Name
|
| |
Age
|
| |
Position
|
|
John Hilburn Davis, IV | | | 49 | | | Chief Executive Officer, President, Chairman of the Board, Director Nominee | |
Mark T. Lynn | | | 37 | | | Director Nominee | |
Trevor Pettennude | | | 54 | | | Director Nominee | |
Jameeka Green Aaron | | | 41 | | | Director Nominee | |
Huong “Lucy” Doan | | | 53 | | | Director Nominee | |
| |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ALL NOMINEES FOR DIRECTOR.
|
| |
| |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” AMENDMENT TO THE COMPANY’S SIXTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED NUMBER OF SHARES OF COMMON STOCK TO 1,000,000,000 AND IN CONJUNCTION THEREWITH, TO INCREASE THE AGGREGATE NUMBER OF AUTHORIZED SHARES TO 1,010,000,000 SHARES
|
| |
| |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL AMENDMENTS TO THE DIGITAL BRANDS GROUP, INC. 2020 OMNIBUS INCENTIVE STOCK PLAN
|
| |
| |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL, FOR PURPOSES OF COMPLYING WITH NASDAQ LISTING RULE SECTION 5635(D) THE ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK UNDERLYING CONVERTIBLE NOTES ISSUED BY US IN OCTOBER AND NOVEMBER 2021 WITHOUT GIVING EFFECT TO THE EXCHANGE CAP IN SUCH CONVERTIBLE NOTES IN AN AMOUNT THAT MAY BE EQUAL TO OR EXCEED 20% OF OUR COMMON STOCK OUTSTANDING IMMEDIATELY PRIOR TO THE ISSUANCE OF SUCH CONVERTIBLE NOTES
|
| |
| |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL, APPROVAL OF THE ISSUANCE OF MORE THAN 20% OF OUR COMMON STOCK PURSUANT TO A PURCHASE AGREEMENT WITH OASIS CAPITAL, LLC, FOR PURPOSES OF NASDAQ LISTING RULE 5635(d)
|
| |
| |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL OF AN AMENDMENT OF THE COMPANY’S SIXTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT OF THE COMPANY’S OUTSTANDING COMMON STOCK AT AN EXCHANGE RATIO BETWEEN 1-for-50 AND 1-FOR-150, AS DETERMINED BY THE COMPANY’S BOARD OF DIRECTORS
|
| |
| | |
Six Months Ended June 30,
|
| |||||||||
| | |
2022
|
| |
2021
|
| ||||||
Net revenues
|
| | | $ | 9,449,734 | | | | | $ | 13,765,815 | | |
Cost of net revenues
|
| | | | 4,948,290 | | | | | | 8,410,619 | | |
Gross profit
|
| | | | 4,501,444 | | | | | | 5,355,196 | | |
Operating expenses
|
| | | | 4,170,137 | | | | | | 4,301,578 | | |
Operating income
|
| | | | 331,307 | | | | | | 1,053,618 | | |
Other income (expenses)
|
| | | | (36,867) | | | | | | 652,104 | | |
Income before provision for income taxes
|
| | | | 294,440 | | | | | | 1,705,722 | | |
Provision for income taxes
|
| | | | (800) | | | | | | (800) | | |
Net income
|
| | | $ | 293,640 | | | | | $ | 1,704,922 | | |
| | |
Six Months Ended June 30,
|
| |||||||||
| | |
2022
|
| |
2021
|
| ||||||
Net cash provided by operating activities: | | | | | | | | | | | | | |
Net income
|
| | | $ | 293,640 | | | | | $ | 1,704,922 | | |
Non-cash adjustments
|
| | | | 27,000 | | | | | | (653,742) | | |
Change in operating assets and liabilities
|
| | | | (3,916) | | | | | | (59,207) | | |
Net cash provided by operating activities
|
| | | | 316,724 | | | | | | 991,973 | | |
Net cash provided by (used in) investing activities
|
| | | | 18,982 | | | | | | (5,000) | | |
Net cash provided by (used in) financing activities
|
| | | | 272,700 | | | | | | (734,363) | | |
Net change in cash
|
| | | $ | 608,406 | | | | | $ | 252,611 | | |
| | |
Year Ended December 31,
|
| |||||||||
| | |
2021
|
| |
2020
|
| ||||||
Net revenues
|
| | | $ | 22,800,825 | | | | | $ | 19,897,696 | | |
Cost of net revenues
|
| | | | 13,638,553 | | | | | | 8,525,612 | | |
Gross profit
|
| | | | 9,162,271 | | | | | | 11,372,084 | | |
Operating expenses
|
| | | | 8,657,442 | | | | | | 7,625,335 | | |
Operating income
|
| | | | 504,829 | | | | | | 3,746,749 | | |
Other income (expense)
|
| | | | 1,249,881 | | | | | | (45,527) | | |
Income before provision for income taxes
|
| | | | 1,754,710 | | | | | | 3,701,222 | | |
Provision for income taxes
|
| | | | 800 | | | | | | 800 | | |
Net income
|
| | | $ | 1,753,911 | | | | | $ | 3,700,422 | | |
| | |
Year Ended December 31,
|
| |||||||||
| | |
2021
|
| |
2020
|
| ||||||
Net cash provided by operating activities: | | | | | | | | | | | | | |
Net income
|
| | | $ | 1,753,911 | | | | | $ | 3,700,422 | | |
Non-cash adjustments
|
| | | $ | (1,255,981) | | | | | $ | 149,618 | | |
Change in operating assets and liabilities
|
| | | $ | 421,928 | | | | | $ | (1,880,989) | | |
Net cash provided by (used in) operating activities
|
| | | $ | 919,859 | | | | | $ | 1,969,051 | | |
Net cash used in investing activities
|
| | | $ | — | | | | | $ | (11,430) | | |
Net cash provided by (used in) financing activities
|
| | | $ | (1,236,063) | | | | | $ | (1,429,829) | | |
Net change in cash
|
| | | $ | (316,204) | | | | | $ | 527,792 | | |
| |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL FOR PURPOSES OF COMPLYING WITH NASDAQ LISTING RULE 5635(A) THE ISSUANCE OF SHARES OF COMMON STOCK AS PARTIAL CONSIDERATION FOR OUR ACQUISITION OF ALL OF THE OUTSTANDING MEMBERSHIP INTERESTS OF SUNNYSIDE, LLC
|
| |
| |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO RATIFY THE APPOINTMENT OF DBBMCKENNON, LLC
|
| |
| |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO APPROVE THE ADJOURNMENT PROPOSAL
|
| |
NAME
|
| |
AGE
|
| |
POSITION
|
|
John Hilburn Davis, IV | | |
49
|
| | Chief Executive Officer, President, Chairman of the Board, Director Nominee | |
Mark T. Lynn | | |
37
|
| | Director Nominee | |
Trevor Pettennude(1) | | |
54
|
| | Director Nominee | |
Jameeka Green Aaron(1) | | |
41
|
| | Director Nominee | |
Huong “Lucy” Doan(1) | | |
53
|
| | Director Nominee | |
NAME
|
| |
AGE
|
| |
POSITION
|
|
John Hilburn Davis IV | | |
49
|
| | Chief Executive Officer | |
Laura Dowling | | |
42
|
| | Chief Operating Officer | |
Reid Yeoman | | |
39
|
| | Chief Financial Officer | |
Name and Principal Position
|
| |
Fiscal
Year |
| |
Salary(1)
|
| |
Bonus
|
| |
Option
Awards |
| |
All Other
Compensation(2) |
| |
Total
|
| |||||||||||||||
John “Hil” Davis, President and Chief Executive Officer
|
| |
2021
|
| | | $ | 350,000 | | | | | $ | — | | | | | | 3,704,483 | | | | | $ | 233,184 | | | | | $ | 4,287,667 | | |
| | |
2020
|
| | | $ | 222,500 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 222,500 | | |
Laura Dowling, Chief Marketing Officer
|
| |
2021
|
| | | $ | 300,000 | | | | | $ | — | | | | | $ | 691,135 | | | | | $ | — | | | | | $ | 991,135 | | |
| | |
2020
|
| | | $ | 258,231 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 258,231 | | |
Reid Yeoman, Chief Financial Officer
|
| |
2021
|
| | | $ | 250,000 | | | | | $ | — | | | | | $ | 176,623 | | | | | $ | — | | | | | $ | 426,623 | | |
| | |
2020
|
| | | $ | 225,000 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 225,000 | | |
Name of Beneficial Owner
|
| |
Number of Shares
Beneficially Owned |
| |
Percentage of
Shares Beneficially Owned |
| ||||||
Executive Officers and Directors | | | | | | | | | | | | | |
John “Hil” Davis(1)
|
| | | | 1,713,641 | | | | | | 3.5% | | |
Laura Dowling(2)
|
| | | | 334,667 | | | | | | * | | |
Reid Yeoman(3)
|
| | | | 114,000 | | | | | | * | | |
Mark Lynn(4)
|
| | | | 507,386 | | | | | | 1.0% | | |
Trevor Pettennude(5)
|
| | | | 328,625 | | | | | | * | | |
Jameeka Aaron(6)
|
| | | | 15,000 | | | | | | * | | |
Huong “Lucy” Doan(7)
|
| | | | 20,000 | | | | | | * | | |
All executive officers, directors and director nominees as a group (7 persons)(8)
|
| | | | 3,033,319 | | | | | | % | | |
Additional 5% Stockholders | | | | | | | | | | | | | |
Drew Jones(9)
|
| | | | 2,192,771 | | | | | | 4.5% | | |
2736 Routh Street
|
| | | | | | | | | | | | |
Dallas, Texas 75201
|
| | | | | | | | | | | | |
Moise Emquies
|
| | | | 1,046,462 | | | | | | 2.1% | | |
Norwest Venture Partners XI, LP
|
| | | | 664,151 | | | | | | 1.4% | | |
Norwest Venture Partners XII, LP
|
| | | | 664,151 | | | | | | 1.4% | | |
| | |
Beneficial Ownership of
Series A Preferred Stock |
| |||||||||
Name of Beneficial Owner
|
| |
Shares
|
| |
Percent
|
| ||||||
John “Hil” Davis(1)
|
| | | | 1 | | | | | | 100% | | |
| | |
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| If to Sellers’ Representative: | | |
George Levy
Email: joe@sundryusa.com |
|
| with a copy to: | | |
Morrison & Foerster LLP
425 Market Street San Francisco, California 94105 Facsimile: (415) 276-7514 Email: jliu@mofo.com Attention: Jackie Liu, Esq. |
|
| If to Buyer: | | |
Digital Brands Group, Inc.
1400 Lavaca Street Austin, Texas 78701 Email: hil@dstld.la Attention: John Hilburn Davis IV, Chief Executive Officer |
|
| with a copy to: | | |
Manatt, Phelps & Phillips, LLP
695 Town Center Drive, 14th Floor Costa Mesa, CA 92646 Facsimile: (714) 371-2550 Email: tpoletti@manatt.com Attention: Thomas J. Poletti, Esq. |
|
| | | | | E-3 | | | |
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| | | | | E-6 | | | |
| | | | | E-7 | | |
| | |
June 30,
2022 |
| |
December 31,
2021 |
| ||||||
ASSETS | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash
|
| | | $ | 1,025,641 | | | | | $ | 417,235 | | |
Accounts receivable, net of allowance
|
| | | | 69,773 | | | | | | 124,342 | | |
Due from factor
|
| | | | 552,367 | | | | | | 590,022 | | |
Inventory
|
| | | | 4,999,496 | | | | | | 4,917,128 | | |
Prepaid expenses and other current assets
|
| | | | 242,982 | | | | | | 219,902 | | |
Total current assets
|
| | | | 6,890,259 | | | | | | 6,268,628 | | |
Fixed assets, net
|
| | | | 126,102 | | | | | | 161,954 | | |
Deposits
|
| | | | 9,612 | | | | | | 19,742 | | |
Total assets
|
| | | $ | 7,025,973 | | | | | $ | 6,450,324 | | |
LIABILITIES AND MEMBERS’ EQUITY | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable
|
| | | $ | 1,382,180 | | | | | $ | 1,142,671 | | |
Accrued liabilities
|
| | | | 390,774 | | | | | | 773,274 | | |
Loan payable, related party
|
| | | | 495,000 | | | | | | — | | |
Total liabilities
|
| | | | 2,267,954 | | | | | | 1,915,945 | | |
Commitments and contingencies (Note 7) | | | | | | | | | | | | | |
Members’ equity
|
| | | | 4,758,019 | | | | | | 4,534,379 | | |
Total members’ equity
|
| | | | 4,758,019 | | | | | | 4,534,379 | | |
Total liabilities and members’ equity
|
| | | $ | 7,025,973 | | | | | $ | 6,450,324 | | |
| | |
Six Months Ended
June 30, |
| |||||||||
| | |
2022
|
| |
2021
|
| ||||||
Net revenues
|
| | | $ | 9,449,734 | | | | | $ | 13,765,815 | | |
Cost of goods sold
|
| | | | 4,948,290 | | | | | | 8,410,619 | | |
Gross profit
|
| | | | 4,501,444 | | | | | | 5,355,196 | | |
Operating expenses: | | | | | | | | | | | | | |
General and administrative
|
| | | | 1,853,295 | | | | | | 1,551,030 | | |
Distribution
|
| | | | 556,910 | | | | | | 570,665 | | |
Sales and marketing
|
| | | | 1,759,932 | | | | | | 2,179,883 | | |
Total operating expenses
|
| | | | 4,170,137 | | | | | | 4,301,578 | | |
Income from operations
|
| | | | 331,307 | | | | | | 1,053,618 | | |
Other income (expense), net | | | | | | | | | | | | | |
Other income
|
| | | | — | | | | | | 689,171 | | |
Interest expense
|
| | | | (36,867) | | | | | | (37,067) | | |
Total other income (expense), net
|
| | | | (36,867) | | | | | | 652,104 | | |
Provision for income taxes
|
| | | | 800 | | | | | | 800 | | |
Net income
|
| | | $ | 293,640 | | | | | $ | 1,704,922 | | |
| | |
Members’
Equity |
| |||
Balances at December 31, 2020
|
| | | $ | 4,630,468 | | |
Distributions
|
| | | | (1,180,000) | | |
Net income
|
| | | | 1,704,922 | | |
Balances at June 30, 2021
|
| | | $ | 5,155,390 | | |
Balances at December 31, 2021
|
| | | $ | 4,534,379 | | |
Distributions
|
| | | | (70,000) | | |
Net income
|
| | | | 293,640 | | |
Balances at June 30, 2022
|
| | | $ | 4,758,019 | | |
| | |
Six Months Ended
June 30, |
| |||||||||
| | |
2022
|
| |
2021
|
| ||||||
Cash flows from operating activities: | | | | | | | | | | | | | |
Net income
|
| | | $ | 293,640 | | | | | $ | 1,704,922 | | |
Adjustments to reconcile net income to net cash provided by operating activities:
|
| | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 27,000 | | | | | | 28,800 | | |
Bad debt
|
| | | | — | | | | | | 6,629 | | |
Other income – PPP forgiveness
|
| | | | — | | | | | | (689,171) | | |
Changes in operating assets and liabilities:
|
| | | | | | | | | | | | |
Accounts receivable
|
| | | | 54,569 | | | | | | (260,403) | | |
Due from factor
|
| | | | 189,953 | | | | | | 448,791 | | |
Inventory
|
| | | | (82,367) | | | | | | 854,796 | | |
Prepaid expenses and other current assets
|
| | | | (23,080) | | | | | | 6,673 | | |
Accounts payable
|
| | | | 239,509 | | | | | | (453,122) | | |
Accrued liabilities
|
| | | | (382,500) | | | | | | (655,942) | | |
Net cash provided by operating activities
|
| | | | 316,724 | | | | | | 991,973 | | |
Cash flows from investing activities: | | | | | | | | | | | | | |
Purchase of property and equipment
|
| | | | — | | | | | | (5,000) | | |
Proceeds from sale of property and equipment
|
| | | | 8,852 | | | | | | — | | |
Deposits
|
| | | | 10,130 | | | | | | — | | |
Net cash provided by (used in) investing activities
|
| | | | 18,982 | | | | | | (5,000) | | |
Cash flows from financing activities: | | | | | | | | | | | | | |
Proceeds from loans payable
|
| | | | — | | | | | | 630,637 | | |
Proceeds from loan payable, related party
|
| | | | 995,000 | | | | | | — | | |
Repayments to loan payable, related party
|
| | | | (500,000) | | | | | | — | | |
Factor advances (repayments), net
|
| | | | (152,300) | | | | | | (185,000) | | |
Distributions
|
| | | | (70,000) | | | | | | (1,180,000) | | |
Net cash provided by (used in) financing activities
|
| | | | 272,700 | | | | | | (734,363) | | |
Net change in cash and cash equivalents
|
| | | | 608,406 | | | | | | 252,611 | | |
Cash at beginning of period
|
| | | | 417,235 | | | | | | 733,440 | | |
Cash at end of period
|
| | | $ | 1,025,641 | | | | | $ | 986,051 | | |
Supplemental disclosure of cash flow information: | | | | | | | | | | | | | |
Cash paid for income taxes
|
| | | $ | 800 | | | | | $ | 800 | | |
Cash paid for interest
|
| | | $ | 36,867 | | | | | $ | 37,067 | | |
| | |
June 30,
2022 |
| |
December 31,
2021 |
| ||||||
Outstanding receivables | | | | | | | | | | | | | |
Without recourse
|
| | | $ | 1,696,907 | | | | | $ | 1,886,591 | | |
With recourse
|
| | | | — | | | | | | 11,000 | | |
| | | | | 1,696,907 | | | | | | 1,897,591 | | |
Advances
|
| | | | (1,057,000) | | | | | | (1,209,300) | | |
Credits due customers
|
| | | | (87,540) | | | | | | (98,269) | | |
Due from factor
|
| | | $ | 552,367 | | | | | $ | 590,022 | | |
| | |
June 30,
2022 |
| |
December 31,
2021 |
| ||||||
Raw materials
|
| | | $ | 1,775,982 | | | | | $ | 1,746,722 | | |
Work in progress
|
| | | | 1,984,240 | | | | | | 1,951,549 | | |
Finished goods
|
| | | | 1,239,274 | | | | | | 1,218,857 | | |
Inventory
|
| | | $ | 4,999,496 | | | | | $ | 4,917,128 | | |
| | |
June 30,
2022 |
| |
December 31,
2021 |
| ||||||
Leasehold improvements and showrooms
|
| | | $ | 198,658 | | | | | $ | 198,658 | | |
Furniture and equipment
|
| | | | 174,006 | | | | | | 183,005 | | |
Automobiles
|
| | | | 34,220 | | | | | | 34,072 | | |
| | | | | 406,883 | | | | | | 415,735 | | |
Less: accumulated depreciation and amortization
|
| | | | (280,781) | | | | | | (253,781) | | |
Fixed assets, net
|
| | | $ | 126,102 | | | | | $ | 161,954 | | |
| | | | | F-3 | | | |
| | | | | F-5 | | | |
| | | | | F-6 | | | |
| | | | | F-7 | | | |
| | | | | F-8 | | | |
| | | | | F-9 | | | |
| | | | | F-10 | | |
| | |
December 31,
|
| |||||||||
| | |
2021
|
| |
2020
|
| ||||||
ASSETS | | | | | | | | | | | | | |
Current assets:
|
| | | $ | 417,235 | | | | | $ | 733,440 | | |
Cash
|
| | | | | | | | | | | | |
Accounts receivable, net of allowance
|
| | | | 124,342 | | | | | | 179,057 | | |
Due from factor
|
| | | | 590,022 | | | | | | 1,086,405 | | |
Inventory
|
| | | | 4,917,128 | | | | | | 5,747,826 | | |
Prepaid expenses and other current assets
|
| | | | 219,901 | | | | | | 102,125 | | |
Total current assets
|
| | | | 6,268,628 | | | | | | 7,848,853 | | |
Fixed assets, net
|
| | | | 161,954 | | | | | | 215,805 | | |
Deposits
|
| | | | 19,742 | | | | | | 19,742 | | |
Total assets
|
| | | $ | 6,450,324 | | | | | $ | 8,084,400 | | |
LIABILITIES AND MEMBERS’ EQUITY | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable
|
| | | $ | 1,142,671 | | | | | $ | 1,400,793 | | |
Accrued liabilities
|
| | | | 773,274 | | | | | | 1,213,968 | | |
Loan payable, current
|
| | | | — | | | | | | 308,151 | | |
Total current liabilities
|
| | | | 1,915,945 | | | | | | 2,922,912 | | |
Loan payable, net of current portion
|
| | | | — | | | | | | 531,020 | | |
Total liabilities
|
| | | | 1,915,945 | | | | | | 3,453,932 | | |
Commitments and contingencies (Note 7) | | | | | | | | | | | | | |
Members’ equity
|
| | | | 4,534,379 | | | | | | 4,630,468 | | |
Total members’ equity
|
| | | | 4,534,379 | | | | | | 4,630,468 | | |
Total liabilities and members’ equity
|
| | | $ | 6,450,324 | | | | | $ | 8,084,400 | | |
| | |
Year Ended December 31,
|
| |||||||||
| | |
2021
|
| |
2020
|
| ||||||
Net revenues
|
| | | $ | 22,800,825 | | | | | $ | 19,897,696 | | |
Cost of goods sold
|
| | | | 13,638,553 | | | | | | 8,525,612 | | |
Gross profit
|
| | | | 9,162,272 | | | | | | 11,372,084 | | |
Operating expenses: | | | | | | | | | | | | | |
General and administrative
|
| | | | 3,201,811 | | | | | | 2,823,334 | | |
Distribution
|
| | | | 1,080,964 | | | | | | 1,011,431 | | |
Sales and marketing
|
| | | | 4,374,667 | | | | | | 3,790,570 | | |
Total operating expenses
|
| | | | 8,657,442 | | | | | | 7,625,335 | | |
Income from operations
|
| | | | 504,830 | | | | | | 3,746,749 | | |
Other income (expense), net Other income
|
| | | | 1,319,899 | | | | | | 10,010 | | |
Interest expense
|
| | | | (70,018) | | | | | | (55,537) | | |
Total other income (expense), net
|
| | | | 1,249,881 | | | | | | (45,527) | | |
Provision for income taxes
|
| | | | 800 | | | | | | 800 | | |
Net income
|
| | | $ | 1,753,911 | | | | | $ | 3,700,422 | | |
| | |
Members’
Equity |
| |||
Balances at December 31, 2019
|
| | | $ | 2,900,046 | | |
Distributions
|
| | | | (1,970,000) | | |
Net income
|
| | | | 3,700,422 | | |
Balances at December 31, 2020
|
| | | | 4,630,468 | | |
Distributions
|
| | | | (1,850,000) | | |
Net income
|
| | | | 1,753,911 | | |
Balances at December 31, 2021
|
| | | $ | 4,534,379 | | |
| | |
Year Ended December 31,
|
| |||||||||
| | |
2021
|
| |
2020
|
| ||||||
Cash flows from operating activities: | | | | | | | | | | | | | |
Net income
|
| | | $ | 1,753,911 | | | | | $ | 3,700,422 | | |
Adjustments to reconcile net income to net cash provided by operating activities:
|
| | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 53,851 | | | | | | 58,423 | | |
Bad debt
|
| | | | 9,976 | | | | | | 91,195 | | |
Other income – PPP forgiveness
|
| | | | (1,319,808) | | | | | | — | | |
Changes in operating assets and liabilities:
|
| | | | | | | | | | | | |
Accounts receivable
|
| | | | 44,740 | | | | | | (144,902) | | |
Due from factor
|
| | | | 363,083 | | | | | | (131,137) | | |
Inventory
|
| | | | 830,698 | | | | | | (2,100,608) | | |
Due from related party
|
| | | | — | | | | | | 92,318 | | |
Prepaid expenses and other current assets
|
| | | | (117,777) | | | | | | 56,145 | | |
Accounts payable
|
| | | | (258,122) | | | | | | 7,866 | | |
Accrued liabilities
|
| | | | (440,694) | | | | | | 339,329 | | |
Net cash provided by operating activities
|
| | | | 919,858 | | | | | | 1,969,051 | | |
Cash flows from investing activities: | | | | | | | | | | | | | |
Purchase of property and equipment
|
| | | | — | | | | | | (11,430) | | |
Net cash used in investing activities
|
| | | | — | | | | | | (11,430) | | |
Cash flows from financing activities: | | | | | | | | | | | | | |
Proceeds from loans payable
|
| | | | 480,637 | | | | | | 839,171 | | |
Factor advances (repayments), net
|
| | | | 133,300 | | | | | | (299,000) | | |
Distributions
|
| | | | (1,850,000) | | | | | | (1,970,000) | | |
Net cash used in financing activities
|
| | | | (1,236,063) | | | | | | (1,429,829) | | |
Net change in cash and cash equivalents
|
| | | | (316,205) | | | | | | 527,792 | | |
Cash and cash equivalents at beginning of year
|
| | | | 733,440 | | | | | | 205,648 | | |
Cash and cash equivalents at end of year
|
| | | $ | 417,235 | | | | | $ | 733,440 | | |
Supplemental disclosure of cash flow information: | | | | | | | | | | | | | |
Cash paid for income taxes
|
| | | $ | 800 | | | | | $ | 800 | | |
Cash paid for interest
|
| | | $ | 70,018 | | | | | $ | 55,537 | | |
| | |
December 31,
|
| |||||||||
| | |
2021
|
| |
2020
|
| ||||||
Outstanding receivables | | | | | | | | | | | | | |
Without recourse
|
| | | $ | 1,886,591 | | | | | $ | 2,129,451 | | |
With recourse
|
| | | | 11,000 | | | | | | 43,948 | | |
| | | | | 1,897,591 | | | | | | 2,173,399 | | |
Advances
|
| | | | (1,209,300) | | | | | | (1,076,000) | | |
Credits due customers
|
| | | | (98,269) | | | | | | (10,994) | | |
Due from factor
|
| | | $ | 590,022 | | | | | $ | 1,086,405 | | |
| | |
December 31,
|
| |||||||||
| | |
2021
|
| |
2020
|
| ||||||
Raw materials
|
| | | $ | 1,746,722 | | | | | $ | 2,273,060 | | |
Work in progress
|
| | | | 1,951,549 | | | | | | 2,231,811 | | |
Finished goods
|
| | | | 1,218,857 | | | | | | 1,242,955 | | |
Inventory
|
| | | $ | 4,917,128 | | | | | $ | 5,747,826 | | |
| | |
December 31,
|
| |||||||||
| | |
2021
|
| |
2020
|
| ||||||
Leasehold improvements and showrooms
|
| | | $ | 198,658 | | | | | $ | 198,658 | | |
Furniture and equipment
|
| | | | 183,005 | | | | | | 183,005 | | |
Automobiles
|
| | | | 34,072 | | | | | | 34,072 | | |
| | | | | 415,735 | | | | | | 415,735 | | |
Less: accumulated depreciation and amortization
|
| | | | (253,781) | | | | | | (199,930) | | |
Fixed assets, net
|
| | | $ | 161,954 | | | | | $ | 215,805 | | |
|
2022
|
| | | $ | 15,516 | | |
| | | | | $ | 15,516 | | |
| | |
DBG
|
| |
Sundry
|
| |
Total
|
| |
Pro Forma
Adjustments |
| |
Pro Forma
Combined |
| |||||||||||||||
Net revenues
|
| | | $ | 7,171,411 | | | | | $ | 9,449,734 | | | | | $ | 16,621,145 | | | | | $ | — | | | | | $ | 16,621,145 | | |
Cost of net revenues
|
| | | | 3,526,833 | | | | | | 4,948,290 | | | | | | 8,475,123 | | | | | | — | | | | | | 8,475,123 | | |
Gross profit
|
| | | | 3,644,578 | | | | | | 4,501,444 | | | | | | 8,146,022 | | | | | | — | | | | | | 8,146,022 | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
General and administrative
|
| | | | 9,601,467 | | | | | | 1,853,295 | | | | | | 11,454,762 | | | | | | 2,408,227 | | | | | | 13,862,989 | | |
Sales and marketing
|
| | | | 2,745,863 | | | | | | 556,910 | | | | | | 3,302,773 | | | | | | — | | | | | | 3,302,773 | | |
Distribution
|
| | | | 424,773 | | | | | | 1,759,932 | | | | | | 2,184,705 | | | | | | — | | | | | | 2,184,705 | | |
Change in fair value of contingent
consideration |
| | | | 7,121,240 | | | | | | — | | | | | | 7,121,240 | | | | | | — | | | | | | 7,121,240 | | |
Total operating expenses
|
| | | | 19,893,343 | | | | | | 4,170,137 | | | | | | 24,063,480 | | | | | | 2,408,227 | | | | | | 26,471,707 | | |
Loss from operations
|
| | | | (16,248,765) | | | | | | 331,307 | | | | | | (15,917,458) | | | | | | (2,408,227) | | | | | | (18,325,685) | | |
Other income (expense): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest expense
|
| | | | (3,771,476) | | | | | | (36,867) | | | | | | (3,808,343) | | | | | | — | | | | | | (3,808,343) | | |
Other non-operating income (expenses)
|
| | | | 2,653,375 | | | | | | — | | | | | | 2,653,375 | | | | | | — | | | | | | 2,653,375 | | |
Total other income (expense), net
|
| | | | (1,118,101) | | | | | | (36,867) | | | | | | (1,154,968) | | | | | | — | | | | | | (1,154,968) | | |
Income tax benefit (provision)
|
| | | | — | | | | | | (800) | | | | | | (800) | | | | | | — | | | | | | (800) | | |
Net income (loss)
|
| | | $ | (17,366,866) | | | | | $ | 293,640 | | | | | $ | (17,073,226) | | | | | $ | (2,408,227) | | | | | $ | (19,481,453) | | |
| | |
DBG
|
| |
H&J
|
| |
Stateside
|
| |
Sundry
|
| |
Total
|
| |
Pro Forma
Adjustments |
| | | | | | | |
Pro Forma
Combined |
| |||||||||||||||||||||
Net revenues
|
| | | $ | 7,584,859 | | | | | $ | 980,261 | | | | | $ | 3,269,481 | | | | | $ | 22,800,825 | | | | | $ | 34,635,426 | | | | | $ | — | | | | | | | | | | | $ | 34,635,426 | | |
Cost of net revenues
|
| | | | 4,689,200 | | | | | | 350,004 | | | | | | 1,194,693 | | | | | | 13,638,553 | | | | | | 19,872,450 | | | | | | — | | | | | | | | | | | | 19,872,450 | | |
Gross profit
|
| | | | 2,895,659 | | | | | | 630,257 | | | | | | 2,074,788 | | | | | | 9,162,271 | | | | | | 14,762,976 | | | | | | — | | | | | | | | | | | | 14,762,976 | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
General and administrative
|
| | | | 17,779,903 | | | | | | 410,891 | | | | | | 1,147,168 | | | | | | 3,201,811 | | | | | | 22,539,773 | | | | | | 6,197,028 | | | | | | (a) | | | | | | 28,736,800 | | |
Sales and marketing
|
| | | | 3,810,583 | | | | | | 349,338 | | | | | | 514,742 | | | | | | 4,374,667 | | | | | | 9,049,330 | | | | | | — | | | | | | | | | | | | 9,049,330 | | |
Distribution
|
| | | | 489,371 | | | | | | — | | | | | | 115,286 | | | | | | 1,080,964 | | | | | | 1,685,621 | | | | | | — | | | | | | | | | | | | 1,685,621 | | |
Impairment of intangible assets
|
| | | | 3,400,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,400,000 | | | | | | — | | | | | | | | | | | | 3,400,000 | | |
Change in fair value of contingent consideration
|
| | | | 8,764,460 | | | | | | — | | | | | | — | | | | | | — | | | | | | 8,764,460 | | | | | | — | | | | | | | | | | | | 8,764,460 | | |
Total operating expenses
|
| | | | 34,244,317 | | | | | | 760,229 | | | | | | 1,777,195 | | | | | | 8,657,442 | | | | | | 45,439,184 | | | | | | 6,197,028 | | | | | | | | | | | | 51,636,212 | | |
Loss from operations
|
| | | | (31,348,658) | | | | | | (129,972) | | | | | | 297,593 | | | | | | 504,829 | | | | | | (30,676,207) | | | | | | (6,197,028) | | | | | | | | | | | | (36,873,235) | | |
Other income (expense): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest expense
|
| | | | (3,663,921) | | | | | | (33,668) | | | | | | — | | | | | | (70,018) | | | | | | (3,767,607) | | | | | | (1,344,000) | | | | | | (b) | | | | | | (5,111,607) | | |
Other non-operating income (expenses)
|
| | | | 1,554,502 | | | | | | — | | | | | | (12,494) | | | | | | 1,319,899 | | | | | | 2,861,907 | | | | | | (1,319,899) | | | | | | (c) | | | | | | 1,542,008 | | |
Total other income (expense), net
|
| | | | (2,109,419) | | | | | | (33,668) | | | | | | (12,494) | | | | | | 1,249,881 | | | | | | (905,699) | | | | | | (2,663,899) | | | | | | | | | | | | (3,569,598) | | |
Income tax benefit (provision)
|
| | | | 1,100,120 | | | | | | — | | | | | | — | | | | | | (800) | | | | | | 1,099,320 | | | | | | — | | | | | | | | | | | | 1,099,320 | | |
Net income (loss)
|
| | | $ | (32,357,957) | | | | | $ | (163,640) | | | | | $ | 285,099 | | | | | $ | 1,753,911 | | | | | $ | (30,482,587) | | | | | $ | (8,860,927) | | | | | | | | | | | $ | (39,343,514) | | |
| | |
DBG
|
| |
Sundry
|
| |
Total
|
| |
Pro Forma
Adjustments |
| | | | |
Pro Forma
Combined |
| | |||||||||||||||||
ASSETS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
Current assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
Cash and cash equivalents
|
| | | $ | 802,724 | | | | | $ | 1,025,641 | | | | | $ | 1,828,365 | | | | | $ | — | | | | | | | | $ | 1,828,365 | | | | ||
Accounts receivable, net
|
| | | | 190,056 | | | | | | 69,773 | | | | | | 259,829 | | | | | | — | | | | | | | | | 259,829 | | | | ||
Due from factor, net
|
| | | | 929,989 | | | | | | 552,367 | | | | | | 1,482,356 | | | | | | — | | | | | | | | | 1,482,356 | | | | ||
Inventory
|
| | | | 2,883,613 | | | | | | 4,999,496 | | | | | | 7,883,109 | | | | | | — | | | | | | | | | 7,883,109 | | | | ||
Prepaid expenses and other current assets
|
| | | | 813,681 | | | | | | 242,982 | | | | | | 1,056,663 | | | | | | — | | | | | | | | | 1,056,663 | | | | ||
Total current assets
|
| | | | 5,620,063 | | | | | | 6,890,259 | | | | | | 12,510,322 | | | | | | — | | | | | | | | | 12,510,322 | | | | ||
Deferred offering costs
|
| | | | 367,696 | | | | | | — | | | | | | 367,696 | | | | | | — | | | | | | | | | 367,696 | | | | ||
Property, equipment and software, net
|
| | | | 65,235 | | | | | | 126,102 | | | | | | 191,337 | | | | | | — | | | | | | | | | 191,337 | | | | ||
Goodwill
|
| | | | 18,264,822 | | | | | | — | | | | | | 18,264,822 | | | | | | 3,379,691 | | | |
(b)
|
| | | | 21,644,513 | | | | ||
Intangible assets, net
|
| | | | 11,765,688 | | | | | | — | | | | | | 11,765,688 | | | | | | 21,454,063 | | | |
(a), (b)
|
| | | | 33,219,751 | | | | ||
Deposits
|
| | | | 137,794 | | | | | | 9,612 | | | | | | 147,406 | | | | | | — | | | | | | | | | 147,406 | | | | ||
Right of use asset
|
| | | | 201,681 | | | | | | | | | | | | 201,681 | | | | | | | | | | | | | | | 201,681 | | | | ||
Total assets
|
| | | $ | 36,422,979 | | | | | $ | 7,025,973 | | | | | $ | 43,448,952 | | | | | $ | 24,833,754 | | | | | | | | $ | 68,282,706 | | | | ||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
Current liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
Accounts payable
|
| | | $ | 7,003,333 | | | | | $ | 1,382,180 | | | | | $ | 8,385,512 | | | | | $ | — | | | | | | | | $ | 8,385,512 | | | | ||
Accrued expenses and other liabilities
|
| | | | 3,698,717 | | | | | | 390,774 | | | | | | 4,089,491 | | | | | | — | | | | | | | | | 4,089,491 | | | | ||
Deferred revenue
|
| | | | 221,363 | | | | | | — | | | | | | 221,363 | | | | | | — | | | | | | | | | 221,363 | | | | ||
Due to related parties
|
| | | | 250,598 | | | | | | 495,000 | | | | | | 745,598 | | | | | | — | | | | | | | | | 745,598 | | | | ||
Contingent consideration liability
|
| | | | 19,300,716 | | | | | | — | | | | | | 19,300,716 | | | | | | — | | | | | | | | | 19,300,716 | | | | ||
Convertible notes, current
|
| | | | 100,000 | | | | | | — | | | | | | 100,000 | | | | | | — | | | | | | | | | 100,000 | | | | ||
Accrued interest payable
|
| | | | 1,801,303 | | | | | | — | | | | | | 1,801,303 | | | | | | — | | | | | | | | | 1,801,303 | | | | ||
Note payable – related party
|
| | | | 154,489 | | | | | | — | | | | | | 154,489 | | | | | | — | | | | | | | | | 154,489 | | | | ||
Venture debt, net of discount
|
| | | | 6,251,755 | | | | | | — | | | | | | 6,251,755 | | | | | | — | | | | | | | | | 6,251,755 | | | | ||
Loan payable, current
|
| | | | 1,489,335 | | | | | | — | | | | | | 1,489,335 | | | | | | — | | | | | | | | | 1,489,335 | | | | ||
Promissory note payable, current
|
| | | | 3,500,000 | | | | | | — | | | | | | 3,500,000 | | | | | | — | | | | | | | | | 3,500,000 | | | | ||
Right of use liability, current portion
|
| | | | 201,681 | | | | | | | | | | | | 201,681 | | | | | | — | | | | | | | | | 201,681 | | | | | |
Total current liabilities
|
| | | | 43,973,290 | | | | | | 2,267,954 | | | | | | 46,241,244 | | | | | | — | | | | | | | | | 46,241,244 | | | | ||
Convertible note payable, net
|
| | | | 5,986,068 | | | | | | — | | | | | | 5,986,068 | | | | | | — | | | | | | | | | 5,986,068 | | | | ||
Loan payable
|
| | | | 298,900 | | | | | | — | | | | | | 298,900 | | | | | | — | | | | | | | | | 298,900 | | | | ||
Derivative liability
|
| | | | 1,044,939 | | | | | | — | | | | | | 1,044,939 | | | | | | — | | | | | | | | | 1,044,939 | | | | ||
Warrant liability
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | — | | | | ||
Right of use liability
|
| | | | — | | | | | | | | | | | | — | | | | | | — | | | | | | | | | — | | | | | |
Total liabilities
|
| | | | 51,303,197 | | | | | | 2,267,954 | | | | | | 53,571,151 | | | | | | — | | | | | | | | | 53,571,151 | | | | ||
Stockholders’ equity (deficit): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
Common stock
|
| | | | 5,287 | | | | | | — | | | | | | 5,287 | | | | | | — | | | | | | | | | 5,287 | | | | ||
Additional paid-in capital
|
| | | | 68,185,315 | | | | | | — | | | | | | 68,185,315 | | | | | | 32,000,000 | | | |
(b)
|
| | | | 100,185,315 | | | | ||
Members’ equity
|
| | | | — | | | | | | 4,758,019 | | | | | | 4,758,019 | | | | | | (4,758,019) | | | |
(b)
|
| | | | — | | | | ||
Accumulated deficit
|
| | | | (83,070,820) | | | | | | — | | | | | | (83,070,820) | | | | | | (2,408,227) | | | | | | | | | (85,479,047) | | | | ||
Total stockholders’ equity (deficit)
|
| | | | (14,880,218) | | | | | | 4,758,019 | | | | | | (10,122,199) | | | | | | 24,833,754 | | | | | | | | | 14,711,555 | | | | ||
Total liabilities and stockholders’ equity (deficit)
|
| | | $ | 36,422,979 | | | | | $ | 7,025,973 | | | | | $ | 43,448,952 | | | | | $ | 24,833,754 | | | | | | | | $ | 68,282,706 | | | |
|
Cash
|
| | | $ | 12,000,000 | | |
|
Common stock
|
| | | | 20,000,000 | | |
|
Purchase price consideration
|
| | | $ | 32,000,000 | | |
|
Assets acquired
|
| | | $ | 7,025,973 | | |
|
Goodwill
|
| | | | 3,379,691 | | |
|
Intangible assets
|
| | | | 23,862,290 | | |
|
Liabilities assumed
|
| | | | (2,267,954) | | |
|
Purchase price consideration
|
| | | $ | 32,000,000 | | |