
| 项目 1。 | 法律诉讼 | 34 | |
| 项目 1A。 | 风险因素 | 35 | |
| 物品 2。 | 未注册的股权证券销售和所得款项的使用 | 35 | |
| 项目 3. | 优先证券违约 | 35 | |
| 项目 4。 | 矿山安全披露 | 35 | |
| 项目 5。 | 其他信息 | 35 | |
| 项目 6。 | 展品 | 36 | |
| 签名 | 37 | ||
| 2 |
关于前瞻性声明的注意事项
除历史信息外，这份10-Q表格的季度报告包含根据《1933年证券法》第27（a）条修正案（“证券法”）和《1934年证券交易法》第21（E）条修正案（“交易所法案”）的涉及风险和不确定性的前瞻性声明。这些前瞻性声明可以通过使用前瞻性术语来识别，包括“相信，”“估计，”“项目，”“目标，”“预期，”“寻找，”“预测，”“考虑，”“持续，”“可能，”“打算，”“可能”，“计划，”“预测，”“未来，”“可能，”“将会，”“可以，“将”或“应该”或, 在各种情况下，它们的否定或其他变体或可比术语。这些前瞻性声明包括所有不是历史事实的事项。它们出现在这份10-k年度报告中的多个地方，包括有关我们意图、信仰或目前对我们的运营结果、财务状况、流动性、前景、增长战略、我们所在行业和潜在收购等事项的声明。我们的许多前瞻性声明源自我们的运营预算和预测，这些预测基于许多详细的假设。虽然我们认为我们的假设是合理的，但我们警告说，预测已知因素的影响非常困难，当然，我们无法预料可能影响我们实际结果的所有因素。所有前瞻性声明均基于我们在本季度10-Q表格上获得的信息日期。
由于其本质，前瞻性声明涉及风险和不确定性，因为它们与事件相关，并依赖于可能在未来发生或不发生的情况。我们提醒您，前瞻性声明并不是未来表现的保证，并且我们的实际经营结果、财务状况和流动性，以及我们所处行业的稳定性，可能与在本季度10-Q报告中包含的前瞻性声明中作出的或提示的内容存在实质性差异。此外，即使我们的经营结果、财务状况和流动性以及我们所处行业的发展与本季度10-Q报告中包含的前瞻性声明一致，这些结果或发展也可能不代表后续期间的结果或发展。可能导致我们结果与预期不同的重要因素包括在我们最近的10-K年度报告中讨论的“风险因素”，并可能会不时更新。
估计和前瞻性声明仅代表其作出之日期的情况，并且除非法律要求，我们不承担更新或审查任何估计和/或前瞻性声明的义务，也不因新信息、未来事件或其他因素而另行审查。
| 3 |
部分I—财务信息
项目 1. 合并基本报表
数字品牌集团公司
汇编简明资产负债表
(未经审计)
| 九月三十日 | 十二月 31, | |||||||
| 2024 | 2023 | |||||||
| 资产 | ||||||||
| 流动资产： | ||||||||
| 现金和现金等价物 | $ | $ | ||||||
| 应收账款，净额 | ||||||||
| 因子应付款，净额 | ||||||||
| 库存 | ||||||||
| 预付费用和其他流动资产 | ||||||||
| 流动资产总额 | ||||||||
| 财产、设备和软件，净额 | ||||||||
| 善意 | ||||||||
| 无形资产，净额 | ||||||||
| 存款 | ||||||||
| 使用权资产 | ||||||||
| 总资产 | $ | $ | ||||||
| 负债和股东权益 | ||||||||
| 流动负债： | ||||||||
| 应付账款 | $ | $ | ||||||
| 应计费用和其他负债 | ||||||||
| 应付关联方款项 | ||||||||
| 可转换应付票据，净额 | ||||||||
| 应计应付利息 | ||||||||
| 应付贷款，当前 | ||||||||
| 应付本票，净额 | ||||||||
| 使用权责任，当前部分 | ||||||||
| 流动负债总额 | ||||||||
| 应付贷款 | ||||||||
| 使用权责任，非流动部分 | ||||||||
| 递延所得税负债 | ||||||||
| 负债总额 | ||||||||
| 承付款和意外开支 | ||||||||
| 股东权益： | ||||||||
| 未指定优先股，$ 面值， 已授权的股份， 已发行的股票和 截至 2024 年 9 月 30 日和 2023 年 12 月 31 日的未缴款项 | ||||||||
| A 系列可转换优先股，$ 面值， 指定股份， 截至 2024 年 9 月 30 日和 2023 年 12 月 31 日的已发行和流通股份 | ||||||||
| C 系列可转换优先股，$ 面值， 和 已发行的股票 以及截至2024年9月30日和2023年12月31日的未缴款项 | ||||||||
| 普通股，美元 面值， 已授权的股份， 和 已发行的股票和 分别截至2024年9月30日和2023年12月31日的未缴款项 | ||||||||
| 额外的实收资本 | ||||||||
| 累计赤字 | ( | ) | ( | ) | ||||
| 股东权益总额 | ||||||||
| 负债和股东权益总额 | $ | $ | ||||||
请参阅未审计的简明合并基本报表附带说明
| 4 |
数字品牌集团公司
精简 合并损益表
(未经审计)
| 三个月已结束 | 九个月已结束 | |||||||||||||||
| 九月三十日 | 九月三十日 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| 净收入 | $ | $ | $ | $ | ||||||||||||
| 净收入成本 | ||||||||||||||||
| 毛利润 | ||||||||||||||||
| 运营费用： | ||||||||||||||||
| 一般和行政 | ||||||||||||||||
| 销售和营销 | ||||||||||||||||
| 分发 | ||||||||||||||||
| 无形资产减值 | ||||||||||||||||
| 或有对价公允价值的变化 | ( | ) | ||||||||||||||
| 运营费用总额 | ||||||||||||||||
| 运营收入（亏损） | ( | ) | ( | ) | ( | ) | ||||||||||
| 其他收入（支出）： | ||||||||||||||||
| 利息支出 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 其他非营业收入（支出） | ( | ) | ( | ) | ( | ) | ||||||||||
| 其他收入（支出）总额，净额 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 所得税条款 | ||||||||||||||||
| 持续经营的净亏损 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 已终止业务的（亏损），扣除税款 | ( | ) | ||||||||||||||
| 净亏损 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 已发行普通股的加权平均值——基本股和摊薄后普通股 | ||||||||||||||||
| 每股普通股净亏损——基本亏损和摊薄后 | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
请参阅未经审计的简明合并基本报表附带的说明。
| 5 |
数字品牌集团公司
凝缩 合并股东权益（赤字）报表
(未经审计)
| A 系列敞篷车 | C 系列敞篷车 | 额外 | 总计 股东 | |||||||||||||||||||||||||||||||||
| 优先股 | 优先股 | 普通股 | 已付款 | 累积 | 股权 | |||||||||||||||||||||||||||||||
| 股票 | 金额 | 股票 | 金额 | 股票 | 金额 | 资本 | 赤字 | （赤字） | ||||||||||||||||||||||||||||
| 截至2022年12月31日的余额 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| 根据私募发行普通股 | - | - | ||||||||||||||||||||||||||||||||||
| 发行成本 | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| 为服务业发行的股票 | - | - | ||||||||||||||||||||||||||||||||||
| 以票据发行的股票和认股权证 | - | - | ||||||||||||||||||||||||||||||||||
| 基于股票的薪酬 | - | - | - | |||||||||||||||||||||||||||||||||
| 净亏损 | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| 截至2023年3月31日的余额 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| 取消票据和发行优先股 | - | - | ||||||||||||||||||||||||||||||||||
| B系列优先股的发行 | - | - | - | |||||||||||||||||||||||||||||||||
| 根据处置发行普通股 | - | - | ||||||||||||||||||||||||||||||||||
| 基于股票的薪酬 | - | - | - | |||||||||||||||||||||||||||||||||
| 净收入 | - | - | - | |||||||||||||||||||||||||||||||||
| 截至2023年6月30日的余额 | ( | ) | ||||||||||||||||||||||||||||||||||
| 取消b系列优先股 | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| 根据私募发行普通股，扣除发行成本 | - | - | ||||||||||||||||||||||||||||||||||
| 为服务而发行的普通股 | - | - | ||||||||||||||||||||||||||||||||||
| 行使认股权证 | - | - | ||||||||||||||||||||||||||||||||||
| 基于股票的薪酬 | - | - | - | |||||||||||||||||||||||||||||||||
| 净亏损 | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| 截至2023年9月30日的余额 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| 截至 2023 年 12 月 31 日的余额 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| 以现金发行的普通股 | - | - | ||||||||||||||||||||||||||||||||||
| 为服务业发行的股票 | - | - | ||||||||||||||||||||||||||||||||||
| 将优先股转换为普通股 | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| 基于股票的薪酬 | - | - | - | |||||||||||||||||||||||||||||||||
| 净亏损 | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| 截至 2024 年 3 月 31 日的余额 | ( | ) | ||||||||||||||||||||||||||||||||||
| 以现金发行的普通股 | - | - | ||||||||||||||||||||||||||||||||||
| 将贷款转换为普通股 | - | - | ||||||||||||||||||||||||||||||||||
| 将优先股转换为普通股 | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| 基于股票的薪酬 | - | - | - | |||||||||||||||||||||||||||||||||
| 净亏损 | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| 截至2024年6月30日的余额 | ( | ) | ||||||||||||||||||||||||||||||||||
| 以现金发行的普通股 | - | - | ||||||||||||||||||||||||||||||||||
| 为服务业发行的股票 | - | - | ||||||||||||||||||||||||||||||||||
| 将优先股转换为普通股 | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| 基于股票的薪酬 | - | - | - | |||||||||||||||||||||||||||||||||
| 净亏损 | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| 截至 2024 年 9 月 30 日的余额 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
请参阅未经审计的简明合并基本报表附带的说明。
| 6 |
数位品牌集团，公司。
简明综合现金流量表
(未经审计)
| 九个月结束 | ||||||||
| 九月三十日， | ||||||||
| 2024 | 2023 | |||||||
| 经营活动现金流量： | ||||||||
| 净亏损 | $ | ( | ) | $ | ( | ) | ||
| 调整为使净亏损转化为经营活动所使用现金： | ||||||||
| 折旧及摊销 | ||||||||
| 贷款折扣和费用的摊销 | ||||||||
| 无形资产减损 | ||||||||
| 债务清偿损失 | ||||||||
| 业务亏损 | ||||||||
| 基于股票的薪酬 | ||||||||
| 股份发行用于服务 | ||||||||
| 信用准备金的变更 | ( | ) | ||||||
| 或有对价的公允价值变化 | ( | ) | ||||||
| 已中止营运 | ||||||||
| 非现金租赁费用 | ||||||||
| 营运资产和负债的变化： | ||||||||
| 应收帐款，净额 | ( | ) | ||||||
| 应收账款 | ||||||||
| 存货 | ( | ) | ||||||
| 预付费用及其他流动资产 | ( | ) | ( | ) | ||||
| 应付账款 | ( | ) | ||||||
| 应计费用及其他负债 | ||||||||
| 透过收入 | ( | ) | ||||||
| 应计利息应付 | ||||||||
| 因为关联方 | ||||||||
| 租赁负债 | ( | ) | ||||||
| 经营活动所用的净现金 | ( | ) | ( | ) | ||||
| 投资活动之现金流量: | ||||||||
| 现金处置 | ( | ) | ||||||
| 购买资产、设备及软体 | ( | ) | ( | ) | ||||
| 存入资金 | ( | ) | ||||||
| 投资活动所提供（使用）的净现金 | ( | ) | ||||||
| 来自筹资活动的现金流量: | ||||||||
| 来自关联方的预付款项还款 | ( | ) | ||||||
| 来自追索权的预付款 | ||||||||
| 发放贷款及应付票据 | ||||||||
| 可转换票据及应付款项的还款 | ( | ) | ( | ) | ||||
| 现金购买普通股的保险 | ||||||||
| 认购权证的行使 | ||||||||
| 公开发行普通股的发行 | ||||||||
| 发行成本 | ( | ) | ||||||
| 筹资活动提供的净现金 | ||||||||
| 现金及现金等价物净变动 | ( | ) | ||||||
| 期初现金及现金等价物余额 | ||||||||
| 期末现金及现金等价物 | $ | $ | ||||||
| 现金流量资讯的补充披露： | ||||||||
| 支付所得税现金 | ||||||||
| 支付利息的现金 | $ | $ | ||||||
| 补充揭露与非现金投资及融资活动有关之事项： | ||||||||
| 租赁资产 | $ | $ | ||||||
| 为服务和应付帐款的转换而发行的股份 | $ | $ | ||||||
| 将优先股转换为普通股 | $ | $ | ||||||
| 将票据转换为优先股 | $ | $ | ||||||
请参阅未经审核的简明综合财务报表附注。
| 7 |
注意 1: 营运性质
Digital Brands Group, Inc.（以下称「公司」或「DBG」）于2012年9月17日根据德拉瓦州法律成立，作为一间名为Denim.LA LLC的有限责任公司。公司于2013年1月30日转换为德拉瓦公司，并更名为Denim.LA, Inc.。自2020年12月31日起，公司更名为Digital Brands Group, Inc.（DBG）。
公司是一个精选的生活方式品牌集合，包括Bailey 44，DSTLD，Stateside和ACE Studios，通过直接面向消费者和批发分销，提供各种服装产品。
于2020年2月12日，Denim.LA, Inc.与特拉华有限责任公司Bailey 44, LLC（“Bailey”）签订了一份合并计划及协议。在收购日，Bailey 44, LLC成为了该公司的全资子公司。
2021年5月18日，公司根据与D. Jones Tailored Collection, Ltd.签订的股份购买协议，完成了对Harper＆Jones, LLC（“H＆J”）的收购，以购买其归属权的百分之百。
于2021年8月30日，该公司根据与Moise Emquies签订的会员权益购买协议完成对Mosbest, LLC（以Stateside经营）("Stateside")的收购，购买了
2022年12月30日，公司根据与Moise Emquies签署的第二份修订及重订会员权益购买协议，成功完成了先前宣布的收购Sunnyside, LLC dba Sundry（以下简称“Sundry”）的交易。
在2023年6月21日，公司与H＆J的前业主执行了一项解决协议和释放协议（“解决协议”），随著各方签署解决协议，公司同意支付总额$
注意 2: 持续经营
附带的简明综合基本报表是基于持续经营的假设编制的，这考虑到资产的实现和在正常业务过程中满足负债的情况。自成立以来，公司未曾产生利润，并已经持续录得净亏损 $
公司在财务报表发布之日起的12个月内能否持续经营，取决于其能否从业务中产生足够的现金流以满足其义务，而目前为止公司尚未能够做到这一点，及/或获得额外的资本融资。在财务报表发布之前，公司主要通过发行资本股票和债务进行融资。如果公司无法产生足够的营业收入来支持其运营，公司将需要减少开支或通过发售债务和/或股权证券来获得融资。额外股权的发行将会稀释现有股东的权益。如果公司在需要时无法获得额外的资金，或者如果这些资金无法以公司可接受的条款获得，公司将无法执行业务计划或支付发生的成本和费用，这将对业务、财务状况和经营结果产生重大不利影响。无法保证公司会在这些努力中取得成功。
| 8 |
注意 3: 重要会计政策摘要
报表说明基础
本公司的会计及报告政策符合美国普遍接受的会计原则（“GAAP”）。
反向 股票合并
在
2023年8月21日，董事会批准了一个
未经审核的 中期财务信息
就以下的基本报表而言：基本报表为2024年9月30日的未经查核总余额表，截至2024年9月30日的三个月和九个月的未经查核综合损益表，以及2024年和2023年的现金流量表；所根据SEC的中期财务报表法规由公司编制。依据法规，某些通常包含在按照GAAP编制的财务报表中的信息和注脚披露已经被压缩或省略。但是，公司认为这些披露足以使呈现的信息不会误导。未经查证的中期综合财务报表是以符合已查证的合并财务报表的基础编制，并且在管理层的意见中，反映出所有调整，仅包括对公允呈现需进行的正常周期性调整，以呈现所述中期期间的合并结果及中期合并资产负债状况的正常公平呈现的必要性。营运结果不一定代表预期于2024年12月31日结束时的结果。
附带的未经审核的中期简明合并基本报表应与公司截至2023年12月31日的经审核合并基本报表及其附注一并阅读，该报表已于2024年4月15日提交至SEC的公司年度10-K表格中。
合并财务报表的准则
这些 简明合并基本报表包含公司的帐目及其全资子公司Bailey和Stateside 自收购日期起的帐目。所有的内部交易和余额在合并时已被消除。
已停业 营运
某些去年的账目已重新归类，以符合有关停业营运收入（亏损）的当年呈现方式。
使用估计值
本公司依据一般公认会计原则（GAAP）编制基本报表需要管理层作出估算和假设，这些估算和假设会影响资产和负债的报告金额、在基本报表日期的或有资产和负债的披露，以及在报告期间的收入和支出的报告金额。这些基本报表中反映的重大估算和假设包括，但不限于，库存、长期资产的减值、或有对价和衍生负债。公司根据历史经验、已知趋势及其他市场特定或其他相关因素，认为在该情况下是合理的，来制定其估算。管理层持续评估其估算，当环境、事实及经验发生变化时会进行评估。估算的变更在已知时记录在变更的期间内。实际结果可能与这些估算有所不同。
| 9 |
现金 及约当现金及信用风险集中度
公司将所有原始到期小于六个月的高流动性证券视为现金等价物。截至2024年9月30日和2023年12月31日，公司并未持有任何现金等价物。公司的现金及现金等价物在银行存入资金账户中的数额，有时可能会超过联邦保险限制的$
金融工具公允价值
公司的金融工具包括现金及现金等价物、预付费用、应付帐款、应计费用、应支付关联方款项、关联方票据应付款及可转换债务。这些资产和负债的帐面价值代表了它们的公平市值，因为这些工具具有较短的到期日。
应收帐款 及预期信用损失
我们按发票金额减去客户信用损失和其他扣款的额度来列示应收帐款，以呈现预计能够在财务资产上收回的净额。所有应收帐款预期能够在合并资产负债表的一年内收回。我们不会在交易应收帐款上计提利息。管理层根据多种因素评估收回应收帐款的能力。根据各自的信用条款，应收帐款被确定为逾期。根据应收帐款逾期的时间长短、历史回收情况或客户财务状况，维持一个信用损失备抵。经努力无法收回应收帐款后，被认定无法收回的年份将其注销。我们没有与客户相关的任何表外信贷风险。
我们 定期检讨应收账款，估算呆账准备金，并同时在 损益表中记录适当的费用。这些估算基于一般经济状况、客户的财务状况以及逾期账款的金额 和年限。逾期账款只有在所有催收尝试都已耗尽 且回收的可能性渺茫时，才会对应该准备金进行核销。之前核销的应收账款在收到时会计入收入。 公司在正常营运中向其客户提供信贷，并已建立信用评估和监控流程，以降低信用风险。
截至2024年9月30日和2023年12月31日，公司确定了$的信用损失准备金。
存货
库存按照成本或净可实现价值的较低者进行结算，DSTLD采用加权平均成本法，而Bailey、Stateside和Sundry则采用先进先出法。截至2024年9月30日和2023年12月31日的库存余额主要包括已购买或生产以便转售的成品产品，以及公司为修改产品而购买的任何原材料和进行中的加工。
库存 包括以下内容：
| 九月三十日， | 12月31日, | |||||||
| 2024 | 2023 | |||||||
| 原材料 | $ | $ | ||||||
| 在制品 | ||||||||
| 成品 | ||||||||
| 存货 | $ | $ | ||||||
商誉
商誉和具有无限有效生命的可辨识无形资产不会被摊销，而是每年进行测试以确定是否有损耗，或发生某些事件或实质变化的时候。每年进行商誉测试允许选择首先评估定性因素，以判断报告单位的公平价值是否有可能低于其携带金额。机构可以选择对其所有报告单位的定性评估或部分报告单位进行定性评估，或机构可以跳过任何报告单位的定性评估，并直接进入定量损耗测试的第一步骤。如果根据定性因素确定报告单位的公平价值比携带价值更有可能低，则需要进行定量损耗测试。
| 10 |
年度 减损
在2023年12月31日，管理层确定发生了一些事件和情况，表明公司的品牌资产，以及与Bailey44、Stateside和Sundry相关的报告单位的帐面价值有可能无法收回。对品质评估主要是由于这两个实体的收入减少或停滞，与公司初始收购时的预测相比，以及实体负债超过资产。经过进行的定量分析后，公司确定无形资产和报告单位的公平价值高于各自的帐面价值。因此，没有记录减值。公司在2023年对每个报告单位进行减值测试时使用了企业价值方法。
2024年9月30日，管理层决定对Bailey44报告单位的减值因数进行评估。定性评估主要是由于Bailey44的收入较公司预测下降，以及实体负债超过资产。因此，公司将无形资产减损记录为$
每股的净收益或亏损是通过将净利润或亏损除以在期间内流通的加权平均普通股数计算的，并不包括需赎回或没收的股票。公司提供基本和稀释后的每股净收益或亏损。稀释后的每股净收益或亏损反映了期内发行和流通的普通股的实际加权平均数，并根据潜在的稀释性证券进行调整。如果将其纳入计算会导致反稀释，则潜在的稀释性证券将排除在稀释后每股净亏损的计算之外。截至2024年和2023年9月30日，所有潜在的稀释性证券均为反稀释，因此每股稀释后净亏损与每股基本净亏损相同。截至2024年和2023年9月30日，未结的潜在稀释项目如下：
| 九月三十日， | ||||||||
| 2024 | 2023 | |||||||
| A轮可转换优先股 | ||||||||
| million ($ | ||||||||
| 普通股权证 | ||||||||
| 股票期权 | ||||||||
| 可能增加股份总数 | ||||||||
2024年和2023年9月30日，上述股票期权和认股权皆已跌出实值。
最近的 会计准则
于2024年1月，公司采纳了 ASU 2020-06，关于具换股和其他期权债务（子题470-20）和衍生工具及避险——实体自有权益合约（子题815-40）： 关于可转换工具和实体自有权益合约的会计处理：本ASU针对可转换工具和实体自有权益合约的某些指导复杂性进行了规范。该ASU适用于符合SEC提交者定义的上市公司，排除SEC定义的有资格成为较小报告公司的实体，适用于2021年12月15日后开始的财政年度，包括该财政年度内的中期期间。对于所有其他实体，该ASU将于2023年12月15日后开始的财政年度开始生效，包括该财政年度内的中期期间。该ASU对合并基本财务报表未产生实质影响。
管理层认为，其他最近发布但尚未生效的会计准则不会对附带财务报表产生重大影响。随著新的会计宣布，公司将采纳适用于当时情况的准则。
截至2024年5月20日，以下会计公告已发布，但尚未生效，并可能影响本公司的未来财务报告：
| ● | ASU 2022-03，公允价值计量（主题820）：受合约销售限制的股权证券的公允价值计量： 该ASU旨在澄清在计量受合约限制禁止出售的股权证券公允价值时的指导 对于公开业务实体，ASU 2022-03中的修订适用于2023年12月15日之后开始的财政年度 及这些财政年度内的中期报告。对于所有其他实体，该ASU适用于 2024年12月15日之后开始的财政年度及这些财政年度内的中期报告。 |
| 11 |
注4： 应收因子
由于/来自因素包括以下内容:
| 九月三十日， | 12月31日, | |||||||
| 2024 | 2023 | |||||||
| 应收帐款杰出： | ||||||||
| 无追索权 | $ | $ | ||||||
| 有追索权 | ||||||||
| 到期基金和存款 | ||||||||
| 进展 | ( | ) | ( | ) | ||||
| 应付顾客的信用 | ( | ) | ||||||
| $ | $ | |||||||
备注 5: 商誉和无形资产
以下是每项业务合并所产生的商誉总结：
| 九月三十日， | 2023年12月31日 | |||||||
| 2024 | 2023 | |||||||
| 贝利 | $ | $ | ||||||
| 美国 | ||||||||
| 杂项 | ||||||||
| $ | $ | |||||||
以下表格概述了截至2024年9月30日公司可识别无形资产的相关信息：
| 总额 | 累积的 | 帐面 | ||||||||||
| 金额 | 摊销 | 价值 | ||||||||||
| 摊销： | ||||||||||||
| 客户关系 | $ | $ | ( | ) | $ | |||||||
| $ | $ | ( | ) | $ | ||||||||
| 不定期限： | ||||||||||||
| 品牌名称 | ||||||||||||
| $ | $ | ( | ) | $ | ||||||||
截至
2024年9月30日，管理层确定有关Bailey44报告单位存在减损的因数。质性
评估主要是基于Bailey44的收入相较于公司的预测减少，以及该实体的
负债超过资产。因此，公司对品牌名称的无形资产录得减损$
公司在截至2024年和2023年9月30日的三个月内，分别记录了摊销费用，金额为$
注意 6: 负债和债务
应计费用 及其他负债
截至2024年9月30日及2023年12月31日，合并资产负债表中的应计费用及其他负债项目包含以下内容：
| 九月三十日， | 12月31日, | |||||||
| 2024 | 2023 | |||||||
| 应计费用 | $ | $ | ||||||
| 与薪金相关的负债 | ||||||||
| 销售税责任 | ||||||||
| 其他负债 | ||||||||
| $ | $ | |||||||
| 12 |
可转换债券
截至2024年9月30日和2023年12月31日，尚有$
目标 资本可转换本票
于2024年4月30日，该公司发行了一张原本金额为$的可转换承诺票据
贷款 应付款项-PPP和SBA贷款
在
2022年4月，对Bailey的第一笔PPP贷款的部分宽恕总额为$
商户进步
未来 销售收据
在2022年和2023年，该公司获得了多笔商户预付款。这些预付款大部分以公司未来预期销售交易为担保，预计每周支付。公司总共支付了现金偿还金额，包括本金和利息，总额为$
以下是截至2024年9月30日和2023年12月31日的商业预付款摘要：
| 九月三十日， | 12月31日, | |||||||
| 2024 | 2023 | |||||||
| 本金 | $ | $ | ||||||
| 未摊销债务折扣减少 | ( | ) | ( | ) | ||||
| 商户现金优势净额 | $ | $ | ||||||
未摊销的债务折扣为$
其他
该公司与shopify Capital有杰出的商户预付款。到 2024年9月结束的三个月，该公司已还款
总额为$
公司还与Gynger, Inc.有优秀的商户预付款。到2024年5月，公司将尚未清偿的本金和欠债利息转换为$
| 13 |
应付本票
截至2024年9月30日和2023年12月31日，贝利的卖方应付票据的未偿本金为$
在
2023年3月，该公司与多位购买者签署了一项证券购买协议（以下称“2023年3月票据”），根据该协议，
投资者从公司购买了总额为$的本票，
在2024年五月，公司偿还了$
以下是应付票据的摘要，净额：
| 九月三十日， | 12月31日, | |||||||
| 2024 | 2023 | |||||||
| 贝利笔记 | $ | $ | ||||||
| 2023年3月笔记 – 本金 | ||||||||
| 2023年3月笔记 - 未摊销负债折价 | ( | ) | ||||||
| 应付票据 – 净值 | $ | $ | ||||||
注意 7: 股东资本赤字
更改公司章程
在
2023年8月21日，董事会批准了一个
普通 股票
截至2023年12月31日和2022年，该公司发行并流通的A类普通股分别为 授权的普通股股份，面值为 $ 截至2024年9月30日。
普通
股东拥有每股一票的投票权。
| 14 |
2024交易
在2024年9月30日结束的九个月期间，该公司发行了
截至2024年9月30日止的九个月内，公司发行了总额为 普通股份，以为支付服务及应付帐款转换，总计公平价值为$
截至九个月于九月三十日的期间， C系列可转换优先股转换为 股普通股。
根据先前报导，公司已与授信投资者（「投资者」）签订证券购买协议，在2023年9月5日，公司发行了某些可购买Series A认股权证
于2024年5月3日，公司与投资者签订了某项促使行使普通股购买warrants的诱导协议（“诱导协议”），根据该协议(i) 公司同意将现有warrants的行使价格降低为$
在
2024年5月，本公司转换了未偿还本金及累积利息的$
系列A可转换优先股
在2022年9月29日，公司提交了指定最多号称股票证书，将其擢为 公司授权但未发行的股份中，将其优先股指定为A系列可转换优先股。
除送转股利或根据指定证书需要进行调整之外，系列A优先股的持有人（「持有人」）将有权按照转换为普通股的基础，就系列A优先股的股份获得且公司支付相等的普通股股息，并按照与普通股相同的形式支付普通股上实际支付的股息。系列A优先股不支付其他股息。
关于任何普通股类别的投票，每一股A系列优先股都将使持有者有权按照其可转换的普通股数量来投票。
A优先股应在以下几个方面占优势：(i) 高于所有普通股；(ii) 高于公司未来创建的任何特别排名低于任何优先股的股票类别或系列（“次级证券”）；(iii) 与由其条款规定与优先股持平的公司未来创建的任何股票类别或系列（“同等证券”）持平；以及(iv) 在公司未来创建的任何特别排名高于任何优先股的股票类别或系列（“高级证券”）下居次级，就股息或在公司清算、解散或清盘时的资产分派而言，无论是自愿还是被迫。
每一股A系列优先股可于2022年9月29日后的任何时间及随时，根据持有者的选择，转换为普通股的股份数量，该股份数量由该A系列优先股的声明价值（$
截至2024年9月30日和2023年12月31日，共有 已发行并流通的A系可转换优先股。
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可转换优先股系列C
在2023年6月21日，公司一方面与Moise Emquies、George Levy、Matthieu Leblan、Carol Ann Emquies、Jenny Murphy及Elodie Crichi（统称为「其他投资者」）签订了一份证券购买协议（「其他SPA」），根据该协议，公司发行了 股份的C系列可转换优先股，每股面值$ （「C系列优先股」）以每股$ 的价格出售给其他投资者。C系列优先股可转换为公司普通股的股份数量等于$
在 2023年6月21日，本公司向德拉瓦州国务卿提交了指定证书，指定最多 股份作为授权但未发行的优先股中的C系列可转换优先股。以下是C系列优先股的主要条款摘要。
除了股票送转或根据指定证书应作出调整的分红派息外，C系列优先股股东（“C系列股东”）将有资格收取并且公司将支付C系列优先股股份相等（按照已换算为普通股基础）和以相同形式付还实际支付的普通股股份的分红，当且如果在普通股上支付了这样的分红时。其他任何分红均不得支付给C系列优先股股份。
作为指定证书明确规定的类别，C系列持有人有权作为一个类别进行表决。C系列持有人也有权与普通股股东一起作为一个类别投票，在C系列持有人被允许与普通股类别投票的所有事项上与普通股股东一起投票。
就普通股类别的任何投票而言，每股C系列优先股拥有人有权投下与其可转换为的普通股股数相等的投票权（受到指定证书中所规定的所有权限制制约），使用确定公司股东有资格就此事投票的报名日期作为转换价格计算基准日。
系列C优先股的排名应为 (i) 优于所有普通股；(ii) 优于次级资产；(iii) 与同等资产平起平坐；以及 (iv) 低于高级资产，在每种情况下，关于分红或在公司清算、解散或终止时资产的分配，无论是自愿还是非自愿。根据公司高级资产持有者的任何优先清算权以及公司现有及未来债权人的权利，在清算时，各持有人有权从公司合法可供分配予股东的资产中优先获得支付，并优先于公司普通股和次级资产的持有者分配资产或盈余资金，并与所有同等资产的持有者的分配相同，获得每当前持有的系列C优先股的明确价值（根据指定证书的定义）相等的金额以及任何累计且未支付的分红派息，然后系列C持有人有权从公司资产中接收资本或盈余相同的金额，若该系列C优先股票完全转换为普通股（在此目的下不考虑任何转换限制），该金额应与所有普通股持有者平起平坐支付。
每一股C系列优先股在2023年6月21日之后的任何时间，持有人可以随时自选转换为普通股，换算成普通股数量的方法为将该C系列优先股的面值（每股\$）除以换股价。
本公司有权在
2023年6月21日后，任何时候以当时的标明价值的百分比赎回任何或所有未偿还的C系列优先股票，
2023年十月， C系列可转换优先股转换为 股普通股。
在2024年9月30日结束的九个月内， C系列可转换优先股转换为 普通 股票的股份。
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注意 8： 关联方交易
截至2024年9月30日和2023年12月31日，向相关方应付金额分别为$
常见 股票认股权证
截至2024年9月30日的九个月内，与普通股warrants相关的信息摘要如下：
| 常见 | 加权 | |||||||
| 股票 | 平均 | |||||||
| 认股权证 | 行使价 | |||||||
| 杰出-二零二三年十二月三十一日 | $ | |||||||
| 授予 | ||||||||
| 运动 | ( | ) | ||||||
| 没收 | ||||||||
| 杰出-二零二四年九月三十日 | $ | |||||||
| 可于二零二三年十二月三十一日进行练习 | $ | |||||||
| 可于二零二四年九月三十日举行 | $ | |||||||
股票 选项
截至2024年9月30日和2023年12月31日，公司持有 期权 ，该公司拥有以加权平均行使价 $ 。
基于股票 补偿费用为 $ 和 $ 分别为截至二零二四年九月三十日和二零二三年九月三十日止三个月的认可和 $ 和 $ 截至二零二四年九月三十日和二零二三年九月三十日止九个月的认可。截至二零二四年九月三十日止九个月内及 二零二三年，美元 和 $ 已记录在销售和营销费用中，所有其他股票补偿都包括在一般和行政费用中 简明综合运营报表中的费用。与非授权的股票期权相关未认可赔偿成本总计 截至二零二四年九月三十日的奖项为美元 并将在加权平均期内被记录为 年。
备注 10: 租赁负担
租金 在合并的营运报表中根据功能被分类为一般及行政费用、销售及市场推广费用，或 营业收入成本。
公司在合约开始时透过评估潜在的租赁协议，包括服务和营运协议，来判断该安排是否或包含租约，以确定公司在安排期间是否拥有控制的特定资产。租约的开始被判断为出租人提供对该特定资产的存取权和控制权的时候。
该 公司的租赁租金通常被结构为固定或变量支付。固定租金支付包括 陈述的最低租金和陈述的最低租金加上陈述的增加。公司认为在租赁开始时无法合理确定的租赁支付为变量租赁支付，这些支付在每个期间内记录为发生，并排除在租赁负债的计算之外。
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管理层 在确定租赁分类时使用判断，包括确定识别资产的经济寿命和公允市场价值。识别资产的公允市场价值通常是基于第三方来源提供的可比市场数据来估算的。
在2023年1月，公司与位于加州维农的公司办公室及配送中心签订了租约延长协议，该租约将于2025年1月31日到期。租约每月基本租金为$
在2023年9月，公司签订了一项位于加州洛杉矶的展厅空间租约延长协议，租约将于2023年3月开始，并于2024年9月到期。租约的基本月租金为$
在2024年4月，公司与德克萨斯州艾伦市的零售店舖续租协议，该协议将于2024年4月生效，直至2027年4月到期。租赁的每月基本租金为$
以下是营业租赁资产和负债的摘要:
| 九月三十日， | 12月31日, | |||||||
| 经营租约 | 2024 | 2023 | ||||||
| 资产 | ||||||||
| ROU使用权租赁资产 | $ | $ | ||||||
| 负债 | ||||||||
| 使用权租赁的流动部分 | ||||||||
| 租赁负债的非流动部分 | ||||||||
| 总经营租赁负债 | $ | $ | ||||||
| 经营租约 | 9月30日， 2024 | 12月31日, 2023 | ||||||
| 加权平均剩余租期（年） | ||||||||
| 加权折现率加权值 | % | % | ||||||
| 9月30日， 2024 | ||||
| 未来最低付款 | $ | |||
| 扣除假定利息 | ( | ) | ||
| 租赁总义务 | $ | |||
备注 11: 附带条款
我们 目前正参与，并且未来可能会参与，法律程序、索赔和政府调查，这些都是在正常的 业务过程中发生的。这些包括与其他事项相关的程序、索赔和调查，例如，监管事务、商业 事务、知识产权、竞争、税务、就业、定价、歧视、消费者权益、人身伤害和财产权利。这些事项还包括以下内容：
2023年3月21日，一位供应商对Digital Brands Group提起了一起关于总额约为$的应付货款的诉讼。
在
2023年2月7日，一家供应商对Digital Brands Group提起诉讼，涉及约$的应付帐款。
在2020年8月和2021年3月，针对Bailey的两宗诉讼由与先前服务相关的第三方提出。
这些索赔（包括罚款、费用和法律费用）总额达到$
在2020年12月21日，一名公司的投资者对DBG提起诉讼，要求偿还他们的投资总计$
于2023年11月16日，一名供应商对Digital Brands Group提起诉讼，涉及总额约为$的应付货款，这代表过期费用和滞纳金。此类金额已纳入附表中的资产负债表中。公司不认为将可能会发生超出这些应付交易应付款项的损失。
在
2023年11月15日，一个供应商对Digital Brands Group提起了与应付交易相关的诉讼，总金额约为$
在2023年12月21日，一名两年前的前员工对公司提起了一项非法解雇诉讼。 公司对这项诉求提出了异议。 到目前为止，同一家律师事务所最近曾就我们从第三方供应机构使用的临时工非法解雇发送了一封索赔函。 这个人任何时候都不是公司的员工。
一名
供应商对Bailey 44提出诉讼，涉及一笔金额为$的零售店租约。
所有板块上述索赔，至管理层认为其将承担责任的范围，已在截至2024年9月30日的附带综合资产负债表中列入应付账款及应计费用和其他负债。
根据诉讼、索赔或调查的性质，我们可能会遭受金钱赔偿、罚款、处罚或禁制令。此外，这些事宜的结果可能会对我们的业务、营运结果和财务状况造成实质不利影响。法律程序、索赔和政府调查的结果不可预测，并且需要重大判断以确定与此类事宜相关的损失可能性和数额。虽然无法确定结果，但根据我们目前的了解，我们认为所有此类未了事项的结案，无论是个别还是综合，都不会对我们的业务、营运结果、现金流量或财务状况产生重大不利影响。
除非另有设定，公司并未参与任何法律诉讼，且公司未得知有任何针对我们提出的索赔或诉讼。将来，公司可能不时参与与其业务正常运作相关的诉讼，公司预计这些诉讼的解决不会对我们的财务状况、营运成果或现金流量造成重大不利影响。
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注意 12: 后续事件
如前所述，本公司与各位买方（「投资者」）签订证券购买协议（
「SPA」）于 2023 年 4 月 7 日或附近，其中投资者以总本金向本公司购买债券
金额约 $
在2024年10月3日至10月15日期间，该公司发行了公司的普通股（「股份」）给某笔票据持有人，以部分转换该公司于2023年10月1日左右原发行的票据（「票据」）。 在2024年10月16日，公司发现发行股份是一个错误，不符合票据条款，根据该条款，需要在发行超过公司交易前股份总数的％，以票据转换时取得股东批准，这是根据纳斯达克上市规则5635（d）明确规定的。公司随后通知票据持有人，股份必须退回给公司的过户代理人进行注销。 因此，票据持有人正在将股份退还给公司的过户代理人进行注销。注销股份后，公司发行且流通的普通股数量将减少 股。公司正在与纳斯达克证券交易所股份公司就前述错误发行的股份及随后的纠正措施进行通信。
Holder在2024年11月5日协助取消了公司的持股者 根据公司的纠正计划，取消了公司普通股的股份。
普通股和预先配售认股权发行完成
二零二四年十月二十八日，本公司
与其中名称的某些认可投资者签订证券购买协议（以下简称「购买协议」）（
「买方」），根据该公司同意以最大努力发行和出售（「发售」）：
(一) 普通股（「普通股」），以买入价为 $ 每股普通股，及 (ii)
普通股、预资助的 warrants，以及根据预资助的 warrants 行使可发行的普通股，均是根据于2024年10月24日提交给美国证券交易委员会的S-1表格的注册声明进行发售，该注册声明于2024年10月28日经修订后生效（以下称为“注册声明”）。
RBW Capital Partners LLC，透过Dominari Securities LLC（以下称为“配售代理”），根据2024年10月28日签署的配售代理协议（以下称为“配售代理协议”）担任本次发售的独家配售代理，该协议由公司与配售代理之间签订。
该发行活动为公司带来约美元的总收益。
股东权益
在2024年10月1日至2024年10月22日之间，该公司依据销售协议的条款向代理人作为销售代理或主体发行并出售了 普通股的股份，以换取净收益约为$
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项目 2. 管理层对财务状况及营运成果的讨论与分析
以下对我们的财务控制项和营运结果的讨论与分析应与相关实体的历史基本报表及本表格10-Q中其他地方包含的预估基本报表及其附注一起阅读。本讨论与分析包含涉及风险和不确定性的前瞻性声明。我们的实际结果可能会因各种因素而与这些前瞻性声明中预期的结果有重大差异，包括在“风险因素”和“关于前瞻性声明的警告性说明”中列出的因素。
除非另有上下文说明，对「DBG」的引用仅指数位品牌集团（Digital Brands Group, Inc.），而对「公司」、「我们」、「我们的」、「我们」及类似用语的引用则指数位品牌集团（Digital Brands Group, Inc.）及其全资子公司Bailey 44, LLC（「Bailey」）、MOSBESt, LLC（「Stateside」）和Sunnyside（「Sundry」）。
本讨论与分析中或本十分之三简易报告内容的某些敍述，包括与我们的业务计划和策略相关的资讯，构成根据1933年证券法第27A条及其修正案及1934年证券交易法第21E条及其修正案所定义的前瞻性陈述。我们已将这些前瞻性敍述建立在对未来事件的目前预期和预计基础上。应该在阅读本十分之三简易报告中其他位置讨论的相关因素的背景下来考虑以下资讯和任何前瞻性敍述，特别是其中在第II部分第1A “风险因素”中确定的那些风险以及我们向SEC提出的其他申报。
我们的 实际结果及某些事件的时间安排可能与所讨论、预测、预期或在任何前瞻性声明中所指出的结果存在重大差异。我们提醒您，前瞻性声明并不保证未来表现，且我们的 实际经营结果、财务状况与流动性，以及我们所处行业板块的发展可能与本季度报告表格10-Q中的前瞻性声明存在重大差异。本报告中的声明自提交本表格10-Q至美国证券交易委员会之日订定，并不应视为在任何后续日期的依据。即使我们的经营结果、财务状况与流动性，以及我们所处行业板块的发展与本季度报告表格10-Q中的前瞻性声明一致，这些结果也可能无法预测未来期间的结果或发展。我们不承担任何义务，除非法律及美国证券交易委员会的规则明确要求，否则不对任何此类声明进行公开更新或修订，以反映我们的期望或根据任何此类声明可能基于的事件、条件或情况的变化，或可能影响实际结果与前瞻性声明所列结果之间差异的可能性。
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业务 概览
最近 发展
纳斯达克 刊登
2024年10月2日，公司收到纳斯达克工作人员的一封信，通知公司工作人员已决定于2024年10月11日业务开始时，根据公司没有保持每股最低买盘价格为1美元(根据清单规则5550(a)(2))，从纳斯达克除牌公司普通股，除非公司于2024年10月9日之前要求上诉此一决定。公司于2024年10月9日向纳斯达克提交上诉请求。纳斯达克准许于2024年12月3日举行上诉听证会。
公司与各位购买人（「投资者」）于2023年4月7日前后执行了一项证券购买协议（「SPA」），根据该协议，投资者从公司购买了总本金约为$2,500,000的本票（「原始票据」），截至2023年10月1日，投资者将原始票据的余额换为2023年10月1日发行的新本票，新本票的总本金约为$1,789,668.37（「2023票据」）。2024年5月24日，公司与投资者签署了和解协议（各为「和解协议」），根据协议，公司同意支付总现金支付款项，金额为$1,789,668.37，以清偿SPA、原始票据和2023票据下的所有债务和索赔，具体为：（i）在2024年5月28日前支付$500,000.00，和（ii）在2024年9月30日前支付$1,289,668.37（「最终付款」）。2024年10月3日前后，公司与投资者签署了与每项和解协议有关的修订，根据协议，将最终付款到期日延长至2024年10月31日。
从2024年7月1日到2024年10月22日，公司发行并出售了5256263股普通股（“最近的Atm股份销售”）给H.C. Wainwright & Co.，LLC（“代理人”）作为销售代理人或主要方，根据公司此前宣布的“大宗市场发行协议”条款，日期为2023年12月27日，我们与代理人之间的（“销售协议”）。公司从最近的Atm股份销售中收到了净收益2063396.00美元。
完成发售 普通股和预资股权证
在2024年10月28日，公司与特定记载之认可投资者（「购买者」）签订了证券购买协议（「购买协议」），根据该协议，公司同意以最大努力方式发行和卖出： (i) 6,233,650股普通股（「普通股」），每股普通股售价为0.10美元；以及 (ii) 24,109,350股预先资助认股权证（「预先资助认股权证」）购买普通股，每个预先资助认股权证售价为0.0999美元，即时采行行使价为每股0.0001美元。购买协议包含公司和购买者之间标准的陈述与保证以及协议，以及当事人之间的标准赔偿权和义务。该发行于2024年10月30日结束。
本次发行带来的总收入约为$3,000,000，在扣除承销商费用和佣金及其他发行费用之前， 以及不包括公司在未来行使于本次发行中发行的预付warrants所可能获得的收入（如有）。 作为对承销商的补偿，作为本次发行的独家承销商， 公司支付了承销商8.0%的发行总收入的现金费用，1.0%的不可报帐费用津贴， 最多$50,000的法律顾问费用及其他实际支付的费用的报销， 以及最多$15,950的清算代理结算费用。
股东权益
在2024年10月1日至2024年10月22日之间，公司根据销售协议的条款，向代理人作为销售代理或主体发行并出售了4,500,579股普通股，换取净收益约为1,320,873美元（以下称“2024年10月ATm收益”）。由于公司收到了2024年10月ATm收益和公募收益，公司在本修订第1号提交之日的股东权益超过2,500,000美元。
我们的公司
Digital Brands是一个精心挑选的生活方式品牌系列，包括Bailey、DSTLD、Sundry和Avo，提供各种服装产品，通过直接面向消费者和批发分销。我们互补的品牌组合为我们提供了独特的机会，可以交叉销售我们的品牌。我们的目标是让客户从头到脚穿上我们的品牌，并捕捉我们称之为“衣柜分享”的内容，通过了解他们的偏好来创建针对其同侪特定需求的定向和个性化内容。在同一组合下运营我们的品牌，使我们能够更好地利用我们的技术、人力资本和运营能力，涵盖所有品牌。因此，我们能够实现运营效率，并继续识别额外的节省成本机会，以扩大我们的品牌和整个组合。
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我们的 投资组合包含四个重要品牌，利用我们的三个渠道：我们的网站、批发和我们自己的商店。
● Bailey 44 Bailey 44结合美丽的豪华面料和时尚设计，为忙碌的女性打造精致的成衣系列。 设计适合现实生活，这个品牌注重舒适感而非T台表现。Bailey 44主要是一个批发 品牌，我们正在将其转型为一个面向消费者的数位品牌。
● DSTLD 提供时尚高品质服装，并选择消费者体验而非奢侈品牌定价。 DSTLD 主要是一个直接面向消费者的数位品牌，最近我们增加了一些选择的批发零售商，以产生品牌知名度。 DSTLD 提供时尚高品质服装，并选择消费者体验而非奢侈品牌定价。 DSTLD 主要是一个直接面向消费者的数位品牌，最近我们增加了一些选择的批发零售商，以产生品牌知名度。
● Stateside Stateside 是一个高级美国品牌，所有针织、染色、剪裁和缝制都在洛杉矶当地采购和制造。该系列受到经典T恤演变的影响，提供简单优雅的外观。Stateside 主要是一个批发品牌，我们将会转型成一个数码直销消费品牌。
● 杂项 Sundry提供独特的女装系列，包括连衣裙、衬衫、毛衣、裙子、短裤、运动休闲服装底部和其他配饰产品。Sundry的产品是海岸休闲的，采用柔软、轻松和色彩缤纷的设计，具有独特的法式时尚，类似于法国地中海的精神和南加州威尼斯海滩的氛围。Sundry主要是一个批发品牌，我们将进行转型成为一个以数字为主、直接面向消费者的品牌。
我们 相信成功的服装品牌在所有营业收入渠道中都能卖出。然而，每个渠道提供不同的利润结构，并需要 不同的客户获取和留存策略。我们成立时是一家数字优先的零售商，已策略性地扩展到选定的批发和直接零售渠道。我们努力为每个品牌制定策略性全渠道策略，将实体和线上渠道相结合，以便让消费者在他们选择的渠道中进行互动。我们的产品主要通过我们的网站和自主展厅直接卖给消费者，但也通过我们的批发渠道，主要是在专业商店和选定的百货商店销售。随著我们批发渠道的持续扩展，我们相信，发展全渠道解决方案进一步增强了我们有效获取和留存客户的能力，同时还能推动高客户终身价值。
我们相信通过利用实体存在扩大客户基础和提升品牌知名度，我们可以运用数位行销专注于保留和一个非常严格、有纪律性的高价值新客户获取策略，尤其是针对潜在位于销售漏斗较低层的客户。建立与客户的直接关系，使客户直接进行交易，让我们能更好地了解客户的偏好和购物习惯。作为一家最初作为数位原生零售商创立的公司，凭借著我们的丰富经验，我们有能力战略性地审查和分析客户的资料，包括联络资讯、浏览和购物车资料、购买历史和风格偏好。这反过来降低了我们的库存风险和现金需求，因为我们可以根据我们在线销售历史的资料，订购和补货产品，根据实时销售资料，根据尺寸、颜色和SKU补充特定库存，以及控制我们的折价和促销策略，而不是被百货商店和精品零售商告知我们必须提供什么折价和促销方案。
我们将「衣柜股份」定义为客户衣柜中所有服饰单品的百分比（「股份」），即客户自己拥有的我们自家服饰品牌单品所占的比例，以及这些单品中有多少被销售给我们所拥有的品牌。例如，如果一位客户一年购买了20件服饰单品，而我们所拥有的品牌占了这20件单品中的10件，那么我们的衣柜股份就是该客户衣柜的50%，计算方式为我们品牌的10件单品除以他们整体购买的20件单品。衣柜股份是一个类似被广泛使用的「钱包股份」术语的概念板块，只是专门针对客户的衣柜。我们的衣柜股份越高，我们的营业收入就越高，因为更高的衣柜股份意味著客户购买我们品牌的相对竞争对手更多。
我们已经在策略上扩展成为一个全通路品牌，不仅在线上提供这些款式和内容，还在选定的批发和零售店面上提供。我们相信这种方式让我们有机会成功推动顾客终身价值（"LTV"），同时增加新客户增长。我们将顾客终身价值或LTV定义为一名顾客在其生命周期作为我们顾客将产生的平均营业收入的估计。这个顾客的价值/营业收入帮助我们判断许多经济决策，例如每个行销渠道的行销预算、保留与获取决策、单位水准经济、盈利能力和营业收入预测。
我们在2020年2月收购了Bailey，在2021年8月收购了Stateside，在2022年12月收购了Sundry。我们就每次收购所支付的对价与Bailey、H&J、Stateside和Sundry的成员权益持有人进行了长臂协商。在确定和协商此对价时，我们依赖于我们管理层的经验和判断，以及我们对Bailey、Stateside和Sundry合并营运所能带来的潜在协同效应的评估。我们并没有获得独立的估值、评估或公正意见来支持我们所支付/同意支付的对价。
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Avo – 品牌摘要
Avo是一个女性基本品牌，将提供T恤、运动衫、洋装、毛衣和运动休闲服饰。 Avo删除了批发标记，因此其产品拥有更具竞争力的价格。 当客户将多个产品捆绑到其购物车时，Avo还提供更大的折扣，这使Avo能够利用其运费和履行成本。 Avo利用公司目前的设计和供应链制造行业，因此我们为Avo使用与其他品牌相同或类似的面料和承包商。
Avo于2024年八月底推出，T恤的价格 根据顾客的捆绑大小，区间从20美元到50美元。其他产品的价格将从17.50美元的背心到198美元的毛衣不等，且若顾客捆绑三件或以上，则没有零售价格高于99美元。如果顾客捆绑两件 则可享受40%的折扣，如果捆绑三件或以上，顾客将获得60%的折扣。
材料 趋势、事件与不确定性
供应链中断
我们受到全球供应链中断的影响，可能包括原材料、进口运输和生产时间更长的影响。供应链问题对我们的品牌特别造成以下影响：
● 原材料成本增加，面料价格根据不同的面料、季节及面料来源增加了10%至100%，同时也受运送地点的影响；
● 海运或空运每公斤的运费增加，根据季节和我们发运的国家，增加幅度从25%上升至300%；
● 海运或空运的过境时间增加了两周至两个月；并且
增加生产成本，制成品劳动成本增加5%至25%，视乎生产国家和所需劳动技能。我们已经成功提价以应对部分成本增加，同时亦透过网上高毛利率营业收入抵销部分成本增加。
季节性
我们的 季度运营结果因各个品牌的季节性而有所不同，历史上在日历年下半年通常更强劲。
重大 债务
截至2024年9月30日，我们的未偿还债务总本金额约为820万美元。我们认为这对于我们的规模和当前的营业收入基础而言，可能算是相当可观的负债。 我们的巨额债务可能对我们产生重要的后果。举例来说，它可能会：
● 使我们更难满足对我们未清偿债务持有人的义务，可能导致债务违约和加速;
● 要求我们将大量来自营运的现金流投入到偿还债务上，这会减少我们来自营运的现金流用于资金周转、资本支出或其他一般公司用途的可用性；
● increase our vulnerability to general adverse economic and industry conditions, including interest rate fluctuations;
● place us at a competitive disadvantage to our competitors with proportionately less debt for their size;
● limit our ability to refinance our existing indebtedness or borrow additional funds in the future;
● limit our flexibility in planning for, or reacting to, changing conditions in our business; and
● limit our ability to react to competitive pressures or make it difficult for us to carry out capital spending that is necessary or important to our growth strategy.
Any of the foregoing impacts of our substantial indebtedness could have a material adverse effect on our business, financial condition and results of operations.
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We currently have $3.5 million in notes outstanding pursuant to our Bailey acquisition. We are currently unable to repay or refinance borrowings so any such action by these lenders could force us into bankruptcy or liquidation.
In addition, our ability to make scheduled payments on our indebtedness or to refinance our obligations under our debt agreements, will depend on our financial and operating performance, which, in turn, will be subject to prevailing economic and competitive conditions and to the financial and business risk factors we face as described in this section, many of which may be beyond our control. We may not be able to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.
If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures or planned growth objectives, seek to obtain additional equity capital or restructure our indebtedness. In the future, our cash flows and capital resources may not be sufficient for payments of interest on and principal of our debt, and such alternative measures may not be successful and may not permit us to meet scheduled debt service obligations. In addition, the recent worldwide credit crisis could make it more difficult for us to refinance our indebtedness on favorable terms, or at all.
In the absence of such operating results and resources, we may be required to dispose of material assets to meet our debt service obligations. We may not be able to consummate those sales, or, if we do, we will not control the timing of the sales or whether the proceeds that we realize will be adequate to meet debt service obligations when due.
Performance Factors
We believe that our future performance will depend on many factors, including the following:
Ability to Increase Our Customer Base in both Online and Traditional Wholesale Distribution Channels
We are currently growing our customer base through both paid and organic online channels, as well as by expanding our presence in a variety of physical retail distribution channels. Online customer acquisitions typically occur at our direct websites for each brand. Our online customer acquisition strategies include paid and unpaid social media, search, display and traditional media. Our products for Bailey, DSTLD and Stateside are also sold through a growing number of physical retail channels, including specialty stores, department stores and online multi-brand platforms.
Ability to Acquire Customers at a Reasonable Cost
We believe an ability to consistently acquire customers at a reasonable cost relative to customer retention rates, contribution margins and projected life-time value will be a key factor affecting future performance. To accomplish this goal, we intend to balance advertising spend between online and offline channels, as well as cross marketing and cross merchandising our portfolio brands and their respective products. We believe the ability to cross merchandise products and cross market brands, will decrease our customer acquisition costs while increasing the customer’s lifetime value and contribution margin. We will also balance marketing spend with advertising focused on creating emotional brand recognition, which we believe will represent a lower percentage of our spend.
Ability to Drive Repeat Purchases and Customer Retention
We accrue substantial economic value and margin expansion from customer cohort retention and repeat purchases of our products on an annual basis. Our revenue growth rate and operating margin expansion will be affected by our customer cohort retention rates and the cohorts annual spend for both existing and newly acquired customers.
Ability to Expand Our Product Lines
Our goal is to expand our product lines over time to increase our growth opportunity. Our customer’s annual spend and brand relevance will be driven by the cadence and success of new product launches.
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Ability to Expand Gross Margins
Our overall profitability will be impacted by our ability to expand gross margins through effective sourcing and leveraging buying power of finished goods and shipping costs, as well as pricing power over time.
Ability to Expand Operating Margins
Our ability to expand operating margins will be impacted by our ability to leverage (1) fixed general and administrative costs, (2) variable sales and marketing costs, (3) elimination of redundant costs as we acquire and integrate brands, (4) cross marketing and cross merchandising brands in our portfolio, and (4) drive customer retention and customer lifetime value. Our ability to expand operating margins will result from increasing revenue growth above our operating expense growth, as well as increasing gross margins. For example, we anticipate that our operating expenses will increase substantially in the foreseeable future as we undertake the acquisition and integration of different brands, incur expenses associated with maintaining compliance as a public company, and increased marketing and sales efforts to increase our customer base. While we anticipate that the operating expenses in absolute dollars will increase, we do not anticipate that the operating expenses as a percentage of revenue will increase. We anticipate that the operating expenses as a percentage of revenue will decrease as we eliminate duplicative costs across brands including a reduction in similar labor roles, contracts for technologies and operating systems and creating lower costs from higher purchasing power from shipping expenses to purchase orders of products. This reduction of expenses and lower cost per unit due to purchasing power should create meaningful savings in both dollars and as a percentage of revenue.
As an example, we were able to eliminate several million in expenses within six months of acquiring Bailey. Examples of these savings include eliminating several Bailey teams, which our teams took over.
We merged over half of the technology contracts and operating systems contracts from two brands into one brand contract at significant savings. We also eliminated our office space and rent and moved everyone into the Bailey office space. Finally, we eliminated DSTLD’s third-party logistics company and started using Bailey’s internal logistics. This resulted in an increase in our operating expenses in absolute dollars as there were now two brands versus one brand. However, the operating expenses as a percentage of pre-COVID revenue declined meaningfully and as we increase revenue for each brand, we expect to experience higher margins.
Ability to Create Free Cash Flow
Our goal is to achieve near term free cash flow through cash flow positive acquisitions, elimination of redundant expenses in acquired companies, increasing customer annual spend and lowering customer acquisition costs through cross merchandising across our brand portfolio.
Components of Our Results of Operations
Bailey
Net Revenue
Bailey sells its products directly to customers. Bailey also sells its products indirectly through wholesale channels that include third-party online channels and physical channels such as specialty retailers and department stores.
Cost of Net Revenue
Bailey’s cost of net revenue includes the direct cost of purchased and manufactured merchandise; inventory shrinkage; inventory adjustments due to obsolescence including excess and slow-moving inventory and lower of cost and net realizable reserves; duties; and inbound freight. Cost of net revenue also includes direct labor to production activities such as pattern makers, cutters and sewers. Cost of net revenue includes an allocation of overheard costs such as rent, utilities and commercial insurance pertaining to direct inventory activities.
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Operating Expenses
Bailey’s operating expenses include all operating costs not included in cost of net revenues and sales and marketing. These costs consist of general and administrative, fulfillment and shipping expense to the customer.
General and administrative expenses consist primarily of all payroll and payroll-related expenses, professional fees, insurance, software costs, occupancy expenses related to Bailey’s operations at its headquarters, including utilities, depreciation and amortization, and other costs related to the administration of its business.
Bailey’s fulfillment and shipping expenses include the cost to operate its warehouse including occupancy and labor costs to pick and pack customer orders and any return orders; packaging; and shipping costs to the customer from the warehouse and any returns from the customer to the warehouse.
Sales & Marketing
Bailey’s sales and marketing expense primarily includes digital advertising; photo shoots for wholesale and direct-to-consumer communications, including email, social media and digital advertisements; and commission expenses associated with sales representatives.
Interest Expense
Bailey’s interest expense consists primarily of interest related to its outstanding debt to our senior lender.
DBG
Net Revenue
We sell our products to our customers directly through our website. In those cases, sales, net represents total sales less returns, promotions and discounts.
Cost of Net Revenue
Cost of net revenue include direct cost of purchased merchandise; inventory shrinkage; inventory adjustments due to obsolescence, including excess and slow-moving inventory and lower of cost and net realizable reserves.
Operating Expenses
Our operating expenses include all operating costs not included in cost of net revenues. These costs consist of general and administrative, sales and marketing, and fulfillment and shipping expense to the customer.
General and administrative expenses consist primarily of all payroll and payroll-related expenses, professional fees, insurance, software costs, and expenses related to our operations at our headquarters, including utilities, depreciation and amortization, and other costs related to the administration of our business.
We expect to continue to incur additional expenses as a result of operating as a public company, including costs to comply with the rules and regulations applicable to companies listed on a national securities exchange, costs related to compliance and reporting obligations pursuant to the rules and regulations of the SEC and higher expenses for insurance, investor relations and professional services. We expect these costs will increase our operating costs.
Fulfillment and shipping expenses include the cost to operate our warehouse — or prior to Bailey 44 acquisition, costs paid to our third-party logistics provider — including occupancy and labor costs to pick and pack customer orders and any return orders; packaging; and shipping costs to the customer from the warehouse and any returns from the customer to the warehouse.
In addition, going forward, the amortization of the identifiable intangibles acquired in the acquisitions will be included in operating expenses.
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Interest Expense
Interest expense consists primarily of interest related to our debt outstanding to our senior lender, convertible debt, and other interest bearing liabilities.
Stateside
Net Revenue
Stateside sells its products directly to customers. Stateside also sells its products indirectly through wholesale channels that include third-party online channels and physical channels such as specialty retailers and department stores.
Cost of Net Revenue
Stateside’s cost of net revenue includes the direct cost of purchased and manufactured merchandise; inventory shrinkage; inventory adjustments due to obsolescence including excess and slow-moving inventory and lower of cost and net realizable reserves; duties; and inbound freight. Cost of net revenue also includes direct labor to production activities such as pattern makers, cutters and sewers. Cost of net revenue includes an allocation of overheard costs such as rent, utilities and commercial insurance pertaining to direct inventory activities.
Operating Expenses
Stateside’s operating expenses include all operating costs not included in cost of net revenues and sales and marketing. These costs consist of general and administrative, fulfillment and shipping expense to the customer.
General and administrative expenses consist primarily of all payroll and payroll-related expenses, professional fees, insurance, software costs, occupancy expenses related to Stateside’s stores and to Stateside’s operations at its headquarters, including utilities, depreciation and amortization, and other costs related to the administration of its business.
Stateside’s fulfillment and shipping expenses include the cost to operate its warehouse including occupancy and labor costs to pick and pack customer orders and any return orders; packaging; and shipping costs to the customer from the warehouse and any returns from the customer to the warehouse.
Sales & Marketing
Stateside’s sales and marketing expense primarily includes digital advertising; photo shoots for wholesale and direct-to-consumer communications, including email, social media and digital advertisements; and commission expenses associated with sales representatives.
Sundry
Net Revenue
Sundry sells its products directly to customers. Sundry also sells its products indirectly through wholesale channels that include third-party online channels and physical channels such as specialty retailers and department stores.
Cost of Net Revenue
Sundry’s cost of net revenue includes the direct cost of purchased and manufactured merchandise; inventory shrinkage; inventory adjustments due to obsolescence including excess and slow-moving inventory and lower of cost and net realizable reserves; duties; and inbound freight. Cost of net revenue also includes direct labor to production activities such as pattern makers, cutters and sewers. Cost of net revenue includes an allocation of overheard costs such as rent, utilities and commercial insurance pertaining to direct inventory activities.
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Operating Expenses
Our operating expenses include all operating costs not included in cost of net revenues. These costs consist of general and administrative, sales and marketing, and fulfillment and shipping expense to the customer.
General and administrative expenses consist primarily of all payroll and payroll-related expenses, stock-based compensation, professional fees, insurance, software costs, and expenses related to our operations at our headquarters, including utilities, depreciation and amortization, and other costs related to the administration of our business.
Sales and marketing expense primarily includes digital advertising; photo shoots for wholesale and direct-to-consumer communications, including email, social media and digital advertisements; and commission expenses associated with sales representatives.
We expect to incur additional expenses as a result of operating as a public company, including costs to comply with the rules and regulations applicable to companies listed on a national securities exchange, costs related to compliance and reporting obligations pursuant to the rules and regulations of the SEC and higher expenses for insurance, investor relations and professional services. We expect these costs will increase our operating costs.
Distribution expenses includes costs paid to our third-party logistics provider, packaging and shipping costs to the customer from the warehouse and any returns from the customer to the warehouse.
At each reporting period, we estimate changes in the fair value of contingent consideration and recognize any change in fair in our consolidated statement of operations, which is included in operating expenses. Additionally, amortization of the identifiable intangibles acquired in the acquisitions is also included in operating expenses.
Interest Expense
Interest expense consists primarily of interest related to our debt outstanding to promissory notes, convertible debt, and other interest bearing liabilities
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Results of Operations
Three Months Ended September 30, 2024 compared to Three Months Ended September 30, 2023
The following table presents our results of operations for the Three months ended September 30, 2024 and 2023:
| Three Months Ended | ||||||||
| September 30, | ||||||||
| 2024 | 2023 | |||||||
| Net revenues | $ | 2,440,801 | $ | 3,257,332 | ||||
| Cost of net revenues | 1,319,214 | 1,554,044 | ||||||
| Gross profit | 1,121,587 | 1,703,288 | ||||||
| General and administrative | 2,429,040 | 3,735,527 | ||||||
| Sales and marketing | 655,833 | 1,151,326 | ||||||
| Other operating (income) / expenses | 780,879 | 238,546 | ||||||
| Operating (loss) /income | (2,144,165 | ) | (3,422,162 | ) | ||||
| Other expenses | (797,072 | ) | (2,013,832 | ) | ||||
| Loss before provision for income taxes | (3,541,237 | ) | (5,435,994 | ) | ||||
| Provision for income taxes | - | - | ||||||
| Net income/(loss) from continuing operations | $ | (3,541,237 | ) | $ | (5,435,994 | ) | ||
Net Revenues
Revenues decreased by $0.8 million to $2.4 million for the three months ended September 30, 2024, compared to $3.3 million in the corresponding fiscal period in 2023. The decrease was primarily due to a delay in wholesale shipments in April 2024, and lower ecommerce revenues across each brand due to less digital advertising spend.
Gross Profit
Our gross profit decreased by $0.6 million for the three months ended September 30, 2024 to $1.1 million from a gross profit of $1.7 million for the corresponding fiscal period in 2023. The decrease in gross margin was primarily attributable to a decrease in sales.
Our gross margin was 46% for three months ended September 30, 2024, compared to 52% for the three months ended June 30, 2023. The decrease in gross margin was due to corresponding decrease in the ecommerce revenue.
Operating Expenses/(Income)
Our operating expenses decreased by $1.3 million for the three months ended September 30, 2024 to $3.8 million compared to $5.1 million for the corresponding fiscal period in 2023. General and administrative expenses decreased by $1.3 million, and sales and marketing expenses decreased by $0.5 million. The deceases were primarily due to cost cutting measures and synergies from the Sundry acquisition including the elimination of its warehouse, office, fulfillment and redundancies in headcount. In the third quarter of 2024, the Company recorded impairment expense of $600,000 pertaining to Bailey’s intangibles.
Other Income (Expenses)
Other expenses were $0.8 million while other expense was $2.0 million for the three months ended September 30, 2024 and 2023, respectively, primarily consisting of interest expense.
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Net Loss from Continuing Operations
Our net loss from continuing operations decreased by $1.9 million to a net loss from continuing operations of $3.5 million for the three months ended September 30, 2024 compared to income from continuing operations of $5.4 million for the corresponding fiscal period in 2023, primarily due to the change in fair value of contingent consideration in 2023 and lower gross profit in 2024, partially offset by lower general and administrative and sales and marketing expenses.
Nine Months Ended September 30, 2024 compared to Nine Months Ended September 30, 2023
The following table presents our results of operations for the nine months ended September 30, 2024 and 2023:
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2024 | 2023 | |||||||
| Net revenues | $ | 9,413,457 | $ | 12,127,135 | ||||
| Cost of net revenues | 5,012,457 | 6,054,532 | ||||||
| Gross profit | 4,401,000 | 6,032,603 | ||||||
| General and administrative | 6,347,460 | 12,115,590 | ||||||
| Sales and marketing | 1,979,173 | 3,188,054 | ||||||
| Other operating expenses/(income) | 1,345,412 | (9,947,530 | ) | |||||
| Operating (loss)/income | (4,671,045 | ) | 676,489 | |||||
| Other expenses | (2,464,407 | ) | (5,642,068 | ) | ||||
| Loss before provision for income taxes | (7,735,453 | ) | (4,965,579 | ) | ||||
| Provision for income taxes | - | - | ||||||
| Net income/(loss) from continuing operations | $ | (7,735,453 | ) | $ | (4,965,579 | ) | ||
Net Revenues
Revenues decreased by $2.7 million to $9.4 million for the nine months ended September 30, 2024, compared to $12.1 million in the corresponding fiscal period in 2023. The decrease was primarily due to a delay in wholesale shipments in April 2024, and lower ecommerce revenues across each brand due to less digital advertising spend.
Gross Profit
Our gross profit decreased by $1.6 million for the nine months ended September 30, 2024 to $4.4 million from a gross profit of $6 million for the corresponding fiscal period in 2023. The decrease in gross margin was primarily attributable to a decrease in sales.
Our gross margin was 47% for nine months ended September 30, 2024, compared to 50% for the nine months ended September 30, 2023. The decrease in gross margin was due to corresponding decrease in the ecommerce revenue.
Operating Expenses
Our operating expenses increased by $4.3 million for the nine months ended September 30, 2024 to $9.7 million compared to $5.4 million for the corresponding fiscal period in 2023. General and administrative expenses decreased by $5.7 million, and sales and marketing expenses decreased by $1.2 million. The deceases were primarily due to cost cutting measures and synergies from the Sundry acquisition including the elimination of its warehouse, office, fulfillment and redundancies in headcount. Other operating expenses included a gain of $10.7 million in 2023 due to the change in fair value of contingent consideration. In the third quarter of 2024, the Company recorded impairment expense of $600,000 pertaining to Bailey’s intangibles.
Other Income (Expenses)
Other expenses were $2.5 million while other expense was $5.6 million for the nine months ended September 30, 2024 and 2023, respectively. Interest expense in 2024 decreased due to less merchant advances and lower principal on outstanding loans.
Net Loss from Continuing Operations
Our net loss from continuing operations increased by $2.7 million to a net loss from continuing operations of $7.7 million for the nine months ended September 30, 2024 compared to income from continuing operations of $5.0 million for the corresponding fiscal period in 2023, primarily due to the change in fair value of contingent consideration in 2023 and lower gross profit in 2024, partially offset by lower general and administrative and sales and marketing expenses.
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Liquidity and Capital Resources
Each of DBG, Bailey, Stateside and Sundry has historically satisfied our liquidity needs and funded operations with borrowings capital raises and internally generated cash flow, Changes in working capital, most notably accounts receivable, are driven primarily by levels of business activity. Historically each of DBG, Bailey, Stateside and Sundry has maintained credit line facilities to support such working capital needs and makes repayments on that facility with excess cash flow from operations.
As of September 30, 2024, we had cash of $158,601, but we had a working capital deficit of $16.0 million. The Company requires significant capital to meet its obligations as they become due. These factors raise substantial doubt about our Company’s ability to continue as a going concern. Throughout the next twelve months, the Company intends to fund its operations primarily from the funds raised through the equity line of credit agreement. The Company may pursue secondary offerings or debt financings to provide working capital and satisfy debt obligations. There can be no assurance as to the availability or terms upon which such financing and capital might be available in the future. If the Company is unable to secure additional funding, it may be forced to curtail or suspend its business plans.
Cash Flow Activities
The following table presents selected captions from our condensed statement of cash flows for the nine months ended September 30, 2024 and 2023:
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2024 | 2023 | |||||||
| Net cash provided by operating activities: | ||||||||
| Net loss | $ | (7,735,453 | ) | $ | (6,582,082 | ) | ||
| Non-cash adjustments | $ | 6,025,549 | $ | (1,717,038 | ) | |||
| Change in operating assets and liabilities | $ | (1,583,366 | ) | $ | 1,787,481 | |||
| Net cash used in operating activities | $ | (3,293,269 | ) | $ | (6,457,639 | ) | ||
| Net cash provided by (used in) investing activities | $ | (101,081 | ) | $ | 41,331 | |||
| Net cash provided by financing activities | $ | 3,662,923 | $ | 6,207,950 | ||||
| Net change in cash | $ | 268,573 | $ | (208,357 | ) | |||
Cash Flows Used In Operating Activities
Our cash used by operating activities decreased by $3.2 million to cash used of $3.3 million for the nine months ended September 30, 2024, as compared to cash used of $6.5 million for the corresponding fiscal period in 2023. The decrease in net cash used in operating activities was primarily driven by non-cash charges in 2024, partially offset by our net loss and cash used in operating assets and liabilities.
Cash Flows Provided By (Used in) Investing Activities
Our cash used investing activities was $101,080 in the nine months ended September 30, 2024, primarily due to purchase of property, equipment & software and deposits on leases.
Our cash provided by investing activities was $41,331 in 2023 primarily due to a reduction of deposits, partially offset by purchase of property and cash sold in the H&J disposition.
Cash Flows Provided by Financing Activities
Cash provided by financing activities was $3.7 million for the nine months ended September 30, 2024. Cash inflows included $5.4 million in net proceeds from the issuance from the common stock for cash and $0.8 million in proceeds from loans and notes. Cash outflows are primarily due to $2.5 million in repayments of notes.
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Contractual Obligations and Commitments
As of September 30, 2024, we had $8.2 million in outstanding principal on debt, primarily our promissory notes due to the Bailey44 Sellers, the March 2023 Notes, PPP and merchant advances. Aside from our remaining non-current SBA obligations, all outstanding loans have maturity dates through 2024.
Critical Accounting Policies and Estimates
Our management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, costs and expenses and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.
Emerging Growth Company Status
We are an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012 and, as such, have elected to comply with certain reduced public company reporting requirements.
Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may, therefore, not be comparable to those of companies that comply with such new or revised accounting standards.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the Securities and Exchange Commission.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) and are not required to provide the information required under this item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, that are designed to ensure that information required to be disclosed in the reports we file and submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
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Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, who serve as our principal executive officer and principal financial and accounting officer, respectively, has evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2024. In making this evaluation, our management considered the material weakness in our internal control over financial reporting described below. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of such date.
We have initiated various remediation efforts, including the hiring of additional financial personnel/consultants with the appropriate public company and technical accounting expertise and other actions that are more fully described below. As such remediation efforts are still ongoing, we have concluded that the material weaknesses have not been fully remediated. Our remediation efforts to date have included the following:
● We have made an assessment of the basis of accounting, revenue recognition policies and accounting period cutoff procedures. In some cases, we made the necessary adjustments to convert the basis of accounting from cash basis to accrual basis. In all cases we have done the required analytical work to ensure the proper cutoff of the financial position and results of operations for the presented accounting periods.
● We have made an assessment of the current accounting personnel, financial reporting and information system environments and capabilities. Based on our preliminary findings, we have found these resources and systems lacking and have concluded that these resources and systems will need to be supplemented and/or upgraded. We are in the process of identifying a single, unified accounting and reporting system that can be used by the Company and Bailey, with the goal of ensuring consistency and timeliness in reporting, real time access to data while also ensuring ongoing data integrity, backup and cyber security procedures and processes.
● We engaged external consultants with public company and technical accounting experience to facilitate accurate and timely accounting closes and to accurately prepare and review the financial statements and related footnote disclosures. We plan to retain these financial consultants until such time that the internal resources of the Company have been upgraded and the required financial controls have been fully implemented.
● We have made an assessment on significant judgments and estimates, including impairment of long-lived assets and inventory valuation. We plan to take the steps as noted above to have the proper resources to conduct proper analyses on areas requiring judgments and estimates.
The actions that have been taken are subject to continued review, implementation and testing by management, as well as audit committee oversight. While we have implemented a variety of steps to remediate these weaknesses, we cannot assure you that we will be able to fully remediate them, which could impair our ability to accurately and timely meet our public company reporting requirements.
Notwithstanding the assessment that our internal controls over financial reporting are not effective and that material weaknesses exist, we believe that we have employed supplementary procedures to ensure that the financial statements contained in this filing fairly present our financial position, results of operations and cash flows for the reporting periods covered herein in all material respects.
Limitations on Effectiveness of Controls and Procedures
Our management, including our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), does not expect that our disclosure controls and procedures will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Management believes that the material weakness set forth above did not have an effect on our financial results.
Changes in Internal Control over Financial Reporting
No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the quarter ended September 30, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are currently involved in, and may in the future be involved in, legal proceedings, claims, and government investigations in the ordinary course of business. These include proceedings, claims, and investigations relating to, among other things, regulatory matters, commercial matters, intellectual property, competition, tax, employment, pricing, discrimination, consumer rights, personal injury, and property rights. These matters also include the following:
| On March 21, 2023, a vendor filed a lawsuit against Digital Brands Group related to trade payables totaling approximately $43,501. Such amounts include interest due, and are included in accounts payable, net of payments made to date, in the accompanying consolidated balance sheets. The Company does not believe it is probable that the losses in excess of such trade payables will be incurred. | |
| On February 7, 2023, a vendor filed a lawsuit against Digital Brands Group related to trade payables totaling approximately $182,400. Such amounts include interest due, and are included in accounts payable, net of payments made to date, in the accompanying consolidated balance sheets. The Company settled for $250,000, in October 2024, which included additional legal costs. | |
| In August 2020 and March 2021, two lawsuits were filed against Bailey’s by third-party’s related to prior services rendered. The claims (including fines, fees, and legal expenses) total an aggregate of $96,900. Both matters were settled in February 2022 and are on payment plans which will be paid off in the second quarter of 2025. | |
| On December 21, 2020, a Company investor filed a lawsuit against DBG for reimbursement of their investment totaling $100,000. Claimed amounts are included in short-term convertible note payable in the accompanying consolidated balance sheets and the Company does not believe it is probable that losses in excess of such short-term note payable will be incurred. The Company is actively working to resolve this matter. | |
| On November 16, 2023 a vendor filed a lawsuit against Digital Brands Group related to trade payables totaling approximately $345,384 , which represents past due fees and late fees. Such amounts are included in the accompanying balance sheets. The Company does not believe it is probable that the losses in excess of such pay trade payables will be incurred. | |
| On November 15, 2023 a vendor filed a lawsuit against Digital Brands Group related to trade payables totaling approximately $582,208, which represents “double damages. The amount due to the vendor is $292,604. Such amounts are included in the accompanying balance sheets. The Company does not believe it is probable that the losses in excess of such pay trade payables will be incurred. |
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On December 21, 2023, a former employee from over two years ago filed a wrongful termination lawsuit against the Company. The Company is disputing this claim. To this point, this same law firm recently sent a demand letter for another wrongful termination of a temporary worker we used from a third party placement agency. This person was not a Company employee at any time.
| A vendor filed a lawsuit against Bailey 44 related to a retail store lease in the amount of $1.5 million. The Company is disputing the claim for damages and the matter is ongoing. The vendor has recently updated the claim to now be $450,968 after signing a long-term lease with another brand for this location. The Company is disputing this new amount after review of the lease. |
All claims above, to the extent management believes it will be liable, have been included in accounts payable and accrued expenses and other liabilities in the accompanying consolidated balance sheet as of September 30, 2024.
Depending on the nature of the proceeding, claim, or investigation, we may be subject to monetary damage awards, fines, penalties, or injunctive orders. Furthermore, the outcome of these matters could materially adversely affect our business, results of operations, and financial condition. The outcomes of legal proceedings, claims, and government investigations are inherently unpredictable and subject to significant judgment to determine the likelihood and amount of loss related to such matters. While it is not possible to determine the outcomes, we believe based on our current knowledge that the resolution of all such pending matters will not, either individually or in the aggregate, have a material adverse effect on our business, results of operations, cash flows, or financial condition.
ITEM 1A. RISK FACTORS
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the nine months ended September 30, 3,442 shares of Series C Convertible Preferred Stock converted into 192,027 shares of common stock.
As previously reported, the Company entered into a securities purchase agreement with an accredited investor (the “Investor”), pursuant to which the Company issued on September 5, 2023 those certain Series A warrants to purchase 513,875 shares of common stock and Series B warrants to purchase 513,875 shares of common stock (collectively, the “Existing Warrants”), amongst other securities.
On May 3, 2024, the Company entered into that certain inducement offer to exercise common stock purchase warrants with the Investor (the “Inducement Agreement”), pursuant to which (i) the Company agreed to lower the exercise price of the Existing Warrants to $3.13 per share and (ii) the Investor agreed to exercise the Existing Warrants into 1,027,750 shares of common stock (the “Exercise Shares”) by payment of the aggregate exercise price of $3,216,857. The closing occurred on May 7, 2024.
Through September 30, 2024, the Company had exercised 378,750 of the 1,027,750 warrants at the amended exercise price of $3.13 per share. The Company received the entire gross proceeds of $3,216,857 in May 2024, which represents the exercise of the entire 1,027,750 warrants at the $3.13 exercise price. The Company received net proceeds of $2,877,475 after placement agent fees and expenses. Company also exercised 649,000 warrants which were prefunded through PIPE offerings in the third of 2023.
In July 2024, the Company issued 60,527 shares of common stock to a vendor for services rendered for a total value of $172,501.
In July 2024, 299 shares of Series C Convertible Preferred Stock converted into 16,681 shares of common stock.
In August 2024, 101 shares of Series C Convertible Preferred Stock converted into 5,635 shares of common stock.
In August 2024, the Company issued 106,020 shares of common stock to a commercial debt holder in satisfaction of $313,816.45 of debt.
Between October 3, 2024 and October 15, 2024, the Company issued 1,311,345 shares of the Company’s common stock (the “Shares”) to a certain note holder upon conversion of a portion of their promissory note originally issued by the Company on or around October 1, 2023 (the “Note”). On October 16, 2024, the Company became aware that the issuance of the Shares was in error and not permitted under the terms of the Note due to the requirement thereunder that stockholder approval be obtained prior to the issuance of more than 19.9% of the Company’s pre-transaction shares outstanding upon conversion(s) of the Note, as referenced and specifically required under Nasdaq Listing Rule 5635(d). The Company then notified the note holder that the Shares must be returned to the Company’s transfer agent for cancellation. Accordingly, the note holder is in the process of returning the Shares to the Company’s transfer agent for cancellation. Upon cancellation of the Shares, the Company’s issued and outstanding common stock count will decrease by 1,311,345 shares. On November 5, 2024, the Holder facilitated the cancellation of 1,311,345 shares of the Company’s common stock in accordance with the Company’s remediation plan.
The above issuances were made pursuant to an exemption from registration pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated under the Securities Act.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURE
Not applicable.
ITEM 5. OTHER INFORMATION
(a) None.
(b) There have been no material changes to the procedures by which security holders may recommend nominees to the Company’s Board of Directors since the Company last provided disclosure in response to the requirements of Item 407(c)(3) of Regulation S-K.
(c)
During the quarter ended September 30, 2024, no director or officer of the Company
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ITEM 6. EXHIBITS
* Filed herewith.
** Furnished herewith
# Indicates management contract or compensatory plan or arrangement.
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SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| DIGITAL BRANDS GROUP, INC. | ||
| November 15, 2024 | By: | /s/ John Hilburn Davis, IV |
| John Hilburn Davis, IV, Chief Executive Officer | ||
| November 15, 2024 | By: | /s/ Reid Yeoman |
| Reid Yeoman, Chief Financial Officer | ||
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