UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For the quarterly period ended
For the transition period from to
Commission file number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) |
(Address of principal executive offices, including zip code)
Tel: (
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and emerging growth company in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
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| Emerging growth company |
If an emerging growth company, indicate by check mark if this registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of November 14, 2022 the Company had
shares of common stock, $0.0001 par value, issued and outstanding.DIGITAL BRANDS GROUP, NC.
FORM 10-Q
TABLE OF CONTENTS
2
PART I – FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
DIGITAL BRANDS GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| September 30, |
| December 31, | |||
2022 | 2021 | |||||
ASSETS | ||||||
Current assets: |
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Cash and cash equivalents | $ | | $ | | ||
Accounts receivable, net |
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Due from factor, net |
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Inventory |
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Prepaid expenses and other current assets |
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Total current assets |
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Deferred offering costs |
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Property, equipment and software, net |
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Goodwill |
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Intangible assets, net |
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Deposits |
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Right of use asset | | — | ||||
Total assets | $ | | $ | | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |
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Current liabilities: |
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Accounts payable | $ | | $ | | ||
Accrued expenses and other liabilities |
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Deferred revenue |
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Due to related parties |
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Contingent consideration liability | | | ||||
Convertible note payable, net |
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Accrued interest payable |
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Note payable - related party |
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Venture debt, net of discount |
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Loan payable, current |
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Promissory note payable |
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Right of use liability, current portion | | — | ||||
Total current liabilities |
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Convertible note payable, net |
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Loan payable |
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Derivative liability |
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Warrant liability |
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Total liabilities |
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Commitments and contingencies (Note 11) |
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Stockholders’ equity (deficit): |
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Undesignated preferred stock, $ |
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Series A preferred stock, $ | ||||||
Series A convertible preferred stock, $ | | — | ||||
Common stock, $ | | | ||||
Additional paid-in capital |
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Accumulated deficit |
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Total stockholders’ equity (deficit) |
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Total liabilities and stockholders’ equity (deficit) | $ | | $ | |
See the accompanying notes to the unaudited condensed consolidated financial statements
3
DIGITAL BRANDS GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
| 2022 |
| 2021 |
| 2022 |
| 2021 | |||||
Net revenues | | | $ | | $ | | ||||||
Cost of net revenues |
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Gross profit (loss) |
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Operating expenses: |
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General and administrative |
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Sales and marketing |
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Distribution |
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Change in fair value of contingent consideration | ( | | | | ||||||||
Total operating expenses |
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Loss from operations |
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Other income (expense): |
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Interest expense |
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Other non-operating income (expenses) |
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Total other income (expense), net |
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Income tax benefit (provision) |
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Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
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Weighted average common shares outstanding - basic and diluted |
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Net loss per common share - basic and diluted | ( | ( | ( | ( |
See the accompanying notes to the unaudited condensed consolidated financial statements
4
DIGITAL BRANDS GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(UNAUDITED)
Series Seed | Series A | Series A-2 | Series A-3 | Series CF | Series B | Series A Convertible | Additional | Total | ||||||||||||||||||||||||||||||||||||||||||
Preferred Stock | Preferred Stock | Preferred Stock | Preferred Stock | Preferred Stock | Preferred Stock | Preferred Stock | Common Stock | Paid-in | Accumulated | Stockholders’ | ||||||||||||||||||||||||||||||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Shares |
| Amount |
| Shares |
| Amount |
| Shares |
| Amount |
| Shares |
| Amount |
| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Deficit |
| Equity (Deficit) | |||||||||||||
Balances at December 31, 2020 | | $ | |
| | $ | |
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| — | $ | — |
| | $ | | $ | | $ | ( | $ | ( | |||||||||||||
Stock-based compensation | — |
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Net loss | — |
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Balances at March 31, 2021 | | | | | | | | | | | | | — | — | | | | ( | ( | |||||||||||||||||||||||||||||||
Conversion of preferred stock into common stock | ( | ( | ( | ( | ( | ( | ( | ( | ( | ( | ( | ( | — | — | | | | — | — | |||||||||||||||||||||||||||||||
Issuance of common stock in public offering | — | — | — | — | — | — | — | — | — | — | — | — | — | — | | | | — | | |||||||||||||||||||||||||||||||
Offering costs | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||
Exercise of over-allotment option, net of offering costs | — | — |
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Conversion of debt into common stock | — | — | — | — | — | — | — | — | — | — | — | — | — | — | | | | — | | |||||||||||||||||||||||||||||||
Conversion of related party notes and payables into common stock | — | — |
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Common stock and warrants issued in connection with note | — | — | — | — | — | — | — | — | — | — | — | — | — | — | | — | | — | | |||||||||||||||||||||||||||||||
Common stock issued in connection with business combination | — | — | — | — | — | — | — | — | — | — | — | — | — | — | | | | — | | |||||||||||||||||||||||||||||||
Exercise of warrants | — | — | — | — | — | — | — | — | — | — | — | — | — | — | | — | | — | | |||||||||||||||||||||||||||||||
Common stock issued pursuant to consulting agreement | — | — | — | — | — | — | — | — | — | — | — | — | — | — | | — | | — | | |||||||||||||||||||||||||||||||
Stock-based compensation | — | — |
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Net loss | — | — |
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| — | — | — | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||
Balances at June 30, 2021 | — | — |
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Issuance of common stock in public offering | — | — | — | — | — | — | — | — | — | — | — | — | — | — | | — | | — | | |||||||||||||||||||||||||||||||
Common stock issued in connection with business combination | — | — | — | — | — | — | — | — | — | — | — | — | — | — | | | | — | | |||||||||||||||||||||||||||||||
Exercise of warrants | — | — | — | — | — | — | — | — | — | — | — | — | — | — | | — | | — | | |||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | | — | | |||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||
Balances at September 30, 2021 | — | $ | — | — | $ | — | — | $ | — | — | $ | — | — | $ | — | — | $ | — | — | $ | — | | $ | | $ | | $ | ( | $ | | ||||||||||||||||||||
Balances at December 31, 2021 | — | $ | — |
| — | $ | — |
| — | $ | — |
| — | $ | — |
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| — | $ | — |
| — | $ | — |
| | $ | | $ | | $ | ( | $ | ( | |||||||||||||
Conversion of notes into common stock | — | — |
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Stock-based compensation | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | | — | | |||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||
Balances at March 31, 2022 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | | | | ( | ( | |||||||||||||||||||||||||||||||
Issuance of common stock in public offering | — | — | — | — | — | — | — | — | — | — | — | — | — | — | | | | — | | |||||||||||||||||||||||||||||||
Offering costs | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||
Conversion of notes and derivative liability into common stock | — | — | — | — | — | — | — | — | — | — | — | — | — | — | | | | — | | |||||||||||||||||||||||||||||||
Warrants issued in connection with note | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | | — | | |||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | | — | | |||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||
Balances at June 30, 2022 | — | — |
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Common stock issued pursuant to consulting agreement | — | — | — | — | — | — | — | — | — | — | — | — | — | — | | — | | — | | |||||||||||||||||||||||||||||||
Issuance of Series A preferred stock | — | — | | — | — | — | — | — | — | — | — | — | — | — | — | — | | — | | |||||||||||||||||||||||||||||||
Conversion of venture debt into Series A convertible preferred stock |