☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______to______ Commission file number: 001-40400 DIGITAL BRANDS GROUP, INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 (Former name, former address and former fiscal year, if changed since last report) Securities r ...

Austin, TX, April 22, 2025 (GLOBE NEWSWIRE) -- Digital Brands Group, Inc. (“DBG”) (OTC: DBGI), a curated collection of luxury lifestyle brands, is pleased to announce a strategic partnership with Amaze (NYSE American: AMZE) (“Amaze” or the “Company”), a global leader in creator-powered commerce. Digital Brands Group becomes the first third-party partner to offer its products on the recently revamped Teespring Marketplace by Amaze. Through this partnership, Amaze customers will soon be able to shop AVO by DS ...

Financial Performance and Equity - The Company reported stockholders' equity of $19,046, failing to meet the $2,500,000 requirement for Nasdaq listing[23]. - The Company received net proceeds of $2,063,386 from the sale of 105,125 shares of Common Stock between July 1, 2024, and October 22, 2024[25]. - The Offering on October 30, 2024, resulted in gross proceeds of approximately $3,000,000, with net proceeds of approximately $2,555,261 after fees[31]. - The Company reported net proceeds of $278,160 from the sale of 65,236 shares of Common Stock between October 23, 2024, and December 17, 2024[25]. - The Company raised approximately $7,500,000 in gross proceeds from the Offering, before deducting fees and expenses[44]. - The Placement Agent received a cash fee of 8.0% of the aggregate gross proceeds raised in the Offering[44]. - The Company extended the Final Payment due date for settlement agreements with investors to November 4, 2024, totaling $1,789,668.37[24]. - The Company issued a promissory note of $260,000 with an original issue discount of $60,000, maturing on April 22, 2025[36]. - The Company entered into securities purchase agreements to issue 124,673 shares of common stock at $5.00 per share and 482,187 pre-funded warrants at $4.995 each[27]. - The Company issued 26,226 shares in error due to non-compliance with Nasdaq Listing Rule 5635(d), which were subsequently canceled[26]. Business Strategy and Operations - The Company aims to increase its "closet share," defined as the percentage of a customer's clothing units owned from its brands, to drive higher revenue[50]. - The Company plans to actively pursue acquisitions to enhance customer cohorts and deliver customized content[53]. - The Company is transitioning its brands from wholesale to digital direct-to-consumer models to improve margins and customer engagement[47]. - The Company leverages data analytics to create targeted marketing campaigns across its brand portfolio[57]. - The Company has centralized certain administrative functions to improve operational efficiency and reduce costs[58]. - The company plans to increase online revenues significantly by enhancing digital marketing efforts and optimizing website sales opportunities[67]. - The company aims to increase gross margins by ordering larger quantities to reduce upcharges associated with minimum order quantities[67]. - Direct-to-consumer sales are emphasized, allowing the company to eliminate wholesale mark-ups and offer sharper pricing[76]. - The marketing strategy includes paid social media, email marketing, and influencer collaborations to drive customer acquisition and retention[92]. - The company plans to develop and launch a company-wide loyalty program to engage and reward customers across all brands, utilizing reward points for purchases[104]. Product Pricing and Categories - Stateside's T-shirt prices range from $68 to $94, with other tops priced between $98 and $130, and bottoms from $80 to $144[63]. - Sundry's T-shirt prices range from $68 to $98, with other tops priced between $98 and $198, and bottoms from $80 to $228[65]. - DSTLD's denim prices range from $75 to $95, while T-shirts and tops range from $30 to $90, and casual pants from $85 to $109[69]. - Avo launched in late August 2024, with T-shirt prices ranging from $20 to $50 based on bundle size, and discounts of 40% for two units and 60% for three or more[71]. - ACE Studios suits were priced between $295 and $495, with dress shirts ranging from $55 to $65, and casual pants from $85 to $109[73]. - A new product category for 2025 in women's athleisure is planned, targeting a high repeat spend market[75]. Employee Relations and Workforce - As of December 31, 2024, the company had 41 full-time employees and maintains a strong relationship with them, with no labor-related work stoppages reported[112]. - The company emphasizes the importance of a diverse workforce and plans to focus on hiring and retaining underrepresented populations[113]. - The company is committed to the health and wellness of its employees, providing access to various health programs and benefits[114]. - Robust compensation and benefits programs are in place to meet employee needs[115]. Market Competition and Challenges - The company faces significant competition from established brands like Vince, James Perse, and Ralph Lauren, which have greater resources and market recognition[105]. - Quarterly operating results are historically stronger in the second half of the calendar year due to seasonality[106]. - The company is subject to evolving domestic and foreign laws regarding consumer protection, privacy, and data security, which could impose additional compliance burdens[107][108]. Corporate Actions - The Company completed a 2024 Reverse Stock Split at a ratio of 1-for-50, affecting the number of shares but not the authorized shares or voting rights[37]. - The Company entered into a vendor agreement with MavDB Consulting LLC for services valued at $3,000,000, with payment options including cash or shares[34]. - The Company submitted an application to list its common stock on a national securities exchange on February 20, 2025[45].

Core Insights - Digital Brands Group, Inc. has acquired the assets of Open Daily Technologies Inc. to enhance its eCommerce capabilities and improve consumer engagement through innovative virtual shopping solutions [1][4] - The acquisition involves the exchange of 344,827 shares of common stock of Digital Brands Group, indicating a strategic move to strengthen its position in the online retail market [1] Company Overview - Digital Brands Group specializes in eCommerce and fashion, offering a variety of apparel through direct-to-consumer and wholesale channels [5] - The company aims to leverage customer data and purchase history to create personalized shopping experiences, focusing on increasing customer "closet share" [5] Open Daily's Contributions - Open Daily is recognized for its pioneering virtual shopping solutions that enhance online retail experiences, helping brands connect with consumers in more engaging and interactive ways [2][4] - The company's core product offerings include: - Outfit Virtual Shopping, a live shopping platform that replicates in-store experiences [7] - Outfit Voice AI, a multilingual shopping assistant that enhances customer support [7] - Outfit ND-AI, a platform aimed at providing deeper consumer insights through behavioral data [7] Strategic Implications - The acquisition aligns with Digital Brands Group's strategy to expand its presence in the evolving online shopping landscape, integrating interactive commerce solutions to foster meaningful connections with customers [4] - The CEO of Digital Brands Group emphasized the potential to enhance digital retail experiences and improve engagement and sales through Open Daily's technology [5]

Core Viewpoint - Digital Brands Group, Inc. has applied for a listing on a national securities exchange, marking a significant step in its growth strategy following a successful capital raise of $7.5 million [1][2]. Group 1: Company Developments - The CEO of Digital Brands Group, Hil Davis, emphasized that the uplisting is a logical progression in the company's growth journey [2]. - The recent capital raise of $7.5 million is intended to strengthen the company's balance sheet and fund growth initiatives, including Tik Tok Live, digital marketing, and influencer partnerships [2]. - The successful listing of the company's common shares is contingent upon approval from the national securities exchange and meeting all listing criteria [2]. Group 2: Business Model and Strategy - Digital Brands Group operates a diverse range of apparel brands through both direct-to-consumer and wholesale channels, focusing on a digitally native-first vertical brand model [4]. - The company aims to enhance customer engagement by leveraging data and purchase history to create personalized content and looks for specific customer cohorts [4].

Core Viewpoint - Digital Brands Group, Inc. (DBG) has announced a public offering of 11.36 million units at a price of $0.66 per unit, aiming to raise approximately $7.5 million for working capital, corporate purposes, and debt repayment [1][3]. Group 1: Offering Details - The offering consists of units that include a share of common stock and/or a pre-funded warrant to purchase common stock, along with two common stock purchase warrants [1]. - The offering is expected to close on February 18, 2025, subject to customary closing conditions [3]. - RBW Capital Partners LLC, through Dawson James Securities, Inc., is the exclusive placement agent for the offering [2]. Group 2: Company Background - DBG operates a variety of apparel brands through both direct-to-consumer and wholesale channels, focusing on a digitally native-first vertical brand model [5]. - The company aims to enhance customer engagement by leveraging data and purchase history to create personalized content and looks for specific customer cohorts [5].

Core Viewpoint - Digital Brands Group, Inc. has made significant improvements in its financial condition, allowing the company to focus on revenue growth initiatives and marketing strategies to enhance shareholder value [1][19]. Financial Condition Improvement - The company has eliminated $5.2 million in convertible notes, other debt, and aged accounts payable since May 2024, leading to a stronger financial position [2]. - Interest expenses are projected to decline from approximately $3.1 million in fiscal year 2024 to an estimated $420,000 in fiscal year 2025, resulting in a net benefit of about $2.7 million to net income and cash flow for fiscal year 2025 [3]. - Over the past three years, the company faced an estimated negative impact of $42.3 million in net income and shareholder equity due to interest expenses and goodwill amortization and writedowns, which is expected to reduce to only $2.5 million over the next two years [4][5]. Cost Management - General and administrative expenses were reduced by approximately $500,000 in Q3 2024 compared to Q2 2024, with further savings anticipated through workforce reductions, ending severance payments, and lower consulting and legal fees [6][7]. Marketing Growth Initiatives - The company is investing in growth marketing initiatives due to the improved financial condition, including a partnership with VaynerCommerce that resulted in a 224% increase in daily digital revenues over a recent 45-day period [8][12]. - A 20% increase in wholesale prices for the Sundry brand is expected to generate an additional $500,000 or more in gross margin dollars during fiscal year 2025 compared to fiscal year 2024 [9]. - Upcoming marketing initiatives include launching products on TikTok Shop, influencer collaborations, and direct-to-consumer pricing strategies aimed at enhancing engagement and conversion rates [14][15][16][17]. Conclusion - The company has made substantial progress in cleaning up its balance sheet, which is expected to lead to significantly lower interest expenses and increased cash flow, allowing for a focus on marketing initiatives to improve performance for shareholders [19].

Core Insights - Digital Brands Group, Inc. (DBG) has reported a significant increase in daily digital revenues following a marketing partnership with VAYNERCOMMERCE, achieving a 224% increase during the first 45 days of collaboration [2][3]. Company Overview - DBG is a curated collection of luxury lifestyle brands that operates both direct-to-consumer and wholesale channels [5]. - The company focuses on leveraging customer data and purchase history to create personalized content and targeted marketing strategies [6]. Partnership Details - The partnership with VAYNERCOMMERCE, initiated on October 21, 2024, aims to enhance DBG's digital marketing efforts and improve overall marketing campaign performance [3]. - VAYNERCOMMERCE is recognized for its expertise in helping digital companies scale their online presence and revenues [1].

Group 1 - Digital Brands Group, Inc. (DBG) will implement a 1-for-50 reverse stock split effective December 13, 2024, to regain compliance with Nasdaq's $1.00 minimum bid price requirement [1][2] - Following the reverse split, DBG's common stock will continue to trade on Nasdaq under the symbol "DBGI" and will have a new CUSIP number of 25401N507 [2] - CEO Hil Davis stated that the reverse stock split is a strategic step towards regaining compliance with Nasdaq's listing requirements [2] Group 2 - DBG operates a business model that includes a variety of apparel offered through both direct-to-consumer and wholesale channels, focusing on leveraging customer data for personalized marketing [4]

Financial Data and Key Metrics Changes - Net revenues for Q3 2024 were $2.4 million, down from $3.3 million a year ago, primarily due to the decision to walk away from a low-margin wholesale account [18] - Gross profit margins decreased to 46% from 52.3% year-over-year, attributed to fixed costs associated with warehouse rent and labor expenses [22] - Net loss was $3.5 million compared to a net loss of $5.4 million a year ago, indicating improved profitability despite lower revenues [27] - Net loss per diluted share was $1.63, significantly improved from a net loss of $14.55 a year ago [28] Business Line Data and Key Metrics Changes - The company experienced a 34% increase in daily digital revenues and a 7% increase in average order volume after partnering with VAYNERCOMMERCE [7] - Gross profit in dollars was $1.1 million, down from $1.7 million a year ago, reflecting the impact of lower digital revenue [23] - Sales and marketing expenses decreased to $655,000 from $1.2 million a year ago, with a sales and marketing expenses ratio of 26.9% compared to 35.3% a year ago [26] Market Data and Key Metrics Changes - The company noted a soft macroeconomic environment affecting consumer spending, impacting all retailers [15] - The decision to drop a wholesale account was made due to its negative cash contribution, despite adding revenue [18] Company Strategy and Development Direction - The company is transitioning from debt repayment to focusing on top-line growth, with plans to enhance digital marketing efforts [6][17] - Initiatives include launching influencer campaigns, selling on platforms like Amazon and TikTok, and introducing limited edition product capsules [9][10] - The partnership with VAYNERCOMMERCE is seen as a critical step in the growth strategy, with a focus on performance marketing [32][35] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, stating that the worst of the macroeconomic conditions may be behind them [12][16] - The company anticipates a $4.5 million increase in earnings in 2025 due to amortized non-cash expenses and reduced interest expenses [13][30] - Management emphasized the importance of the partnership with VAYNERCOMMERCE and the expected positive impact on growth initiatives [29][36] Other Important Information - G&A expenses decreased significantly to $2.4 million from $3.7 million a year ago, indicating effective cost management [24] - The company has cleared its convertible debt, leaving only long-term debt on the balance sheet, which alleviates financial pressure [31] Q&A Session Summary Question: What is the status of the company's debt? - The company has paid back $1.3 million in convertible debt, leaving no convertible debt on the balance sheet [31] Question: How did the relationship with VAYNERCOMMERCE develop? - The company initially felt too small for VAYNERCOMMERCE but later re-engaged, leading to a partnership based on a performance-driven revenue model [32][33] Question: What are the expectations for future marketing efforts? - The company plans to increase digital marketing spend and is currently A/B testing ads to determine the most effective strategies [36][37] Question: What impact did the wholesale account have on the business? - The wholesale account was net negative for the company, leading to a decision to drop it, which is expected to improve gross margins moving forward [38][39]