美國
證券交易委員會
華盛頓特區，20549
表格
(修訂版 1)
| 根據1934年證券交易法第13條或15(d)條的規定的季度報告 |
截至季度結束
| 根據1934年證券交易法第13或第15(d)款的規定，根據過渡報告 |
過渡期從____到____
佣金
文件編號:
（精確 註冊人姓名（如其章程中所述）
| （註冊地或組織所在管轄區） | （美國國稅局僱主號碼） | |
| 文件號碼） | (主要 執行人員之地址) |
（總部地址，包括郵政編碼）
電話：
根據交易所法規（17 CFR 240.14a-12）第14a-12規定的招股材料
不適用
(公司更名、更改地址和更改財年情況的以往名稱、以前地址和以前財年，如與上次報告有所改變)
根據法案第12(b)節註冊的證券:
| 每一類別的名稱 | 交易符號 | 在每個交易所註冊的名稱 | ||
| 股 股票市場 有限責任公司 | ||||
| 股 股票市場 有限責任公司 |
請勾選標記以指示註冊者是否（1）在過去12個月內（或註冊者需要提交這些報告的更短時間內）已提交證券交易所法案第13或15（d）節要求提交的所有報告，及 （2）是否已被提交要求過去90天的提交要求所制約。
通過勾選圓圈表明註冊者是否在過去12個月內(或註冊者需要提交這些文件的較短期限內)已經遞交規章S-T(本章第232.405條)規定的每個交互式數據文件。
用複選標記表示註冊人是大型高速申報者、高速申報者、非高速申報者、小型報告公司還是新興成長型公司。請參閱《交易所法案》第120億.2條中「大型高速申報者」、「高速申報者」、「小型報告公司」和「新興成長型公司」的定義。
| 大型加速文件提交人 | ☐ | 加速文件提交人 | ☐ |
| ☒ | 小型報告公司 | ||
| 新興成長公司 |
如果是新興成長公司，請在這裏打勾，表示該註冊人已選擇不使用根據證券交易所法第13(a)條規定提供的遵守任何新的或修訂財務會計準則所規定的延長過渡期。
請勾選適用的圓圈，表示註冊登記者是否是空殼公司(根據交易所法案第12b-2條的定義)。是 ☐ 否
截至2024年11月14日，公司已經 普通股股票，$ 面值、發行和流通量。
解釋說明
| (i) | 在隨後的事件中插入關於發帖季度結束後股東權益的額外披露； |
| (ii) | 提供最新日期的認證； 和 |
| (iii) | 糾正目錄中的一個不重要的錯誤。 |
以下項目已在此修正案第1號中修訂：
| ● | 第一部分 — 項目1。 未經審計的綜合財務報表附註的附註12（後續事項） | |
| ● | 第一部分 - 項目2。 「管理層對財務狀況和經營結果的討論 - 最近的發展」 | |
| ● | 第二部分 - 項目6。 附件 |
數字品牌集團，股份有限公司。
10-Q表格
目錄
| 頁面 | |||
| 關於前瞻性陳述的警示性說明 | 3 | ||
| 第一部分財務信息 | 4 | ||
| 項目 1。 | 財務報表 | 4 | |
| 截至 2024 年 9 月 30 日（未經審計）和 2023 年 12 月 31 日的簡明合併資產負債表 | 4 | ||
| 截至2024年9月30日和2023年9月30日的三個月和九個月未經審計的簡明合併運營報表 | 5 | ||
| 截至2024年9月30日和2023年9月30日的三個月和九個月未經審計的簡明合併股東權益（赤字）報表 | 6 | ||
| 截至2024年9月30日和2023年9月30日的九個月未經審計的簡明合併現金流量表 | 7 | ||
| 未經審計的簡明合併財務報表附註 | 8 | ||
| 物品 2。 | 管理層對財務狀況和經營業績的討論和分析 | 20 | |
| 項目 3 | 關於市場風險的定量和定性披露 | 32 | |
| 項目 4。 | 控制和程序 | 32 | |
| 第二部分。其他信息 | 34 | ||
| 項目 1。 | 法律訴訟 | 34 | |
| 項目 1A。 | 風險因素 | 35 | |
| 物品 2。 | 未註冊的股權證券銷售和所得款項的使用 | 35 | |
| 項目 3. | 優先證券違約 | 35 | |
| 項目 4。 | 礦山安全披露 | 35 | |
| 項目 5。 | 其他信息 | 35 | |
| 項目 6。 | 展品 | 36 | |
| 簽名 | 37 | ||
| 2 |
關於前瞻性聲明的注意事項
除歷史信息外，這份10-Q表格的季度報告包含根據《1933年證券法》第27（a）條修正案（「證券法」）和《1934年證券交易法》第21（E）條修正案（「交易所法案」）的涉及風險和不確定性的前瞻性聲明。這些前瞻性聲明可以通過使用前瞻性術語來識別，包括「相信，」「估計，」「項目，」「目標，」「預期，」「尋找，」「預測，」「考慮，」「持續，」「可能，」「打算，」「可能」，「計劃，」「預測，」「未來，」「可能，」「將會，」“可以，「將」或「應該」或, 在各種情況下，它們的否定或其他變體或可比術語。這些前瞻性聲明包括所有不是歷史事實的事項。它們出現在這份10-k年度報告中的多個地方，包括有關我們意圖、信仰或目前對我們的運營結果、財務狀況、流動性、前景、增長戰略、我們所在行業和潛在收購等事項的聲明。我們的許多前瞻性聲明源自我們的運營預算和預測，這些預測基於許多詳細的假設。雖然我們認爲我們的假設是合理的，但我們警告說，預測已知因素的影響非常困難，當然，我們無法預料可能影響我們實際結果的所有因素。所有前瞻性聲明均基於我們在本季度10-Q表格上獲得的信息日期。
由於其本質，前瞻性聲明涉及風險和不確定性，因爲它們與事件相關，並依賴於可能在未來發生或不發生的情況。我們提醒您，前瞻性聲明並不是未來表現的保證，並且我們的實際經營結果、財務狀況和流動性，以及我們所處行業的穩定性，可能與在本季度10-Q報告中包含的前瞻性聲明中作出的或提示的內容存在實質性差異。此外，即使我們的經營結果、財務狀況和流動性以及我們所處行業的發展與本季度10-Q報告中包含的前瞻性聲明一致，這些結果或發展也可能不代表後續期間的結果或發展。可能導致我們結果與預期不同的重要因素包括在我們最近的10-K年度報告中討論的「風險因素」，並可能會不時更新。
估計和前瞻性聲明僅代表其作出之日期的情況，並且除非法律要求，我們不承擔更新或審查任何估計和/或前瞻性聲明的義務，也不因新信息、未來事件或其他因素而另行審查。
| 3 |
部分I—財務信息
項目 1. 合併基本報表
數字品牌集團公司
彙編簡明資產負債表
(未經審計)
| 九月三十日 | 十二月 31, | |||||||
| 2024 | 2023 | |||||||
| 資產 | ||||||||
| 流動資產： | ||||||||
| 現金和現金等價物 | $ | $ | ||||||
| 應收賬款，淨額 | ||||||||
| 因子應付款，淨額 | ||||||||
| 庫存 | ||||||||
| 預付費用和其他流動資產 | ||||||||
| 流動資產總額 | ||||||||
| 財產、設備和軟件，淨額 | ||||||||
| 善意 | ||||||||
| 無形資產，淨額 | ||||||||
| 存款 | ||||||||
| 使用權資產 | ||||||||
| 總資產 | $ | $ | ||||||
| 負債和股東權益 | ||||||||
| 流動負債： | ||||||||
| 應付賬款 | $ | $ | ||||||
| 應計費用和其他負債 | ||||||||
| 應付關聯方款項 | ||||||||
| 可轉換應付票據，淨額 | ||||||||
| 應計應付利息 | ||||||||
| 應付貸款，當前 | ||||||||
| 應付本票，淨額 | ||||||||
| 使用權責任，當前部分 | ||||||||
| 流動負債總額 | ||||||||
| 應付貸款 | ||||||||
| 使用權責任，非流動部分 | ||||||||
| 遞延所得稅負債 | ||||||||
| 負債總額 | ||||||||
| 承付款和意外開支 | ||||||||
| 股東權益： | ||||||||
| 未指定優先股，$ 面值， 已授權的股份， 已發行的股票和 截至 2024 年 9 月 30 日和 2023 年 12 月 31 日的未繳款項 | ||||||||
| A 系列可轉換優先股，$ 面值， 指定股份， 截至 2024 年 9 月 30 日和 2023 年 12 月 31 日的已發行和流通股份 | ||||||||
| C 系列可轉換優先股，$ 面值， 和 已發行的股票 以及截至2024年9月30日和2023年12月31日的未繳款項 | ||||||||
| 普通股，美元 面值， 已授權的股份， 和 已發行的股票和 分別截至2024年9月30日和2023年12月31日的未繳款項 | ||||||||
| 額外的實收資本 | ||||||||
| 累計赤字 | ( | ) | ( | ) | ||||
| 股東權益總額 | ||||||||
| 負債和股東權益總額 | $ | $ | ||||||
請參閱未審計的簡明合併基本報表附帶說明
| 4 |
數字品牌集團公司
精簡 合併損益表
(未經審計)
| 三個月已結束 | 九個月已結束 | |||||||||||||||
| 九月三十日 | 九月三十日 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| 淨收入 | $ | $ | $ | $ | ||||||||||||
| 淨收入成本 | ||||||||||||||||
| 毛利潤 | ||||||||||||||||
| 運營費用： | ||||||||||||||||
| 一般和行政 | ||||||||||||||||
| 銷售和營銷 | ||||||||||||||||
| 分發 | ||||||||||||||||
| 無形資產減值 | ||||||||||||||||
| 或有對價公允價值的變化 | ( | ) | ||||||||||||||
| 運營費用總額 | ||||||||||||||||
| 運營收入（虧損） | ( | ) | ( | ) | ( | ) | ||||||||||
| 其他收入（支出）： | ||||||||||||||||
| 利息支出 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 其他非營業收入（支出） | ( | ) | ( | ) | ( | ) | ||||||||||
| 其他收入（支出）總額，淨額 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 所得稅條款 | ||||||||||||||||
| 持續經營的淨虧損 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 已終止業務的（虧損），扣除稅款 | ( | ) | ||||||||||||||
| 淨虧損 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 已發行普通股的加權平均值——基本股和攤薄後普通股 | ||||||||||||||||
| 每股普通股淨虧損——基本虧損和攤薄後 | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
請參閱未經審計的簡明合併基本報表附帶的說明。
| 5 |
數字品牌集團公司
凝縮 合併股東權益（赤字）報表
(未經審計)
| A 系列敞篷車 | C 系列敞篷車 | 額外 | 總計 股東 | |||||||||||||||||||||||||||||||||
| 優先股 | 優先股 | 普通股 | 已付款 | 累積 | 股權 | |||||||||||||||||||||||||||||||
| 股票 | 金額 | 股票 | 金額 | 股票 | 金額 | 資本 | 赤字 | （赤字） | ||||||||||||||||||||||||||||
| 截至2022年12月31日的餘額 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| 根據私募發行普通股 | - | - | ||||||||||||||||||||||||||||||||||
| 發行成本 | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| 爲服務業發行的股票 | - | - | ||||||||||||||||||||||||||||||||||
| 以票據發行的股票和認股權證 | - | - | ||||||||||||||||||||||||||||||||||
| 基於股票的薪酬 | - | - | - | |||||||||||||||||||||||||||||||||
| 淨虧損 | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| 截至2023年3月31日的餘額 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| 取消票據和發行優先股 | - | - | ||||||||||||||||||||||||||||||||||
| B系列優先股的發行 | - | - | - | |||||||||||||||||||||||||||||||||
| 根據處置發行普通股 | - | - | ||||||||||||||||||||||||||||||||||
| 基於股票的薪酬 | - | - | - | |||||||||||||||||||||||||||||||||
| 淨收入 | - | - | - | |||||||||||||||||||||||||||||||||
| 截至2023年6月30日的餘額 | ( | ) | ||||||||||||||||||||||||||||||||||
| 取消b系列優先股 | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| 根據私募發行普通股，扣除發行成本 | - | - | ||||||||||||||||||||||||||||||||||
| 爲服務而發行的普通股 | - | - | ||||||||||||||||||||||||||||||||||
| 行使認股權證 | - | - | ||||||||||||||||||||||||||||||||||
| 基於股票的薪酬 | - | - | - | |||||||||||||||||||||||||||||||||
| 淨虧損 | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| 截至2023年9月30日的餘額 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| 截至 2023 年 12 月 31 日的餘額 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| 以現金髮行的普通股 | - | - | ||||||||||||||||||||||||||||||||||
| 爲服務業發行的股票 | - | - | ||||||||||||||||||||||||||||||||||
| 將優先股轉換爲普通股 | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| 基於股票的薪酬 | - | - | - | |||||||||||||||||||||||||||||||||
| 淨虧損 | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| 截至 2024 年 3 月 31 日的餘額 | ( | ) | ||||||||||||||||||||||||||||||||||
| 以現金髮行的普通股 | - | - | ||||||||||||||||||||||||||||||||||
| 將貸款轉換爲普通股 | - | - | ||||||||||||||||||||||||||||||||||
| 將優先股轉換爲普通股 | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| 基於股票的薪酬 | - | - | - | |||||||||||||||||||||||||||||||||
| 淨虧損 | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| 截至2024年6月30日的餘額 | ( | ) | ||||||||||||||||||||||||||||||||||
| 以現金髮行的普通股 | - | - | ||||||||||||||||||||||||||||||||||
| 爲服務業發行的股票 | - | - | ||||||||||||||||||||||||||||||||||
| 將優先股轉換爲普通股 | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| 基於股票的薪酬 | - | - | - | |||||||||||||||||||||||||||||||||
| 淨虧損 | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| 截至 2024 年 9 月 30 日的餘額 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
請參閱未經審計的簡明合併基本報表附帶的說明。
| 6 |
數位品牌集團，公司。
簡明綜合現金流量表
(未經審計)
| 九個月結束 | ||||||||
| 九月三十日， | ||||||||
| 2024 | 2023 | |||||||
| 經營活動現金流量： | ||||||||
| 淨虧損 | $ | ( | ) | $ | ( | ) | ||
| 調整為使淨虧損轉化為經營活動所使用現金： | ||||||||
| 折舊及攤銷 | ||||||||
| 貸款折扣和費用的攤銷 | ||||||||
| 無形資產減損 | ||||||||
| 債務清償損失 | ||||||||
| 業務虧損 | ||||||||
| 基於股票的薪酬 | ||||||||
| 股份發行用於服務 | ||||||||
| 信用準備金的變更 | ( | ) | ||||||
| 或有對價的公允價值變化 | ( | ) | ||||||
| 已中止營運 | ||||||||
| 非現金租賃費用 | ||||||||
| 營運資產和負債的變化： | ||||||||
| 應收帳款，淨額 | ( | ) | ||||||
| 應收賬款 | ||||||||
| 存貨 | ( | ) | ||||||
| 預付費用及其他流動資產 | ( | ) | ( | ) | ||||
| 應付賬款 | ( | ) | ||||||
| 應計費用及其他負債 | ||||||||
| 透過收入 | ( | ) | ||||||
| 應計利息應付 | ||||||||
| 因為關聯方 | ||||||||
| 租賃負債 | ( | ) | ||||||
| 經營活動所用的淨現金 | ( | ) | ( | ) | ||||
| 投資活動之現金流量: | ||||||||
| 現金處置 | ( | ) | ||||||
| 購買資產、設備及軟體 | ( | ) | ( | ) | ||||
| 存入資金 | ( | ) | ||||||
| 投資活動所提供（使用）的淨現金 | ( | ) | ||||||
| 來自籌資活動的現金流量: | ||||||||
| 來自關聯方的預付款項還款 | ( | ) | ||||||
| 來自追索權的預付款 | ||||||||
| 發放貸款及應付票據 | ||||||||
| 可轉換票據及應付款項的還款 | ( | ) | ( | ) | ||||
| 現金購買普通股的保險 | ||||||||
| 認購權證的行使 | ||||||||
| 公開發行普通股的發行 | ||||||||
| 發行成本 | ( | ) | ||||||
| 籌資活動提供的淨現金 | ||||||||
| 現金及現金等價物淨變動 | ( | ) | ||||||
| 期初現金及現金等價物餘額 | ||||||||
| 期末現金及現金等價物 | $ | $ | ||||||
| 現金流量資訊的補充披露： | ||||||||
| 支付所得稅現金 | ||||||||
| 支付利息的現金 | $ | $ | ||||||
| 補充揭露與非現金投資及融資活動有關之事項： | ||||||||
| 租賃資產 | $ | $ | ||||||
| 為服務和應付帳款的轉換而發行的股份 | $ | $ | ||||||
| 將優先股轉換為普通股 | $ | $ | ||||||
| 將票據轉換為優先股 | $ | $ | ||||||
請參閱未經審核的簡明綜合財務報表附註。
| 7 |
注意 1: 營運性質
Digital Brands Group, Inc.（以下稱「公司」或「DBG」）於2012年9月17日根據德拉瓦州法律成立，作為一間名為Denim.LA LLC的有限責任公司。公司於2013年1月30日轉換為德拉瓦公司，並更名為Denim.LA, Inc.。自2020年12月31日起，公司更名為Digital Brands Group, Inc.（DBG）。
公司是一個精選的生活方式品牌集合，包括Bailey 44，DSTLD，Stateside和ACE Studios，通過直接面向消費者和批發分銷，提供各種服裝產品。
於2020年2月12日，Denim.LA, Inc.與特拉華有限責任公司Bailey 44, LLC（“Bailey”）簽訂了一份合併計劃及協議。在收購日，Bailey 44, LLC成為了該公司的全資子公司。
2021年5月18日，公司根據與D. Jones Tailored Collection, Ltd.簽訂的股份購買協議，完成了對Harper＆Jones, LLC（“H＆J”）的收購，以購買其歸屬權的百分之百。
於2021年8月30日，該公司根據與Moise Emquies簽訂的會員權益購買協議完成對Mosbest, LLC（以Stateside經營）("Stateside")的收購，購買了
2022年12月30日，公司根據與Moise Emquies簽署的第二份修訂及重訂會員權益購買協議，成功完成了先前宣布的收購Sunnyside, LLC dba Sundry（以下簡稱“Sundry”）的交易。
在2023年6月21日，公司與H＆J的前業主執行了一項解決協議和釋放協議（“解決協議”），隨著各方簽署解決協議，公司同意支付總額$
注意 2: 持續經營
附帶的簡明綜合基本報表是基於持續經營的假設編製的，這考慮到資產的實現和在正常業務過程中滿足負債的情況。自成立以來，公司未曾產生利潤，並已經持續錄得淨虧損 $
公司在財務報表發布之日起的12個月內能否持續經營，取決於其能否從業務中產生足夠的現金流以滿足其義務，而目前為止公司尚未能夠做到這一點，及/或獲得額外的資本融資。在財務報表發布之前，公司主要通過發行資本股票和債務進行融資。如果公司無法產生足夠的營業收入來支持其運營，公司將需要減少開支或通過發售債務和/或股權證券來獲得融資。額外股權的發行將會稀釋現有股東的權益。如果公司在需要時無法獲得額外的資金，或者如果這些資金無法以公司可接受的條款獲得，公司將無法執行業務計劃或支付發生的成本和費用，這將對業務、財務狀況和經營結果產生重大不利影響。無法保證公司會在這些努力中取得成功。
| 8 |
注意 3: 重要會計政策摘要
報表說明基礎
本公司的會計及報告政策符合美國普遍接受的會計原則（“GAAP”）。
反向 股票合併
在
2023年8月21日，董事會批准了一个
未經審核的 中期財務信息
就以下的基本報表而言：基本報表為2024年9月30日的未經查核總餘額表，截至2024年9月30日的三個月和九個月的未經查核綜合損益表，以及2024年和2023年的現金流量表；所根據SEC的中期財務報表法規由公司編製。依據法規，某些通常包含在按照GAAP編製的財務報表中的信息和註腳披露已經被壓縮或省略。但是，公司認為這些披露足以使呈現的信息不會誤導。未經查證的中期綜合財務報表是以符合已查證的合併財務報表的基礎編製，並且在管理層的意見中，反映出所有調整，僅包括對公允呈現需進行的正常週期性調整，以呈現所述中期期間的合併結果及中期合併資產負債狀況的正常公平呈現的必要性。營運結果不一定代表預期於2024年12月31日結束時的結果。
附帶的未經審核的中期簡明合併基本報表應與公司截至2023年12月31日的經審核合併基本報表及其附註一併閱讀，該報表已於2024年4月15日提交至SEC的公司年度10-K表格中。
合併財務報表的準則
這些 簡明合併基本報表包含公司的帳目及其全資子公司Bailey和Stateside 自收購日期起的帳目。所有的內部交易和餘額在合併時已被消除。
已停業 營運
某些去年的賬目已重新歸類，以符合有關停業營運收入（虧損）的當年呈現方式。
使用估計值
本公司依據一般公認會計原則（GAAP）編制基本報表需要管理層作出估算和假設，這些估算和假設會影響資產和負債的報告金額、在基本報表日期的或有資產和負債的披露，以及在報告期間的收入和支出的報告金額。這些基本報表中反映的重大估算和假設包括，但不限於，庫存、長期資產的減值、或有對價和衍生負債。公司根據歷史經驗、已知趨勢及其他市場特定或其他相關因素，認為在該情況下是合理的，來制定其估算。管理層持續評估其估算，當環境、事實及經驗發生變化時會進行評估。估算的變更在已知時記錄在變更的期間內。實際結果可能與這些估算有所不同。
| 9 |
現金 及約當現金及信用風險集中度
公司將所有原始到期小於六個月的高流動性證券視為現金等價物。截至2024年9月30日和2023年12月31日，公司並未持有任何現金等價物。公司的現金及現金等價物在銀行存入資金賬戶中的數額，有時可能會超過聯邦保險限制的$
金融工具公允價值
公司的金融工具包括現金及現金等價物、預付費用、應付帳款、應計費用、應支付關聯方款項、關聯方票據應付款及可轉換債務。這些資產和負債的帳面價值代表了它們的公平市值，因為這些工具具有較短的到期日。
應收帳款 及預期信用損失
我們按發票金額減去客戶信用損失和其他扣款的額度來列示應收帳款，以呈現預計能夠在財務資產上收回的淨額。所有應收帳款預期能夠在合併資產負債表的一年內收回。我們不會在交易應收帳款上計提利息。管理層根據多種因素評估收回應收帳款的能力。根據各自的信用條款，應收帳款被確定為逾期。根據應收帳款逾期的時間長短、歷史回收情況或客戶財務狀況，維持一個信用損失備抵。經努力無法收回應收帳款後，被認定無法收回的年份將其注銷。我們沒有與客戶相關的任何表外信貸風險。
我們 定期檢討應收賬款，估算呆賬準備金，並同時在 損益表中記錄適當的費用。這些估算基於一般經濟狀況、客戶的財務狀況以及逾期賬款的金額 和年限。逾期賬款只有在所有催收嘗試都已耗盡 且回收的可能性渺茫時，才會對應該準備金進行核銷。之前核銷的應收賬款在收到時會計入收入。 公司在正常營運中向其客戶提供信貸，並已建立信用評估和監控流程，以降低信用風險。
截至2024年9月30日和2023年12月31日，公司確定了$的信用損失準備金。
存貨
庫存按照成本或淨可實現價值的較低者進行結算，DSTLD採用加權平均成本法，而Bailey、Stateside和Sundry則採用先進先出法。截至2024年9月30日和2023年12月31日的庫存餘額主要包括已購買或生產以便轉售的成品產品，以及公司為修改產品而購買的任何原材料和進行中的加工。
庫存 包括以下內容：
| 九月三十日， | 12月31日, | |||||||
| 2024 | 2023 | |||||||
| 原材料 | $ | $ | ||||||
| 在製品 | ||||||||
| 成品 | ||||||||
| 存貨 | $ | $ | ||||||
商譽
商譽和具有無限有效生命的可辨識無形資產不會被攤銷，而是每年進行測試以確定是否有損耗，或發生某些事件或實質變化的時候。每年進行商譽測試允許選擇首先評估定性因素，以判斷報告單位的公平價值是否有可能低於其攜帶金額。機構可以選擇對其所有報告單位的定性評估或部分報告單位進行定性評估，或機構可以跳過任何報告單位的定性評估，並直接進入定量損耗測試的第一步驟。如果根據定性因素確定報告單位的公平價值比攜帶價值更有可能低，則需要進行定量損耗測試。
| 10 |
年度 減損
在2023年12月31日，管理層確定發生了一些事件和情況，表明公司的品牌資產，以及與Bailey44、Stateside和Sundry相關的報告單位的帳面價值有可能無法收回。對品質評估主要是由於這兩個實體的收入減少或停滯，與公司初始收購時的預測相比，以及實體負債超過資產。經過進行的定量分析後，公司確定無形資產和報告單位的公平價值高於各自的帳面價值。因此，沒有記錄減值。公司在2023年對每個報告單位進行減值測試時使用了企業價值方法。
2024年9月30日，管理層決定對Bailey44報告單位的減值因數進行評估。定性評估主要是由於Bailey44的收入較公司預測下降，以及實體負債超過資產。因此，公司將無形資產減損記錄為$
每股的凈收益或虧損是通過將凈利潤或虧損除以在期間內流通的加權平均普通股數計算的，並不包括需贖回或沒收的股票。公司提供基本和稀釋後的每股凈收益或虧損。稀釋後的每股凈收益或虧損反映了期內發行和流通的普通股的實際加權平均數，並根據潛在的稀釋性證券進行調整。如果將其納入計算會導致反稀釋，則潛在的稀釋性證券將排除在稀釋後每股凈虧損的計算之外。截至2024年和2023年9月30日，所有潛在的稀釋性證券均為反稀釋，因此每股稀釋後凈虧損與每股基本凈虧損相同。截至2024年和2023年9月30日，未結的潛在稀釋項目如下：
| 九月三十日， | ||||||||
| 2024 | 2023 | |||||||
| A輪可轉換優先股 | ||||||||
| million ($ | ||||||||
| 普通股權證 | ||||||||
| 股票期權 | ||||||||
| 可能增加股份總數 | ||||||||
2024年和2023年9月30日，上述股票期權和認股權皆已跌出實值。
最近的 會計準則
於2024年1月，公司採納了 ASU 2020-06，關於具換股和其他期權債務（子題470-20）和衍生工具及避險——實體自有權益合約（子題815-40）： 關於可轉換工具和實體自有權益合約的會計處理：本ASU針對可轉換工具和實體自有權益合約的某些指導複雜性進行了規範。該ASU適用於符合SEC提交者定義的上市公司，排除SEC定義的有資格成為較小報告公司的實體，適用於2021年12月15日後開始的財政年度，包括該財政年度內的中期期間。對於所有其他實體，該ASU將於2023年12月15日後開始的財政年度開始生效，包括該財政年度內的中期期間。該ASU對合併基本財務報表未產生實質影響。
管理層認為，其他最近發佈但尚未生效的會計準則不會對附帶財務報表產生重大影響。隨著新的會計宣布，公司將採納適用於當時情況的準則。
截至2024年5月20日，以下會計公告已發佈，但尚未生效，並可能影響本公司的未來財務報告：
| ● | ASU 2022-03，公允價值計量（主題820）：受合約銷售限制的股權證券的公允價值計量： 該ASU旨在澄清在計量受合約限制禁止出售的股權證券公允價值時的指導 對於公開業務實體，ASU 2022-03中的修訂適用於2023年12月15日之後開始的財政年度 及這些財政年度內的中期報告。對於所有其他實體，該ASU適用於 2024年12月15日之後開始的財政年度及這些財政年度內的中期報告。 |
| 11 |
註4： 應收因子
由於/來自因素包括以下内容:
| 九月三十日， | 12月31日, | |||||||
| 2024 | 2023 | |||||||
| 應收帳款傑出： | ||||||||
| 無追索權 | $ | $ | ||||||
| 有追索權 | ||||||||
| 到期基金和存款 | ||||||||
| 進展 | ( | ) | ( | ) | ||||
| 應付顧客的信用 | ( | ) | ||||||
| $ | $ | |||||||
備註 5: 商譽和無形資產
以下是每項業務合併所產生的商譽總結：
| 九月三十日， | 2023年12月31日 | |||||||
| 2024 | 2023 | |||||||
| 貝利 | $ | $ | ||||||
| 美國 | ||||||||
| 雜項 | ||||||||
| $ | $ | |||||||
以下表格概述了截至2024年9月30日公司可識別無形資產的相關信息：
| 總額 | 累積的 | 帳面 | ||||||||||
| 金額 | 攤銷 | 價值 | ||||||||||
| 攤銷： | ||||||||||||
| 客戶關係 | $ | $ | ( | ) | $ | |||||||
| $ | $ | ( | ) | $ | ||||||||
| 不定期限： | ||||||||||||
| 品牌名稱 | ||||||||||||
| $ | $ | ( | ) | $ | ||||||||
截至
2024年9月30日，管理層確定有關Bailey44報告單位存在減損的因數。質性
評估主要是基於Bailey44的收入相較於公司的預測減少，以及該實體的
負債超過資產。因此，公司對品牌名稱的無形資產錄得減損$
公司在截至2024年和2023年9月30日的三個月內，分別記錄了攤銷費用，金額為$
注意 6: 負債和債務
應計費用 及其他負債
截至2024年9月30日及2023年12月31日，合併資產負債表中的應計費用及其他負債項目包含以下內容：
| 九月三十日， | 12月31日, | |||||||
| 2024 | 2023 | |||||||
| 應計費用 | $ | $ | ||||||
| 與薪金相關的負債 | ||||||||
| 銷售稅責任 | ||||||||
| 其他負債 | ||||||||
| $ | $ | |||||||
| 12 |
可轉換債券
截至2024年9月30日和2023年12月31日，尚有$
目標 資本可轉換本票
於2024年4月30日，該公司發行了一張原本金額為$的可轉換承諾票據
貸款 應付款項-PPP和SBA貸款
在
2022年4月，對Bailey的第一筆PPP貸款的部分寬恕總額為$
商戶進步
未來 銷售收據
在2022年和2023年，該公司獲得了多筆商戶預付款。這些預付款大部分以公司未來預期銷售交易為擔保，預計每週支付。公司總共支付了現金償還金額，包括本金和利息，總額為$
以下是截至2024年9月30日和2023年12月31日的商業預付款摘要：
| 九月三十日， | 12月31日, | |||||||
| 2024 | 2023 | |||||||
| 本金 | $ | $ | ||||||
| 未攤銷債務折扣減少 | ( | ) | ( | ) | ||||
| 商戶現金優勢淨額 | $ | $ | ||||||
未攤銷的債務折扣為$
其他
該公司與shopify Capital有傑出的商戶預付款。到 2024年9月結束的三個月，該公司已還款
總額為$
公司還與Gynger, Inc.有優秀的商戶預付款。到2024年5月，公司將尚未清償的本金和欠債利息轉換為$
| 13 |
應付本票
截至2024年9月30日和2023年12月31日，貝利的賣方應付票據的未償本金為$
在
2023年3月，該公司與多位購買者簽署了一項證券購買協議（以下稱“2023年3月票據”），根據該協議，
投資者從公司購買了總額為$的本票，
在2024年五月，公司償還了$
以下是應付票據的摘要，淨額：
| 九月三十日， | 12月31日, | |||||||
| 2024 | 2023 | |||||||
| 貝利筆記 | $ | $ | ||||||
| 2023年3月筆記 – 本金 | ||||||||
| 2023年3月筆記 - 未攤銷負債折價 | ( | ) | ||||||
| 應付票據 – 淨值 | $ | $ | ||||||
注意 7: 股東資本赤字
更改公司章程
在
2023年8月21日，董事會批准了一个
普通 股票
截至2023年12月31日和2022年，該公司發行並流通的A類普通股分別為 授權的普通股股份，面值為 $ 截至2024年9月30日。
普通
股東擁有每股一票的投票權。
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2024交易
在2024年9月30日結束的九個月期間，該公司發行了
截至2024年9月30日止的九個月內，公司發行了總額為 普通股份，以為支付服務及應付帳款轉換，總計公平價值為$
截至九個月於九月三十日的期間， C系列可轉換優先股轉換為 股普通股。
根據先前報導，公司已與授信投資者（「投資者」）簽訂證券購買協議，在2023年9月5日，公司發行了某些可購買Series A認股權證
於2024年5月3日，公司與投資者簽訂了某項促使行使普通股購買warrants的誘導協議（“誘導協議”），根據該協議(i) 公司同意將現有warrants的行使價格降低為$
在
2024年5月，本公司轉換了未償還本金及累積利息的$
系列A可轉換優先股
在2022年9月29日，公司提交了指定最多號稱股票證書，將其擢為 公司授權但未發行的股份中，將其優先股指定為A系列可轉換優先股。
除送轉股利或根據指定證書需要進行調整之外，系列A優先股的持有人（「持有人」）將有權按照轉換為普通股的基礎，就系列A優先股的股份獲得且公司支付相等的普通股股息，並按照與普通股相同的形式支付普通股上實際支付的股息。系列A優先股不支付其他股息。
關於任何普通股類別的投票，每一股A系列優先股都將使持有者有權按照其可轉換的普通股數量來投票。
A優先股應在以下幾個方面佔優勢：(i) 高於所有普通股；(ii) 高於公司未來創建的任何特別排名低於任何優先股的股票類別或系列（“次級證券”）；(iii) 與由其條款規定與優先股持平的公司未來創建的任何股票類別或系列（“同等證券”）持平；以及(iv) 在公司未來創建的任何特別排名高於任何優先股的股票類別或系列（“高級證券”）下居次級，就股息或在公司清算、解散或清盤時的資產分派而言，無論是自願還是被迫。
每一股A系列優先股可於2022年9月29日後的任何時間及隨時，根據持有者的選擇，轉換為普通股的股份數量，該股份數量由該A系列優先股的聲明價值（$
截至2024年9月30日和2023年12月31日，共有 已發行並流通的A系可轉換優先股。
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可轉換優先股系列C
在2023年6月21日，公司一方面與Moise Emquies、George Levy、Matthieu Leblan、Carol Ann Emquies、Jenny Murphy及Elodie Crichi（統稱為「其他投資者」）簽訂了一份證券購買協議（「其他SPA」），根據該協議，公司發行了 股份的C系列可轉換優先股，每股面值$ （「C系列優先股」）以每股$ 的價格出售給其他投資者。C系列優先股可轉換為公司普通股的股份數量等於$
在 2023年6月21日，本公司向德拉瓦州國務卿提交了指定證書，指定最多 股份作為授權但未發行的優先股中的C系列可轉換優先股。以下是C系列優先股的主要條款摘要。
除了股票送轉或根據指定證書應作出調整的分紅派息外，C系列優先股股東（“C系列股東”）將有資格收取並且公司將支付C系列優先股股份相等（按照已換算為普通股基礎）和以相同形式付還實際支付的普通股股份的分紅，當且如果在普通股上支付了這樣的分紅時。其他任何分紅均不得支付給C系列優先股股份。
作為指定證書明確規定的類別，C系列持有人有權作為一個類別進行表決。C系列持有人也有權與普通股股東一起作為一個類別投票，在C系列持有人被允許與普通股類別投票的所有事項上與普通股股東一起投票。
就普通股類別的任何投票而言，每股C系列優先股擁有人有權投下與其可轉換為的普通股股數相等的投票權（受到指定證書中所規定的所有權限制制約），使用確定公司股東有資格就此事投票的報名日期作為轉換價格計算基準日。
系列C優先股的排名應為 (i) 優於所有普通股；(ii) 優於次級資產；(iii) 與同等資產平起平坐；以及 (iv) 低於高級資產，在每種情況下，關於分紅或在公司清算、解散或終止時資產的分配，無論是自願還是非自願。根據公司高級資產持有者的任何優先清算權以及公司現有及未來債權人的權利，在清算時，各持有人有權從公司合法可供分配予股東的資產中優先獲得支付，並優先於公司普通股和次級資產的持有者分配資產或盈餘資金，並與所有同等資產的持有者的分配相同，獲得每當前持有的系列C優先股的明確價值（根據指定證書的定義）相等的金額以及任何累計且未支付的分紅派息，然後系列C持有人有權從公司資產中接收資本或盈餘相同的金額，若該系列C優先股票完全轉換為普通股（在此目的下不考慮任何轉換限制），該金額應與所有普通股持有者平起平坐支付。
每一股C系列優先股在2023年6月21日之後的任何時間，持有人可以隨時自選轉換為普通股，換算成普通股數量的方法為將該C系列優先股的面值（每股\$）除以換股價。
本公司有權在
2023年6月21日後，任何時候以當時的標明價值的百分比贖回任何或所有未償還的C系列優先股票，
2023年十月， C系列可轉換優先股轉換為 股普通股。
在2024年9月30日結束的九個月內， C系列可轉換優先股轉換為 普通 股票的股份。
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注意 8： 關聯方交易
截至2024年9月30日和2023年12月31日，向相關方應付金額分別為$
普通股認股權證
截至2024年9月30日的九個月內，與普通股warrants相關的信息摘要如下：
| 常見 | 加權 | |||||||
| 股票 | 平均 | |||||||
| 認股權證 | 行使價 | |||||||
| 傑出-二零二三年十二月三十一日 | $ | |||||||
| 授予 | ||||||||
| 運動 | ( | ) | ||||||
| 沒收 | ||||||||
| 傑出-二零二四年九月三十日 | $ | |||||||
| 可於二零二三年十二月三十一日進行練習 | $ | |||||||
| 可於二零二四年九月三十日舉行 | $ | |||||||
股票 期權
截至2024年9月30日和2023年12月31日，公司持有 期權 ，該公司擁有以加權平均行使價 $ 。
基於股票 補償費用為 $ 和 $ 分別為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個月的認可和 $ 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個月的認可。截至二零二四年九月三十日止九個月內及 二零二三年，美元 和 $ 已記錄在銷售和營銷費用中，所有其他股票補償都包括在一般和行政費用中 簡明綜合運營報表中的費用。與非授權的股票期權相關未認可賠償成本總計 截至二零二四年九月三十日的獎項為美元 並將在加權平均期內被記錄為 年。
備註 10: 租賃負擔
租金 在合併的營運報表中根據功能被分類為一般及行政費用、銷售及市場推廣費用，或 營業收入成本。
公司在合約開始時透過評估潛在的租賃協議，包括服務和營運協議，來判斷該安排是否或包含租約，以確定公司在安排期間是否擁有控制的特定資產。租約的開始被判斷為出租人提供對該特定資產的存取權和控制權的時候。
該 公司的租賃租金通常被結構為固定或變量支付。固定租金支付包括 陳述的最低租金和陳述的最低租金加上陳述的增加。公司認為在租賃開始時無法合理確定的租賃支付為變量租賃支付，這些支付在每個期間內記錄為發生，並排除在租賃負債的計算之外。
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管理層 在確定租賃分類時使用判斷，包括確定識別資產的經濟壽命和公允市場價值。識別資產的公允市場價值通常是基於第三方來源提供的可比市場數據來估算的。
在2023年1月，公司與位於加州維農的公司辦公室及配送中心簽訂了租約延長協議，該租約將於2025年1月31日到期。租約每月基本租金為$
在2023年9月，公司簽訂了一項位於加州洛杉磯的展廳空間租約延長協議，租約將於2023年3月開始，並於2024年9月到期。租約的基本月租金為$
在2024年4月，公司與德克薩斯州艾倫市的零售店舖續租協議，該協議將於2024年4月生效，直至2027年4月到期。租賃的每月基本租金為$
以下是營業租賃資產和負債的摘要:
| 九月三十日， | 12月31日, | |||||||
| 經營租約 | 2024 | 2023 | ||||||
| 資產 | ||||||||
| ROU使用權租賃資產 | $ | $ | ||||||
| 負債 | ||||||||
| 使用權租賃的流動部分 | ||||||||
| 租賃負債的非流動部分 | ||||||||
| 總經營租賃負債 | $ | $ | ||||||
| 經營租約 | 9月30日， 2024 | 12月31日, 2023 | ||||||
| 加權平均剩餘租期（年） | ||||||||
| 加權折現率加權值 | % | % | ||||||
| 9月30日， 2024 | ||||
| 未來最低付款 | $ | |||
| 扣除假定利息 | ( | ) | ||
| 租賃總義務 | $ | |||
備註 11: 附帶條款
我們 目前正參與，並且未來可能會參與，法律程序、索賠和政府調查，這些都是在正常的 業務過程中發生的。這些包括與其他事項相關的程序、索賠和調查，例如，監管事務、商業 事務、知識產權、競爭、稅務、就業、定價、歧視、消費者權益、人身傷害和財產權利。這些事項還包括以下內容：
2023年3月21日，一位供應商對Digital Brands Group提起了一起關於總額約為$的應付貨款的訴訟。
在
2023年2月7日，一家供應商對Digital Brands Group提起訴訟，涉及約$的應付帳款。
在2020年8月和2021年3月，針對Bailey的兩宗訴訟由與先前服務相關的第三方提出。
這些索賠（包括罰款、費用和法律費用）總額達到$
在2020年12月21日，一名公司的投資者對DBG提起訴訟，要求償還他們的投資總計$
於2023年11月16日，一名供應商對Digital Brands Group提起訴訟，涉及總額約為$的應付貨款，這代表過期費用和滯納金。此類金額已納入附表中的資產負債表中。公司不認為將可能會發生超出這些應付交易應付款項的損失。
在
2023年11月15日，一個供應商對Digital Brands Group提起了與應付交易相關的訴訟，總金額約為$
在2023年12月21日，一名兩年前的前員工對公司提起了一項非法解僱訴訟。 公司對這項訴求提出了異議。 到目前為止，同一家律師事務所最近曾就我們從第三方供應機構使用的臨時工非法解僱發送了一封索賠函。 這個人任何時候都不是公司的員工。
一名
供應商對Bailey 44提出訴訟，涉及一筆金額為$的零售店租約。
所有板塊上述索賠，至管理層認為其將承擔責任的範圍，已在截至2024年9月30日的附帶綜合資產負債表中列入應付賬款及應計費用和其他負債。
根據訴訟、索賠或調查的性質，我們可能會遭受金錢賠償、罰款、處罰或禁制令。此外，這些事宜的結果可能會對我們的業務、營運結果和財務狀況造成實質不利影響。法律程序、索賠和政府調查的結果不可預測，並且需要重大判斷以確定與此類事宜相關的損失可能性和數額。雖然無法確定結果，但根據我們目前的了解，我們認為所有此類未了事項的結案，無論是個別還是綜合，都不會對我們的業務、營運結果、現金流量或財務狀況產生重大不利影響。
除非另有設定，公司並未參與任何法律訴訟，且公司未得知有任何針對我們提出的索賠或訴訟。將來，公司可能不時參與與其業務正常運作相關的訴訟，公司預計這些訴訟的解決不會對我們的財務狀況、營運成果或現金流量造成重大不利影響。
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注意 12: 后續事件
如前所述，本公司與各位買方（「投資者」）簽訂證券購買協議（
「SPA」）於 2023 年 4 月 7 日或附近，其中投資者以總本金向本公司購買債券
金額約 $
在2024年10月3日至10月15日期間，該公司發行了公司的普通股（「股份」）給某筆票據持有人，以部分轉換該公司於2023年10月1日左右原發行的票據（「票據」）。 在2024年10月16日，公司發現發行股份是一個錯誤，不符合票據條款，根據該條款，需要在發行超過公司交易前股份總數的％，以票據轉換時取得股東批准，這是根據納斯達克上市規則5635（d）明確規定的。公司隨後通知票據持有人，股份必須退回給公司的過戶代理人進行注銷。 因此，票據持有人正在將股份退還給公司的過戶代理人進行注銷。注銷股份後，公司發行且流通的普通股數量將減少 股。公司正在與納斯達克證券交易所股份公司就前述錯誤發行的股份及隨後的糾正措施進行通信。
Holder在2024年11月5日協助取消了公司的持股者 根據公司的糾正計劃，取消了公司普通股的股份。
普通股和預先配售認股權發行完成
二零二四年十月二十八日，本公司
與其中名稱的某些認可投資者簽訂證券購買協議（以下簡稱「購買協議」）（
「買方」），根據該公司同意以最大努力發行和出售（「發售」）：
(一) 普通股（「普通股」），以買入價為 $ 每股普通股，及 (ii)
普通股、預資助的 warrants，以及根據預資助的 warrants 行使可發行的普通股，均是根據於2024年10月24日提交給美國證券交易委員會的S-1表格的註冊聲明進行發售，該註冊聲明於2024年10月28日經修訂後生效（以下稱為“註冊聲明”）。
RBW Capital Partners LLC，透過Dominari Securities LLC（以下稱為“配售代理”），根據2024年10月28日簽署的配售代理協議（以下稱為“配售代理協議”）擔任本次發售的獨家配售代理，該協議由公司與配售代理之間簽訂。
該發行活動為公司帶來約美元的總收益。
股東權益
在2024年10月1日至2024年10月22日之間，該公司依據銷售協議的條款向代理人作為銷售代理或主體發行並出售了 普通股的股份，以換取淨收益約為$
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項目 2. 管理層對財務狀況及營運成果的討論與分析
以下對我們的財務控制項和營運結果的討論與分析應與相關實體的歷史基本報表及本表格10-Q中其他地方包含的預估基本報表及其附註一起閱讀。本討論與分析包含涉及風險和不確定性的前瞻性聲明。我們的實際結果可能會因各種因素而與這些前瞻性聲明中預期的結果有重大差異，包括在“風險因素”和“關於前瞻性聲明的警告性說明”中列出的因素。
除非另有上下文說明，對「DBG」的引用僅指數位品牌集團（Digital Brands Group, Inc.），而對「公司」、「我們」、「我們的」、「我們」及類似用語的引用則指數位品牌集團（Digital Brands Group, Inc.）及其全資子公司Bailey 44, LLC（「Bailey」）、MOSBESt, LLC（「Stateside」）和Sunnyside（「Sundry」）。
本討論與分析中或本十分之三簡易報告內容的某些敍述，包括與我們的業務計劃和策略相關的資訊，構成根據1933年證券法第27A條及其修正案及1934年證券交易法第21E條及其修正案所定義的前瞻性陳述。我們已將這些前瞻性敍述建立在對未來事件的目前預期和預計基礎上。應該在閱讀本十分之三簡易報告中其他位置討論的相關因素的背景下來考慮以下資訊和任何前瞻性敍述，特別是其中在第II部分第1A “風險因素”中確定的那些風險以及我們向SEC提出的其他申報。
我們的 實際結果及某些事件的時間安排可能與所討論、預測、預期或在任何前瞻性聲明中所指出的結果存在重大差異。我們提醒您，前瞻性聲明並不保證未來表現，且我們的 實際經營結果、財務狀況與流動性，以及我們所處行業板塊的發展可能與本季度報告表格10-Q中的前瞻性聲明存在重大差異。本報告中的聲明自提交本表格10-Q至美國證券交易委員會之日訂定，並不應視為在任何後續日期的依據。即使我們的經營結果、財務狀況與流動性，以及我們所處行業板塊的發展與本季度報告表格10-Q中的前瞻性聲明一致，這些結果也可能無法預測未來期間的結果或發展。我們不承擔任何義務，除非法律及美國證券交易委員會的規則明確要求，否則不對任何此類聲明進行公開更新或修訂，以反映我們的期望或根據任何此類聲明可能基於的事件、條件或情況的變化，或可能影響實際結果與前瞻性聲明所列結果之間差異的可能性。
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業務 概覽
最近 發展
納斯達克 刊登
2024年10月2日，公司收到納斯達克工作人員的一封信，通知公司工作人員已決定於2024年10月11日業務開始時，根據公司沒有保持每股最低買盤價格為1美元(根據清單規則5550(a)(2))，從納斯達克除牌公司普通股，除非公司於2024年10月9日之前要求上訴此一決定。公司於2024年10月9日向納斯達克提交上訴請求。納斯達克准許於2024年12月3日舉行上訴聽證會。
公司與各位購買人（「投資者」）於2023年4月7日前後執行了一項證券購買協議（「SPA」），根據該協議，投資者從公司購買了總本金約為$2,500,000的本票（「原始票據」），截至2023年10月1日，投資者將原始票據的餘額換為2023年10月1日發行的新本票，新本票的總本金約為$1,789,668.37（「2023票據」）。2024年5月24日，公司與投資者簽署了和解協議（各為「和解協議」），根據協議，公司同意支付總現金支付款項，金額為$1,789,668.37，以清償SPA、原始票據和2023票據下的所有債務和索賠，具體為：（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（「最終付款」）。2024年10月3日前後，公司與投資者簽署了與每項和解協議有關的修訂，根據協議，將最終付款到期日延長至2024年10月31日。
從2024年7月1日到2024年10月22日，公司發行並出售了5256263股普通股（“最近的Atm股份銷售”）給H.C. Wainwright & Co.，LLC（“代理人”）作為銷售代理人或主要方，根據公司此前宣布的“大宗市場發行協議”條款，日期為2023年12月27日，我們與代理人之間的（“銷售協議”）。公司從最近的Atm股份銷售中收到了凈收益2063396.00美元。
完成發售 普通股和預資股權證
在2024年10月28日，公司與特定記載之認可投資者（「購買者」）簽訂了證券購買協議（「購買協議」），根據該協議，公司同意以最大努力方式發行和賣出： (i) 6,233,650股普通股（「普通股」），每股普通股售價為0.10美元；以及 (ii) 24,109,350股預先資助認股權證（「預先資助認股權證」）購買普通股，每個預先資助認股權證售價為0.0999美元，即時採行行使價為每股0.0001美元。購買協議包含公司和購買者之間標準的陳述與保證以及協議，以及當事人之間的標準賠償權和義務。該發行於2024年10月30日結束。
本次發行帶來的總收入約為$3,000,000，在扣除承銷商費用和佣金及其他發行費用之前， 以及不包括公司在未來行使於本次發行中發行的預付warrants所可能獲得的收入（如有）。 作為對承銷商的補償，作為本次發行的獨家承銷商， 公司支付了承銷商8.0%的發行總收入的現金費用，1.0%的不可報帳費用津貼， 最多$50,000的法律顧問費用及其他實際支付的費用的報銷， 以及最多$15,950的清算代理結算費用。
股東權益
在2024年10月1日至2024年10月22日之間，公司根據銷售協議的條款，向代理人作為銷售代理或主體發行並出售了4,500,579股普通股，換取淨收益約為1,320,873美元（以下稱“2024年10月ATm收益”）。由於公司收到了2024年10月ATm收益和公募收益，公司在本修訂第1號提交之日的股東權益超過2,500,000美元。
我們的公司
Digital Brands是一個精心挑選的生活方式品牌系列，包括Bailey、DSTLD、Sundry和Avo，提供各種服裝產品，通過直接面向消費者和批發分銷。我們互補的品牌組合為我們提供了獨特的機會，可以交叉銷售我們的品牌。我們的目標是讓客戶從頭到腳穿上我們的品牌，並捕捉我們稱之為“衣櫃分享”的內容，通過瞭解他們的偏好來創建針對其同儕特定需求的定向和個性化內容。在同一組合下運營我們的品牌，使我們能夠更好地利用我們的技術、人力資本和運營能力，涵蓋所有品牌。因此，我們能夠實現運營效率，並繼續識別額外的節省成本機會，以擴大我們的品牌和整個組合。
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我們的 投資組合包含四個重要品牌，利用我們的三個渠道：我們的網站、批發和我們自己的商店。
● Bailey 44 Bailey 44結合美麗的豪華面料和時尚設計，為忙碌的女性打造精緻的成衣系列。 設計適合現實生活，這個品牌注重舒適感而非T台表現。Bailey 44主要是一個批發 品牌，我們正在將其轉型為一個面向消費者的數位品牌。
● DSTLD 提供時尚高品質服裝，並選擇消費者體驗而非奢侈品牌定價。 DSTLD 主要是一個直接面向消費者的數位品牌，最近我們增加了一些選擇的批發零售商，以產生品牌知名度。 DSTLD 提供時尚高品質服裝，並選擇消費者體驗而非奢侈品牌定價。 DSTLD 主要是一個直接面向消費者的數位品牌，最近我們增加了一些選擇的批發零售商，以產生品牌知名度。
● Stateside Stateside 是一個高級美國品牌，所有針織、染色、剪裁和縫製都在洛杉磯當地採購和製造。該系列受到經典T卹演變的影響，提供簡單優雅的外觀。Stateside 主要是一個批發品牌，我們將會轉型成一個數碼直銷消費品牌。
● 雜項 Sundry提供獨特的女裝系列，包括連衣裙、襯衫、毛衣、裙子、短褲、運動休閒服裝底部和其他配飾產品。Sundry的產品是海岸休閒的，採用柔軟、輕鬆和色彩繽紛的設計，具有獨特的法式時尚，類似於法國地中海的精神和南加州威尼斯海灘的氛圍。Sundry主要是一個批發品牌，我們將進行轉型成為一個以數字為主、直接面向消費者的品牌。
我們 相信成功的服裝品牌在所有營業收入渠道中都能賣出。然而，每個渠道提供不同的利潤結構，並需要 不同的客戶獲取和留存策略。我們成立時是一家數字優先的零售商，已策略性地擴展到選定的批發和直接零售渠道。我們努力為每個品牌制定策略性全渠道策略，將實體和線上渠道相結合，以便讓消費者在他們選擇的渠道中進行互動。我們的產品主要通過我們的網站和自主展廳直接賣給消費者，但也通過我們的批發渠道，主要是在專業商店和選定的百貨商店銷售。隨著我們批發渠道的持續擴展，我們相信，發展全渠道解決方案進一步增強了我們有效獲取和留存客戶的能力，同時還能推動高客戶終身價值。
我們相信通過利用實體存在擴大客戶基礎和提升品牌知名度，我們可以運用數位行銷專注於保留和一個非常嚴格、有紀律性的高價值新客戶獲取策略，尤其是針對潛在位於銷售漏斗較低層的客戶。建立與客戶的直接關係，使客戶直接進行交易，讓我們能更好地了解客戶的偏好和購物習慣。作為一家最初作為數位原生零售商創立的公司，憑藉著我們的豐富經驗，我們有能力戰略性地審查和分析客戶的資料，包括聯絡資訊、瀏覽和購物車資料、購買歷史和風格偏好。這反過來降低了我們的庫存風險和現金需求，因為我們可以根據我們在線銷售歷史的資料，訂購和補貨產品，根據實時銷售資料，根據尺寸、顏色和SKU補充特定庫存，以及控制我們的折價和促銷策略，而不是被百貨商店和精品零售商告知我們必須提供什麼折價和促銷方案。
我們將「衣櫃股份」定義為客戶衣櫃中所有服飾單品的百分比（「股份」），即客戶自己擁有的我們自家服飾品牌單品所佔的比例，以及這些單品中有多少被銷售給我們所擁有的品牌。例如，如果一位客戶一年購買了20件服飾單品，而我們所擁有的品牌佔了這20件單品中的10件，那麼我們的衣櫃股份就是該客戶衣櫃的50%，計算方式為我們品牌的10件單品除以他們整體購買的20件單品。衣櫃股份是一個類似被廣泛使用的「錢包股份」術語的概念板塊，只是專門針對客戶的衣櫃。我們的衣櫃股份越高，我們的營業收入就越高，因為更高的衣櫃股份意味著客戶購買我們品牌的相對競爭對手更多。
我們已經在策略上擴展成為一個全通路品牌，不僅在線上提供這些款式和內容，還在選定的批發和零售店面上提供。我們相信這種方式讓我們有機會成功推動顧客終身價值（"LTV"），同時增加新客戶增長。我們將顧客終身價值或LTV定義為一名顧客在其生命週期作為我們顧客將產生的平均營業收入的估計。這個顧客的價值/營業收入幫助我們判斷許多經濟決策，例如每個行銷渠道的行銷預算、保留與獲取決策、單位水準經濟、盈利能力和營業收入預測。
我們在2020年2月收購了Bailey，在2021年8月收購了Stateside，在2022年12月收購了Sundry。我們就每次收購所支付的對價與Bailey、H&J、Stateside和Sundry的成員權益持有人進行了長臂協商。在確定和協商此對價時，我們依賴於我們管理層的經驗和判斷，以及我們對Bailey、Stateside和Sundry合併營運所能帶來的潛在協同效應的評估。我們並沒有獲得獨立的估值、評估或公正意見來支持我們所支付/同意支付的對價。
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Avo – 品牌摘要
Avo是一個女性基本品牌，將提供T恤、運動衫、洋裝、毛衣和運動休閒服飾。 Avo刪除了批發標記，因此其產品擁有更具競爭力的價格。 當客戶將多個產品捆綁到其購物車時，Avo還提供更大的折扣，這使Avo能夠利用其運費和履行成本。 Avo利用公司目前的設計和供應鏈製造行業，因此我們為Avo使用與其他品牌相同或類似的面料和承包商。
Avo於2024年八月底推出，T恤的價格 根據顧客的捆綁大小，區間從20美元到50美元。其他產品的價格將從17.50美元的背心到198美元的毛衣不等，且若顧客捆綁三件或以上，則沒有零售價格高於99美元。如果顧客捆綁兩件 則可享受40%的折扣，如果捆綁三件或以上，顧客將獲得60%的折扣。
材料 趨勢、事件與不確定性
供應鏈中斷
我們受到全球供應鏈中斷的影響，可能包括原材料、進口運輸和生產時間更長的影響。供應鏈問題對我們的品牌特別造成以下影響：
● 原材料成本增加，面料價格根據不同的面料、季節及面料來源增加了10%至100%，同時也受運送地點的影響；
● 海運或空運每公斤的運費增加，根據季節和我們發運的國家，增加幅度從25%上升至300%；
● 海運或空運的過境時間增加了兩週至兩個月；並且
增加生產成本，製成品勞動成本增加5%至25%，視乎生產國家和所需勞動技能。我們已經成功提價以應對部分成本增加，同時亦透過網上高毛利率營業收入抵銷部分成本增加。
季節性
我們的 季度運營結果因各個品牌的季節性而有所不同，歷史上在日歷年下半年通常更強勁。
重大 債務
截至2024年9月30日，我們的未償還債務總本金額約為820萬美元。我們認為這對於我們的規模和當前的營業收入基礎而言，可能算是相當可觀的負債。 我們的巨額債務可能對我們產生重要的後果。舉例來說，它可能會：
● 使我們更難滿足對我們未清償債務持有人的義務，可能導致債務違約和加速;
● 要求我們將大量來自營運的現金流投入到償還債務上，這會減少我們來自營運的現金流用於資金周轉、資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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