Company Overview - DBGI Corp. specializes in eCommerce and Fashion, offering a wide variety of apparel through numerous brands on both direct-to-consumer and wholesale basis [3] - The company operates under a digitally native-first vertical brand model, focusing on personalized content and customer engagement to enhance "closet share" [3] Nasdaq Uplisting - The company announced its uplisting to The Nasdaq Capital Market under the ticker symbol "DBGI," effective August 20, 2025 [1][2] - This transition is aimed at enhancing investor visibility, increasing liquidity, and supporting the company's growth strategy, positioning it for long-term value creation for shareholders [2] Business Model and Strategy - Digital Brands Group continues to operate under its current business model while leveraging customer data and purchase history to create targeted marketing strategies [3] - The company emphasizes the importance of maintaining its business model and brand identity during this transition to Nasdaq [2]

Company Overview - DBGI Corp. specializes in eCommerce and Fashion, offering a wide variety of apparel through multiple brands on both direct-to-consumer and wholesale bases [3] - The company operates under a digitally native-first vertical brand model, focusing on personalized content and customer engagement to enhance "closet share" [3] Nasdaq Uplisting - The company announced its uplisting to The Nasdaq Capital Market under the ticker symbol "DBGI," effective August 20, 2025 [1][2] - This transition is aimed at enhancing investor visibility, increasing liquidity, and supporting the company's growth strategy, positioning it for long-term value creation for shareholders [2] Business Model and Strategy - Digital Brands Group continues to operate under its existing business model while leveraging customer data and purchase history to create targeted marketing strategies [3] - The company emphasizes the importance of maintaining its current operational structure while pursuing growth opportunities in the apparel market [2]

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=ITEM%201.%20Financial%20Statements) The unaudited statements show decreased revenue and a reduced net loss, with equity shifting from a deficit to a surplus due to financing Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$27,820,287** | **$19,890,327** | | Total Current Assets | $6,450,666 | $4,697,267 | | Goodwill | $8,973,501 | $8,973,501 | | **Total Liabilities** | **$20,714,167** | **$21,218,868** | | Total Current Liabilities | $19,381,882 | $20,819,878 | | **Total Stockholders' Equity (Deficit)** | **$7,106,120** | **$(1,328,541)** | Condensed Consolidated Statements of Operations Highlights (Unaudited) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net Revenues** | $2,251,379 | $3,396,069 | $4,123,080 | $6,972,656 | | **Gross Profit** | $711,552 | $1,558,677 | $1,584,007 | $3,279,413 | | **Loss from Operations** | $(1,985,217) | $(2,302,235) | $(3,981,777) | $(2,526,880) | | **Net Loss** | **$(2,117,862)** | **$(3,510,480)** | **$(4,207,772)** | **$(4,194,215)** | | **Net Loss per Share** | $(0.81) | $(104.18) | $(1.24) | $(123.10) | - Net cash used in operating activities for H1 2025 was **$(6.1) million**, up from $(2.9) million in H1 2024, while net cash from financing activities rose to **$6.5 million** from $3.0 million[19](index=19&type=chunk)[251](index=251&type=chunk)[254](index=254&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Key disclosures detail the alleviation of going concern uncertainty, an asset acquisition, and significant financing activities - Management concluded that **substantial doubt about the Company's ability to continue as a going concern has been alleviated** due to a $16.225 million offering and other capital sources[31](index=31&type=chunk)[33](index=33&type=chunk) - On April 1, 2025, the Company acquired intellectual property from Open Daily Technologies Inc for **344,827 shares of common stock valued at $3,000,000**[82](index=82&type=chunk)[83](index=83&type=chunk) - In February 2025, an offering of common stock and pre-funded warrants raised **net proceeds of $6,642,433**[96](index=96&type=chunk)[98](index=98&type=chunk) - In August 2025, a PIPE offering and warrant exercise generated **gross proceeds of $16,225,000**, improving pro forma stockholders' equity to over $33 million[134](index=134&type=chunk)[138](index=138&type=chunk) - The company is involved in a legal dispute over a retail lease with a **claimed amount of $450,968**, reduced from an initial $1.5 million[129](index=129&type=chunk)[273](index=273&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenue declined due to a strategic account drop, but net loss improved from reduced operating expenses and recent financing Results of Operations Comparison (Q2 2025 vs Q2 2024) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Net Revenues | $2.3 million | $3.4 million | $(1.1) million | | Gross Profit | $0.7 million | $1.6 million | $(0.9) million | | Gross Margin | 32% | 46% | (14 pts) | | Operating Expenses | $2.7 million | $3.8 million | $(1.1) million | | Net Loss | $(2.1) million | $(3.5) million | $1.4 million | - The Q2 2025 revenue decrease was primarily due to dropping a large, low-margin wholesale account, with the impact expected to be offset by expanding another wholesale relationship[230](index=230&type=chunk)[231](index=231&type=chunk) - Operating expenses **decreased by $1.2 million** in Q2 2025 year-over-year following significant headcount reductions, with an additional **$0.7 million in savings anticipated**[235](index=235&type=chunk) - As of June 30, 2025, the company had **$6.4 million in outstanding debt**, mainly from promissory notes, PPP loans, and merchant advances[255](index=255&type=chunk) - The company entered into exclusive private label manufacturing agreements with AAA Tuscaloosa and Traffic Holdco for university apparel subsequent to the reporting period[219](index=219&type=chunk)[222](index=222&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=49&type=section&id=ITEM%203%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exempt from market risk disclosures as a smaller reporting company - As a smaller reporting company, Digital Brands Group, Inc. is not required to provide the information for this item[260](index=260&type=chunk) [Controls and Procedures](index=49&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Disclosure controls were deemed ineffective due to material weaknesses in internal controls, with remediation efforts underway - Management concluded that the company's **disclosure controls and procedures were not effective** as of June 30, 2025[262](index=262&type=chunk) - The ineffectiveness stems from **material weaknesses related to inadequate accounting resources and systems**, which are under active remediation[263](index=263&type=chunk)[268](index=268&type=chunk) - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[269](index=269&type=chunk) [PART II. OTHER INFORMATION](index=51&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=51&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is managing several legal matters, including a disputed lease claim and settled vendor and employee lawsuits - A vendor lawsuit concerning a retail lease has an updated claim of **$450,968**, down from $1.5 million, which the company disputes[273](index=273&type=chunk) - A wrongful termination lawsuit was **settled in May 2025 for a payment of $81,000**[273](index=273&type=chunk) - A lawsuit with vendor Simon Showroom was **settled for $400,000**, with a remaining balance of $130,000 as of June 30, 2025[273](index=273&type=chunk) [Risk Factors](index=52&type=section&id=ITEM%201A.%20Risk%20Factors) The company is not required to provide risk factor disclosures due to its status as a smaller reporting company - The company is not required to provide risk factor information as it qualifies as a "smaller reporting company"[275](index=275&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=52&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Equity sales were conducted under exemptions from registration requirements as detailed in the financial statement notes - Details on unregistered sales of equity are located in Note 7 of the financial statements[276](index=276&type=chunk) - The issuances were made under exemptions from registration pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D[276](index=276&type=chunk) [Defaults upon Senior Securities](index=52&type=section&id=ITEM%203.%20Defaults%20upon%20Senior%20Securities) No defaults upon senior securities were reported during the period - None[277](index=277&type=chunk) [Mine Safety Disclosures](index=52&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to the company's operations - Not applicable[278](index=278&type=chunk) [Other Information](index=52&type=section&id=ITEM%205.%20Other%20Information) No material changes to shareholder processes or insider trading plans were reported for the quarter - During the quarter ended June 30, 2025, no director or officer adopted or terminated a Rule 10b5-1 trading plan[280](index=280&type=chunk) [Exhibits](index=52&type=section&id=ITEM%206.%20Exhibits) A list of filed exhibits includes officer certifications and key material agreements - The report includes a list of filed exhibits, such as CEO/CFO certifications and various material agreements[281](index=281&type=chunk) [Signatures](index=54&type=section&id=SIGNATURES)

Core Viewpoint - Digital Brands Group, Inc. has announced a private investment in public equity (PIPE) financing agreement, raising approximately $11,225,000 after fees and expenses [1][2]. Financing Details - The PIPE financing involves the sale of up to 14,031.25 shares of Series D Convertible Preferred Stock, convertible into common stock at a conversion price of 80% of the lowest closing price over the previous five trading days [2]. - The stated value of the Series D Preferred Stock is $14,031,250, with a cash purchase price of $11,225,000 [2]. Placement Agent - RBW Capital Partners LLC, a division of Dawson James Securities, acted as the placement agent for the PIPE financing [3]. Securities Registration - The securities offered in the PIPE financing have not been registered under the Securities Act of 1933 and are only available to accredited investors [4]. - The company plans to file registration statements with the SEC for the resale of unregistered shares upon conversion of the Series D Preferred Stock [4]. Company Overview - Digital Brands Group specializes in eCommerce and Fashion, offering a variety of apparel through multiple brands on both direct-to-consumer and wholesale bases [6]. - The company focuses on leveraging customer data and purchase history to create personalized content and enhance customer engagement [6].

Financial Performance - For the three months ended March 31, 2025, the company generated net revenues of $1,871,701, a decrease of $1,704,886 (approximately 47.6%) compared to $3,576,587 in the same period of 2024 [192]. - The company reported a net loss of $2,089,910 for the three months ended March 31, 2025, compared to a net loss of $683,735 in 2024, representing an increase in loss of approximately 205.5% [204]. - Gross profit decreased to $872,455 for the three months ended March 31, 2025, down from $1,720,736 in 2024, reflecting a decline of approximately 49.3% [197]. - The company's gross margin was 46.6% for the three months ended March 31, 2025, compared to 48.1% for the same period in 2024, indicating a decrease of 1.5 percentage points [198]. - Cash used in operating activities increased by $3,266,807 to $4,507,347 for the three months ended March 31, 2025, compared to $1,240,540 in 2024 [209]. - The company had cash of $2.2 million as of March 31, 2025, but reported a working capital deficit of $8.2 million [206]. Debt and Financing - Digital Brands Group has an aggregate principal amount of debt outstanding of approximately $6.5 million as of March 31, 2025, which is considered significant for the company's size and revenue base [145]. - The company entered into a securities purchase agreement for a promissory note of $121.9 million, with a 12% interest rate, maturing on October 16, 2025 [177]. - The company issued a second promissory note of $260,000 with an original issue discount of $60,000, maturing on April 22, 2025 [180]. - The February 2025 Offering raised funds through the sale of 11,365,340 units, including common stock and pre-funded warrants, at a purchase price of $0.66 per unit [183]. Operating Expenses - Operating expenses are expected to increase substantially due to acquisitions and compliance costs, but the company anticipates that these expenses as a percentage of revenue will decrease over time [153]. - The company expects to continue incurring additional expenses related to operating as a public company, which will increase overall operating costs [158]. - The company expects to incur additional expenses due to public company operations, including compliance and reporting obligations, which will increase operating costs [171]. - The company’s operating expenses include general and administrative costs, sales and marketing, and fulfillment and shipping expenses [169]. - The company expects to reduce operating expenses by an additional $700,000 over the next 12 months following significant headcount reductions in April and May 2025 [202]. Revenue Growth Strategies - The company aims to achieve near-term free cash flow through cash flow positive acquisitions and the elimination of redundant expenses, with a focus on increasing customer annual spend and lowering acquisition costs [152]. - The company has identified opportunities to drive customer lifetime value (LTV) through targeted marketing and cross-merchandising across its brand portfolio [140]. - The company is transitioning several brands from wholesale to digital direct-to-consumer models, aiming to enhance customer engagement and operational efficiencies [138]. - The company has strategically expanded into omnichannel strategies, blending physical and online channels to enhance customer acquisition and retention [139]. - Digital revenue increased over 80% from the previous quarter despite limited marketing spend in the first quarter of 2025 [196]. Cost Increases - The company has experienced increased costs in raw materials, with fabric prices rising between 10% to 100%, and shipping costs increasing from 25% to 300% depending on various factors [144]. - The company anticipates that changes in tariff policies will lead to increased prices for competitors, enhancing its market share potential [176]. - The company produces over 90% of its products in the USA, significantly limiting tariff exposure and providing a competitive advantage [174]. - The company does not utilize the "de minimis" exemption, which may impact e-commerce retailers and reduce competition in the online apparel market [175]. Cost Management - The company has successfully eliminated several million in expenses within six months of acquiring Bailey, including merging technology contracts and reducing office space costs [152].

Core Insights - Digital Brands Group, Inc. has formed a strategic partnership with Amaze, becoming the first third-party partner to offer its products on the revamped Teespring Marketplace [1][2] - This partnership allows Amaze customers to shop AVO by DSTLD, enhancing the product collection and shopping experience on Teespring Marketplace, which attracts over 1.2 billion unique visitors [2][3] - The collaboration aims to connect fans with styles that reflect their unique tastes, leveraging AI-driven curation and advanced discovery tools to maximize audience reach [3][4] Company Overview - Digital Brands Group offers a variety of apparel through multiple brands on a direct-to-consumer and wholesale basis, focusing on owning the customer's "closet share" by utilizing data and purchase history for personalized content [5] - Amaze is a creator-powered commerce platform that provides tools for seamless product creation and advanced e-commerce solutions, enabling creators to sell products and cultivate audience connections [6]

Core Insights - Digital Brands Group, Inc. has formed a strategic partnership with Amaze, becoming the first third-party partner to offer its products on the revamped Teespring Marketplace [1][2] - This partnership allows Amaze customers to shop AVO by DSTLD, a fashion label under Digital Brands Group, directly within the Teespring Marketplace, enhancing product visibility and shopping experience [2][3] Company Overview - Digital Brands Group offers a variety of apparel through multiple brands on both direct-to-consumer and wholesale bases, focusing on a digitally native-first vertical brand model [5] - The company aims to leverage customer data and purchase history to create personalized content and looks for specific customer cohorts [5] Partnership Details - The partnership with Amaze is seen as a significant milestone, enhancing the shopping experience through AI-driven curation and advanced discovery tools [3][4] - The Teespring Marketplace attracts over 1.2 billion unique visitors, providing a substantial audience for Digital Brands Group's products [2] Strategic Vision - The collaboration is positioned to meet customers within a vibrant digital ecosystem, aligning with the growing trend of digital shopping [4] - Both companies share a vision to elevate brand growth through specialized services and infrastructure, including operations, marketing, technology, and customer support [4]

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].