Business Model and Strategy - Digital Brands Group operates a portfolio of four significant brands, leveraging direct-to-consumer and wholesale channels to enhance operational efficiencies and cost savings [9]. - The company aims to transition its primarily wholesale brands, such as Bailey 44 and Stateside, to a digital direct-to-consumer model, which is expected to improve margins and customer engagement [11]. - The company has identified three ideal acquisition targets: mismanaged legacy brands, capital-constrained strong brands, and struggling wholesale brands transitioning to e-commerce, indicating a strategic focus on consolidation [11]. - The company has strategically expanded its brand portfolio to leverage technological and operational capabilities across all brands, aiming for cost savings and scalability [105]. - The company aims to increase "closet share," defined as the percentage of a customer's clothing units owned from its brands, with a target of capturing a higher share of customer purchases [107]. Pricing and Product Offering - The average price points for Bailey's products range from $90 to $350, while Harper & Jones custom suits range from $1,995 to $4,995, indicating a diverse pricing strategy across brands [14][15]. - Stateside's products are primarily sold through wholesale channels, with T-shirt prices ranging from $68 to $94, and other tops priced between $98 and $130 [16]. - DSTLD focuses on minimalist design with denim prices ranging from $75 to $95, significantly lower than similar quality brands, which retail for $185 to $350 [18]. - ACE Studios is expected to launch in Q2 2023, offering luxury men's suiting priced between $295 and $495, aiming to capture a segment of the high-end market [19]. Financial Performance - The company incurred a net loss of approximately $32.4 million and $10.7 million for the years ended December 31, 2021, and 2020, respectively, with an accumulated deficit of $65.7 million as of December 31, 2021 [41]. - Net revenue increased by $2.4 million to $7.6 million for the year ended December 31, 2021, compared to $5.2 million in 2020, primarily due to the acquisitions of H&J and Stateside [146]. - Gross profit rose by $2.3 million to $2.9 million for the year ended December 31, 2021, with a gross margin of 38.2%, up from 10.6% in 2020, attributed to margins from H&J and Stateside acquisitions [147]. - Operating expenses increased by $24.5 million to $22.5 million for the year ended December 31, 2021, driven by a $10.6 million rise in general and administrative expenses and a $3.2 million increase in sales and marketing expenses [148]. - Cash used in operating activities increased by $12.2 million to $14.2 million for the year ended December 31, 2021, compared to $1.2 million in 2020, driven by a higher net loss [151]. Marketing and Customer Engagement - The company utilizes paid social media marketing as its primary customer acquisition channel, focusing on platforms like Facebook and Instagram [27]. - The company plans to develop and launch a company-wide loyalty program designed to engage and reward customers across all brands, allowing customers to earn reward points for purchases [36]. - The company aims to increase brand awareness and customer engagement through a multi-pronged marketing strategy, including content marketing and search engine optimization [29]. - The company has successfully tested retail "pop ups," resulting in higher average order value and significantly lower customer returns, viewing these locations as a marketing strategy [30]. Operational Challenges and Risks - The company may face challenges in successfully integrating future acquisitions, which could adversely affect its business and financial results [50]. - The ongoing impacts of COVID-19 have led to significant uncertainty in global economic conditions, affecting consumer confidence and spending [46]. - The company faces significant competition for personnel, requiring competitive compensation and benefits to attract top talent [56]. - Economic downturns may adversely affect consumer discretionary spending, impacting demand for the company's products [58]. - The company faces heightened risks of inventory obsolescence and significant write-downs due to ineffective inventory management and supply chain disruptions, particularly from the COVID-19 pandemic [62]. Legal and Regulatory Compliance - The company is subject to evolving domestic and foreign laws regarding consumer protection and data privacy, which could impose additional compliance burdens [38]. - The company is subject to extensive regulations by various federal agencies, which could lead to significant penalties or claims if compliance is not met [76]. - The company has identified material weaknesses in its internal control over financial reporting, which could affect the accuracy of financial results and investor confidence [82]. Capital Structure and Financing - As of December 31, 2021, the company had an aggregate principal amount of debt outstanding of approximately $21.9 million, which may be considered significant for its size [51]. - The company entered into a Membership Interest Purchase Agreement to acquire Sundry for $7.5 million in stock and $34.0 million in cash, with $20.0 million payable at closing [48]. - The company has a credit facility that may impose limits on future dividend payments [90]. - The company intends to fund operations primarily from funds raised through an equity line of credit agreement and may pursue secondary offerings or debt financings [151]. Human Resources and Compensation - Total compensation for CEO John "Hil" Davis in 2021 was $4,287,667, which includes a salary of $350,000 and option awards valued at $3,704,483 [189]. - Chief Marketing Officer Laura Dowling received total compensation of $991,135 in 2021, including a salary of $300,000 and stock option awards of $691,135 [189]. - Chief Financial Officer Reid Yeoman's total compensation for 2021 was $471,163, comprising a salary of $250,000 and option awards of $221,163 [189]. Future Outlook - The company anticipates substantial increases in operating expenses due to brand acquisitions, compliance costs, and enhanced marketing efforts, which may impact profitability [42]. - The company expects lower order quantities from accounts in the first half of 2022 compared to pre-COVID levels, but significantly higher than 2020 or 2021 [46]. - The company plans to achieve near-term free cash flow through cash flow positive acquisitions and reducing redundant expenses in acquired companies [123].

Table of Contents 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 September 30, 2021 ☐ 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. (Exact name of registrant as specified in its charter) Delaw ...

Table of Contents 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 June 30, 2021 ☐ 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. (Exact name of registrant as specified in its charter) Delaware 4 ...

Financial Data and Key Metrics Changes - Revenue increased 51% year-over-year to $1.0 million compared to $664,000 in the same period of 2020, representing a $340,000 increase driven by Bailey-44 and Harper & Jones [17] - Net loss increased by $8.4 million to a loss of $10.7 million for the three months ended June 30, 2021, primarily due to noncash expenses associated with stock-based compensation and changes in fair value of contingent liabilities [28] - Gross profit margin increased to 39.3% from a negative 40.4% year-over-year, reflecting an increase of $663,000 across all brands [21] Business Line Data and Key Metrics Changes - Bailey-44 experienced a revenue ramp post-COVID, contributing significantly to the overall revenue increase [18] - Harper & Jones contributed to revenue for approximately 6 weeks post-acquisition, indicating a positive impact on overall sales [17] - DSTLD's core denim and tees are back in stock, with expectations for strong fall product availability [19] Market Data and Key Metrics Changes - Wholesale bookings for Bailey-44 are trending at pre-pandemic levels, with strong sales expected for January and February [34] - The company is seeing an acceleration in wholesale booking orders for fall, aligning with pre-pandemic levels [10] Company Strategy and Development Direction - The company is focused on an acquisition-oriented strategy, planning to acquire more companies this year, which will require GAAP PCAOB audits [13] - A significant marketing and advertising plan is being developed, including an Amazon marketing strategy, expected to roll out in the fall [11] - The company aims to drive both organic revenue growth and earnings through strategic acquisitions and improved marketing efforts [32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the improving business trends continuing into the third quarter and fourth quarter of 2021, supported by sufficient cash and inventory [7][8] - The company anticipates significant improvements in gross margins for Bailey-44 and DSTLD in the upcoming quarters as inventory levels stabilize and marketing strategies are fully implemented [22][24] - Management highlighted the transition from a pre-IPO to a post-IPO company, emphasizing the stronger cash position and marketing budget [30] Other Important Information - Operating expenses increased significantly due to noncash charges related to the IPO and acquisition of Harper & Jones, totaling $7.3 million in one-time expenses [25] - The company is excited about the launch of its first Ready-to-Wear program for Harper & Jones, which is expected to enhance revenue and growth [35] Q&A Session Summary Question: What are the expectations for the upcoming quarters? - Management is excited about the trends seen in Q2 and into Q3, with Bailey-44 trending at pre-pandemic levels and strong wholesale bookings confirmed for fall [37] Question: How is the integration of Harper & Jones progressing? - Harper & Jones will be fully integrated into Q3 results, with positive responses to the new Ready-to-Wear program [37] Question: What is the outlook for marketing efforts? - The company plans to launch a significant marketing strategy this fall, which has not been pursued for over a year, expected to drive significant upside for all brands [36]

Table of Contents 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, 2021 ☐ 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. (Exact name of registrant as specified in its charter) | --- | - ...