Table of Contents As Filed with Securities and Exchange Commission on September 18, 2023 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 DIGITAL BRANDS GROUP, INC. (Exact name of registrant as specified in its charter) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) 1400 Lavaca Street Austin, TX 78701 (209) 651-0172 (Address and telephone number of registrant's principal ...

Table of Contents WASHINGTON, D.C. 20549 AMENDMENT NO. 3 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Digital Brands Group, Inc. (Exact name of registrant as specified in its charter) As filed with the Securities and Exchange Commission on August 24, 2023 UNITED STATES SECURITIES AND EXCHANGE COMMISSION (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) 1400 Lavaca Street Austin, TX 78701 (209) 651-0172 (Address and ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [ITEM 1. Condensed Consolidated Financial Statements – Unaudited](index=3&type=section&id=ITEM%201.%20Condensed%20Consolidated%20Financial%20Statements%20%E2%80%93%20Unaudited) This section presents the unaudited condensed consolidated financial statements and accompanying notes for the periods ended June 30, 2023 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202023%2C%20and%20December%2031%2C%202022) Balance Sheet Summary | Metric | June 30, 2023 | December 31, 2022 | Change (Absolute) | Change (%) | | :-------------------------------- | :------------ | :---------------- | :---------------- | :--------- | | **Assets** | | | | | | Total current assets | $6,613,944 | $8,829,393 | $(2,215,449) | -25.1% | | Total assets | $27,552,558 | $33,738,055 | $(6,185,497) | -18.3% | | **Liabilities** | | | | | | Total current liabilities | $22,651,462 | $40,893,791 | $(18,242,329) | -44.6% | | Total liabilities | $23,128,598 | $41,191,229 | $(18,062,631) | -43.8% | | **Stockholders' Equity (Deficit)** | | | | | | Total stockholders' equity (deficit) | $4,423,960 | $(7,453,174) | $11,877,134 | 159.4% | - The company's **working capital deficit improved** from $(32,064,398) as of December 31, 2022, to **$(16,037,518)** as of June 30, 2023, primarily due to a significant reduction in current liabilities[8](index=8&type=chunk)[19](index=19&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202023%2C%20and%202022) Three Months Ended June 30 | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | Change (Absolute) | Change (%) | | :----------------------------------- | :--------------------------- | :--------------------------- | :---------------- | :--------- | | Net revenues | $4,493,424 | $2,649,432 | $1,843,992 | 69.6% | | Gross profit | $2,336,075 | $1,112,729 | $1,223,346 | 109.9% | | Gross margin | 52.0% | 42.0% | 10.0% | 23.8% | | Income (loss) from operations | $7,620,959 | $(10,645,714) | $18,266,673 | 171.6% | | Net income (loss) from continuing operations | $6,536,311 | $(9,482,520) | $16,018,831 | 168.9% | | Net income (loss) | $5,044,261 | $(9,533,924) | $14,578,185 | 152.9% | | Basic EPS from continuing operations | $1.06 | $(26.47) | $27.53 | 104.0% | | Diluted EPS from continuing operations | $0.31 | $(26.47) | $26.78 | 101.2% | Six Months Ended June 30 | Metric | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | Change (Absolute) | Change (%) | | :----------------------------------- | :--------------------------- | :--------------------------- | :---------------- | :--------- | | Net revenues | $8,869,803 | $5,278,562 | $3,591,241 | 68.0% | | Cost of net revenues | $4,540,488 | $3,552,396 | $988,092 | 27.8% | | Gross profit | $4,329,315 | $1,726,166 | $2,603,149 | 150.8% | | Gross margin | 48.8% | 32.7% | 16.1% | 49.2% | | Income (loss) from operations | $4,098,651 | $(16,123,555) | $20,222,206 | 125.4% | | Net income (loss) from continuing operations | $470,415 | $(17,200,792) | $17,671,207 | 102.7% | | Net income (loss) | $(1,092,088) | $(17,366,866) | $16,274,778 | 93.7% | | Basic EPS from continuing operations | $0.08 | $(69.95) | $70.03 | 100.1% | | Diluted EPS from continuing operations | $0.02 | $(69.95) | $69.97 | 100.0% | [Condensed Consolidated Statements of Stockholders' Deficit](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Deficit%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202023%2C%20and%202022) Stockholders' Equity (Deficit) Summary | Metric | June 30, 2023 | December 31, 2022 | Change (Absolute) | Change (%) | | :--------------------------- | :------------ | :---------------- | :---------------- | :--------- | | Common Stock Shares | 7,927,549 | 4,468,939 | 3,458,610 | 77.4% | | Common Stock Amount | $793 | $447 | $346 | 77.4% | | Additional Paid-in Capital | $109,262,570 | $96,293,694 | $12,968,876 | 13.5% | | Accumulated Deficit | $(104,839,404) | $(103,747,316) | $(1,092,088) | 1.1% | | Total Stockholders' Equity (Deficit) | $4,423,960 | $(7,453,174) | $11,877,134 | 159.4% | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202023%2C%20and%202022) Cash Flow Summary | Cash Flow Activity | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | Change (Absolute) | Change (%) | | :-------------------------------- | :--------------------------- | :--------------------------- | :---------------- | :--------- | | Net cash used in operating activities | $(2,981,446) | $(6,609,470) | $3,628,024 | 54.9% | | Net cash provided by investing activities | $41,331 | $0 | $41,331 | N/A | | Net cash provided by financing activities | $1,999,969 | $6,883,800 | $(4,883,831) | -70.9% | | Net change in cash and cash equivalents | $(940,146) | $274,330 | $(1,214,476) | -442.7% | | Cash and cash equivalents at end of period | $335,470 | $802,724 | $(467,254) | -58.2% | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [NOTE 1: NATURE OF OPERATIONS](index=8&type=section&id=NOTE%201%3A%20NATURE%20OF%20OPERATIONS) DBG operates a collection of lifestyle apparel brands and recently disposed of its Harper & Jones (H&J) brand - DBG operates as a curated collection of lifestyle apparel brands, including Bailey 44, DSTLD, Harper & Jones, Stateside, and ACE Studios, utilizing direct-to-consumer and wholesale distribution[14](index=14&type=chunk) - The company completed the acquisition of Sundry on December 30, 2022[17](index=17&type=chunk) - On June 21, 2023, DBG disposed of Harper & Jones (H&J) through a settlement agreement, transferring 100% membership interest to D Jones Tailored Collection, Ltd in exchange for a cash payment and common stock[18](index=18&type=chunk) [NOTE 2: GOING CONCERN](index=8&type=section&id=NOTE%202%3A%20GOING%20CONCERN) Substantial doubt exists about the company's ability to continue as a going concern due to recurring losses and a significant working capital deficit - The company has sustained net losses of **$1,092,088** and **$17,366,866** for the six months ended June 30, 2023 and 2022, respectively[19](index=19&type=chunk) - As of June 30, 2023, the company had a **working capital deficit of $16,037,518**[19](index=19&type=chunk) - The company's ability to continue as a going concern is dependent on generating sufficient cash flows from operations or obtaining additional capital financing, with no assurance of success[20](index=20&type=chunk) [NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=10&type=section&id=NOTE%203%3A%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note details key accounting policies, including consolidation principles, fair value measurements, and goodwill impairment - A **one-for-100 reverse stock split** became effective on November 3, 2022, retroactively adjusting all share and per share amounts[23](index=23&type=chunk) - The company ceased consolidating H&J's accounts as of June 21, 2023, following its disposition[26](index=26&type=chunk) Contingent Consideration | Item | June 30, 2023 | December 31, 2022 | | :------------------------ | :------------ | :---------------- | | Contingent consideration | $0 | $12,098,475 | | - Bailey | $0 | $10,698,475 | | - Harper & Jones | $0 | $1,400,000 | - The company recorded a **gain of $10,698,475** from the Norwest Waiver and **$1,400,000** from the H&J Settlement due to the fair value of contingent consideration becoming $0[39](index=39&type=chunk)[40](index=40&type=chunk) Inventory | Inventory Category | June 30, 2023 | December 31, 2022 | | :----------------- | :------------ | :---------------- | | Raw materials | $1,508,416 | $1,611,134 | | Work in process | $653,412 | $888,643 | | Finished goods | $2,609,443 | $2,622,787 | | Total Inventory | $4,771,271 | $5,122,564 | - In 2022, the company recorded an **impairment loss of $3,667,000** for brand name assets and **$11,872,332 for goodwill**, primarily due to reduced revenues and liabilities exceeding assets for Bailey44 and H&J[46](index=46&type=chunk) [NOTE 4: DISCONTINUED OPERATIONS](index=19&type=section&id=NOTE%204%3A%20DISCONTINUED%20OPERATIONS) The disposition of Harper & Jones (H&J) on June 21, 2023, resulted in a loss on disposition of $1,523,940 - The H&J Settlement on June 21, 2023, involved a **$229,000 cash payment** and the issuance of **1,952,580 common shares** (fair value $1,357,043) to D Jones Tailored Collection, Ltd for 100% of H&J's membership interest[53](index=53&type=chunk)[54](index=54&type=chunk) - The disposition of H&J resulted in a **loss of $1,523,940**, recorded in income (loss) from discontinued operations[54](index=54&type=chunk)[55](index=55&type=chunk) H&J Discontinued Operations Summary | Metric (H&J Discontinued Operations) | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net revenues | $686,627 | $1,089,569 | $1,405,482 | $1,892,849 | | Gross profit | $394,520 | $760,654 | $839,861 | $1,287,436 | | Net income (loss) | $(1,492,050) | $(51,404) | $(1,562,503) | $(166,074) | [NOTE 5: DUE FROM FACTOR](index=20&type=section&id=NOTE%205%3A%20DUE%20FROM%20FACTOR) The net amount due from factor decreased to $438,142 as of June 30, 2023, from $839,400 at year-end 2022 Due from Factor, Net | Item | June 30, 2023 | December 31, 2022 | | :------------------------ | :------------ | :---------------- | | Outstanding receivables: Without recourse | $774,264 | $1,680,042 | | Outstanding receivables: With recourse | $50,979 | $65,411 | | Matured funds and deposits | $92,399 | $81,055 | | Advances | $(411,753) | $(632,826) | | Credits due customers | $(67,747) | $(354,282) | | Total Due from factor, net | $438,142 | $839,400 | [NOTE 6: GOODWILL AND INTANGIBLE ASSETS](index=21&type=section&id=NOTE%206%3A%20GOODWILL%20AND%20INTANGIBLE%20ASSETS) Goodwill remained stable at $9.0 million, while net intangible assets decreased to $11.4 million due to amortization and the H&J disposition Goodwill by Business Combination | Goodwill by Business Combination | June 30, 2023 | December 31, 2022 | | :------------------------------- | :------------ | :---------------- | | Bailey | $3,158,123 | $3,158,123 | | Stateside | $2,104,056 | $2,104,056 | | Sundry | $3,711,322 | $3,711,322 | | Total Goodwill | $8,973,501 | $8,973,501 | - The company derecognized **$1,130,311 in goodwill** and **$1,246,915 in intangible assets** due to the H&J disposition[59](index=59&type=chunk)[60](index=60&type=chunk) Intangible Assets Summary (June 30, 2023) | Intangible Assets (June 30, 2023) | Gross Amount | Accumulated Amortization | Carrying Value | | :-------------------------------- | :----------- | :----------------------- | :------------- | | Customer relationships (Amortized) | $9,734,560 | $(4,155,129) | $5,579,431 | | Brand name (Indefinite-lived) | $5,841,880 | — | $5,841,880 | | Total Intangible Assets, net | $15,576,440 | $(4,155,129) | $11,421,311 | - Amortization expense for intangible assets was **$804,924 for Q2 2023** (vs $537,812 in 2022) and **$1,759,277 for H1 2023** (vs $1,075,625 in 2022)[61](index=61&type=chunk) [NOTE 7: LIABILITIES AND DEBT](index=21&type=section&id=NOTE%207%3A%20LIABILITIES%20AND%20DEBT) This note details changes in liabilities, including debt repayments, conversions, and new promissory note issuances Accrued Expenses and Other Liabilities | Accrued Expenses and Other Liabilities | June 30, 2023 | December 31, 2022 | | :------------------------------------- | :------------ | :---------------- | | Accrued expenses | $503,927 | $668,714 | | Reserve for returns | — | $307,725 | | Payroll related liabilities | $4,009,812 | $2,618,870 | | Sales tax liability | $277,800 | $262,765 | | Other liabilities | $247,398 | $78,845 | | Total | $5,038,937 | $3,936,920 | - Payroll liabilities as of June 30, 2023, included **$1,288,048 in payroll taxes** due to federal and state authorities, subject to penalties and interest[62](index=62&type=chunk) - The **$4,000,000 principal of the December Notes was fully repaid** in February 2023, resulting in a $689,100 loss on extinguishment of debt[68](index=68&type=chunk)[69](index=69&type=chunk) - The **$5,500,000 Sundry Promissory Note** and accrued interest of $259,177 were cancelled on June 21, 2023, in exchange for 5,761 shares of Series C Convertible Preferred Stock[75](index=75&type=chunk) - In March 2023, the company issued **$2,458,750 in new promissory notes** (March 2023 Notes) with an original issue discount of $608,750, receiving net proceeds of $1,850,000[76](index=76&type=chunk) Promissory Notes Payable, Net | Promissory Notes Payable, Net | June 30, 2023 | December 31, 2022 | | :---------------------------- | :------------ | :---------------- | | Bailey Note | $3,500,000 | $3,500,000 | | Sundry Note | — | $5,500,000 | | March 2023 Notes - principal | $2,458,750 | — | | March 2023 Notes - unamortized debt discount | $(344,911) | — | | Total Promissory note payable, net | $5,613,839 | $9,000,000 | [NOTE 8: STOCKHOLDERS' DEFICIT](index=25&type=section&id=NOTE%208%3A%20STOCKHOLDERS%27%20DEFICIT) This section details changes in stockholders' equity, including common and preferred stock issuances and warrant activity - In January 2023, the company completed a private placement, issuing 1,277,140 shares of common stock and warrants, generating **gross proceeds of $5.0 million** and **net proceeds of $4.3 million**[78](index=78&type=chunk)[80](index=80&type=chunk) - The company issued 1 share of Series B Preferred Stock to its CEO for $25,000, granting **250,000,000 votes per share** exclusively for reverse stock split proposals[84](index=84&type=chunk)[85](index=85&type=chunk) - On June 21, 2023, **5,761 shares of Series C Convertible Preferred Stock** were issued to Sundry Investors at $1,000 per share, in consideration for the cancellation of $5,500,000 in promissory notes and accrued interest[88](index=88&type=chunk)[90](index=90&type=chunk) - Each Series C Preferred Stock share is convertible into common stock at a **conversion price of $0.717**[96](index=96&type=chunk) [NOTE 9: RELATED PARTY TRANSACTIONS](index=29&type=section&id=NOTE%209%3A%20RELATED%20PARTY%20TRANSACTIONS) Net repayments to related parties totaled $57,427 for the first half of 2023, reducing the outstanding balance to $472,790 - Net repayments for amounts due to related parties were **$57,427 for the six months ended June 30, 2023**, compared to $172,036 in the prior year[98](index=98&type=chunk) - As of June 30, 2023, amounts due to related parties were **$472,790**, down from $556,225 at December 31, 2022[99](index=99&type=chunk) [NOTE 10: SHARE-BASED PAYMENTS](index=31&type=section&id=NOTE%2010%3A%20SHARE-BASED%20PAYMENTS) Warrant and stock option activity resulted in a stock-based compensation expense of $207,094 for the first half of 2023 Warrant Activity | Warrant Activity | Common Stock Warrants | Weighted Average Exercise Price | | :----------------------- | :-------------------- | :------------------------------ | | Outstanding - Dec 31, 2022 | 4,418,320 | $8.37 | | Granted | 2,327,446 | $3.98 | | Exercised | (802,140) | $3.92 | | Outstanding - June 30, 2023 | 5,943,626 | $7.25 | - Stock-based compensation expense was **$101,500 for Q2 2023** (vs $119,759 in 2022) and **$207,094 for H1 2023** (vs $258,852 in 2022)[105](index=105&type=chunk) - Total unrecognized compensation cost related to non-vested stock option awards was **$370,907** as of June 30, 2023, to be recognized over a weighted average period of 0.9 years[105](index=105&type=chunk) [NOTE 11: LEASE OBLIGATIONS](index=31&type=section&id=NOTE%2011%3A%20LEASE%20OBLIGATIONS) The company extended two lease agreements, recognizing new right-of-use assets and liabilities, while total rent expense decreased significantly - In January 2023, the company extended its corporate office and distribution center lease, recognizing a **right-of-use asset and liability of $467,738**[106](index=106&type=chunk) - In May 2023, a showroom lease extension resulted in a **right-of-use asset and liability of $125,397**[107](index=107&type=chunk) - Total rent expense for the six months ended June 30, 2023, was **$210,265**, a significant decrease from $469,482 in 2022[110](index=110&type=chunk) [NOTE 12: CONTINGENCIES](index=33&type=section&id=NOTE%2012%3A%20CONTINGENCIES) The company is involved in several legal proceedings, primarily related to vendor trade payables and a disputed retail lease - The company faces vendor lawsuits totaling approximately **$43,501** (March 2023) and **$182,400** (February 2023) related to trade payables[111](index=111&type=chunk)[112](index=112&type=chunk) - A lawsuit against Bailey 44 regarding a retail store lease, initially $1.5 million, has been updated to **$450,968**, which the company is disputing[116](index=116&type=chunk) - All claims where management believes liability is probable are included in accounts payable and accrued expenses[117](index=117&type=chunk) [NOTE 13: INCOME TAXES](index=33&type=section&id=NOTE%2013%3A%20INCOME%20TAXES) A full valuation allowance is required against net deferred tax assets due to a history of cumulative losses - The company uses a discrete effective tax rate method for interim periods due to potential significant changes in the estimated annual effective tax rate[119](index=119&type=chunk) - A **full valuation allowance** is required against net deferred tax assets due to cumulative losses and no history of generating taxable income[120](index=120&type=chunk) [NOTE 14: SUBSEQUENT EVENTS](index=35&type=section&id=NOTE%2014%3A%20SUBSEQUENT%20EVENTS) The maturity date of the Bailey Note was extended subsequent to the reporting period - On July 5, 2023, the maturity date of the Bailey Note was **extended to June 30, 2024**[121](index=121&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial results, highlighting revenue growth from the Sundry acquisition, liquidity challenges, and operational trends [Business Overview](index=36&type=section&id=Business%20Overview) The company operates an omnichannel apparel business and is addressing Nasdaq listing requirements through a proposed reverse stock split - The company is seeking stockholder approval for a **reverse stock split (1-for-2.5 to 1-for-50)** to comply with Nasdaq's minimum bid price requirement, with potential delisting if not approved[127](index=127&type=chunk)[211](index=211&type=chunk) - On June 21, 2023, the company disposed of Harper & Jones (H&J) by transferring 100% membership interest to D Jones Tailored Collection, Ltd in exchange for a cash payment of $229,000 and 1,952,580 shares of common stock[128](index=128&type=chunk) - Digital Brands Group operates a curated collection of lifestyle brands (Bailey 44, DSTLD, Stateside, Sundry, ACE Studios) through direct-to-consumer and wholesale distribution, aiming for 'closet share' and operational efficiencies[130](index=130&type=chunk)[134](index=134&type=chunk) - The company's strategy involves leveraging a physical footprint for customer acquisition and brand awareness, while using digital marketing for retention and targeted new customer acquisition, supported by data analysis to manage inventory and promotions[132](index=132&type=chunk)[133](index=133&type=chunk) [Material Trends, Events and Uncertainties](index=39&type=section&id=Material%20Trends%2C%20Events%20and%20Uncertainties) The company is subject to global supply chain disruptions and seasonal fluctuations, with stronger performance typically in the second half of the year - Global supply chain disruptions have led to increased costs for **raw materials (10-100%)**, **shipping (25-300%)**, and **labor (5-25%)**, along with extended transit times (two weeks to two months)[137](index=137&type=chunk)[138](index=138&type=chunk) - The company's operating results are subject to seasonality, with stronger performance historically in the second half of the calendar year[137](index=137&type=chunk) [Components of Our Results of Operations](index=39&type=section&id=Components%20of%20Our%20Results%20of%20Operations) This section defines key financial components, including revenue sources, cost of revenue, and various operating expenses - Net revenues are generated through direct-to-consumer websites and wholesale channels (specialty stores, department stores) for brands like DSTLD, Bailey, Stateside, and Sundry[138](index=138&type=chunk)[139](index=139&type=chunk) - Cost of net revenue includes direct merchandise costs, inventory shrinkage, obsolescence adjustments, duties, and inbound freight[140](index=140&type=chunk) - Operating expenses encompass general and administrative (payroll, professional fees, depreciation), sales and marketing (digital advertising, commissions), distribution (logistics, packaging, shipping), and changes in fair value of contingent consideration[141](index=141&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk) [Results of Operations](index=41&type=section&id=Results%20of%20Operations) The company's financial performance improved significantly, driven by the Sundry acquisition and a favorable change in contingent consideration Three Months Ended June 30, 2023 vs. 2022 | Metric | 2023 | 2022 | Change (Absolute) | Change (%) | | :----------------------------------- | :----------- | :----------- | :---------------- | :--------- | | Net revenues | $4,493,424 | $2,649,432 | $1,843,992 | 69.6% | | Gross profit | $2,336,075 | $1,112,729 | $1,223,346 | 109.9% | | Gross margin | 52.0% | 42.0% | 10.0% | 23.8% | | Operating expenses | $(5,284,884) | $11,758,443 | $(17,043,327) | -144.9% | | Net income (loss) from continuing operations | $6,536,311 | $(9,482,520) | $16,018,831 | 168.9% | Six Months Ended June 30, 2023 vs. 2022 | Metric | 2023 | 2022 | Change (Absolute) | Change (%) | | :----------------------------------- | :----------- | :----------- | :---------------- | :--------- | | Net revenues | $8,869,803 | $5,278,562 | $3,591,241 | 68.0% | | Gross profit | $4,329,315 | $1,726,166 | $2,603,149 | 150.8% | | Gross margin | 48.8% | 32.7% | 16.1% | 49.2% | | Operating expenses | $230,664 | $17,849,721 | $(17,619,057) | -98.7% | | Net income (loss) from continuing operations | $470,415 | $(17,200,792) | $17,671,207 | 102.7% | - The significant decrease in operating expenses for both periods was primarily due to a **$16.6 million (3 months)** and **$17.8 million (6 months)** favorable change in the fair value of contingent consideration[152](index=152&type=chunk)[159](index=159&type=chunk) - Other income (expenses) shifted from a gain of $1.2 million in Q2 2022 to a loss of $1.1 million in Q2 2023, and from a loss of $1.1 million in H1 2022 to a loss of $3.6 million in H1 2023, mainly due to less interest expense in 2023 and a gain from derivative liability in 2022[153](index=153&type=chunk)[160](index=160&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) The company faces substantial doubt about its going concern ability, with a working capital deficit of $16.0 million as of June 30, 2023 - As of June 30, 2023, the company had **cash of $0.3 million** and a **working capital deficit of $16.0 million**, raising substantial doubt about its going concern ability[163](index=163&type=chunk) - Net cash used in operating activities **decreased by $3.6 million to $3.0 million** for the six months ended June 30, 2023, compared to $6.6 million in the prior year[165](index=165&type=chunk) - Net cash provided by financing activities **decreased to $2.0 million** for the six months ended June 30, 2023, from $6.9 million in the prior year, despite $4.3 million in net proceeds from a private placement[168](index=168&type=chunk)[169](index=169&type=chunk) - The company has **$7.6 million in outstanding principal on debt** as of June 30, 2023, with most loans maturing through 2024[170](index=170&type=chunk) - Future funding needs are expected to be met through public or private equity offerings, debt financings, or other sources, with no assurance of availability or favorable terms[163](index=163&type=chunk) [Critical Accounting Policies and Estimates](index=46&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Financial statements require significant management estimates, particularly for inventory, asset impairment, and contingent liabilities - Significant estimates and assumptions are made for **inventory, impairment of long-lived assets, contingent consideration, and derivative liabilities**[27](index=27&type=chunk)[171](index=171&type=chunk) [Emerging Growth Company Status](index=46&type=section&id=Emerging%20Growth%20Company%20Status) The company has elected to use the extended transition period for new accounting standards available to emerging growth companies - The company is an emerging growth company and has elected to use the **extended transition period** for new or revised financial accounting standards, which may affect comparability[172](index=172&type=chunk)[173](index=173&type=chunk) [Off-Balance Sheet Arrangements](index=46&type=section&id=Off-Balance%20Sheet%20Arrangements) The company did not have any off-balance sheet arrangements during the periods presented - The company has **no off-balance sheet arrangements**[174](index=174&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures about Market Risk](index=46&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, these disclosures are not required - As a smaller reporting company, the registrant is not required to provide quantitative and qualitative disclosures about market risk[175](index=175&type=chunk) [ITEM 4. Controls and Procedures](index=47&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls were not effective as of June 30, 2023, due to material weaknesses in internal control - The company's disclosure controls and procedures were **not effective** as of June 30, 2023, due to **material weaknesses** in internal control over financial reporting[177](index=177&type=chunk) - Remediation efforts include hiring additional financial personnel/consultants with public company and technical accounting expertise, assessing accounting systems, and ensuring proper cutoff procedures[178](index=178&type=chunk)[179](index=179&type=chunk) - Despite material weaknesses, management believes supplementary procedures ensured the fair presentation of financial statements[179](index=179&type=chunk) - No change in internal control over financial reporting occurred during the six months ended June 30, 2023, that materially affected or is reasonably likely to materially affect internal control over financial reporting[182](index=182&type=chunk) [PART II. OTHER INFORMATION](index=33&type=section&id=PART%20II.%20OTHER%20INFORMATION) [ITEM 1. Legal Proceedings](index=33&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is involved in several legal proceedings, primarily related to vendor trade payables and a disputed retail lease - The company is involved in vendor lawsuits for trade payables of approximately **$43,501** (March 2023) and **$182,400** (February 2023)[185](index=185&type=chunk)[186](index=186&type=chunk) - A lawsuit against Bailey 44 related to a retail store lease, initially $1.5 million, has been updated to **$450,968**, which the company is disputing[190](index=190&type=chunk) - An investor lawsuit for **$100,000** related to reimbursement of investment is ongoing and included in short-term convertible note payable[189](index=189&type=chunk) - Management does not anticipate that the resolution of these legal proceedings would have a material adverse impact on the company's financial position, results of operations, or cash flows[192](index=192&type=chunk) [ITEM 1A. Risk Factors](index=34&type=section&id=ITEM%201A.%20Risk%20Factors) Key risks include potential Nasdaq delisting, substantial liabilities, and the possibility of future asset impairments - The company is at **risk of delisting from Nasdaq** due to non-compliance with the minimum bid price ($1.00) and stockholders' equity ($2.5 million) requirements[195](index=195&type=chunk)[196](index=196&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk) - A proposed **reverse stock split** (1-for-2.5 to 1-for-50) is intended to regain bid price compliance, but failure to approve or maintain compliance could lead to delisting and adverse effects on stock liquidity and financing[127](index=127&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk)[216](index=216&type=chunk) - As of June 21, 2023, the company had approximately **$22.0 million in total liabilities**, including $7.9 million in outstanding debt obligations, which is considered significant for its size and revenue base[219](index=219&type=chunk) - Substantial liabilities could make it difficult to satisfy debt obligations, reduce cash flow for operations, increase vulnerability to adverse economic conditions, and limit future financing options[220](index=220&type=chunk)[224](index=224&type=chunk)[225](index=225&type=chunk) - The company has recorded significant **impairment expenses for goodwill and intangible assets** in prior periods (**$15.5 million in 2022**, $3.4 million in 2021), and future impairments could adversely affect financial condition[228](index=228&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company engaged in several unregistered sales of equity securities, including a private placement generating $5.0 million in gross proceeds - In January 2023, a private placement resulted in the issuance of 1,277,140 common shares (including pre-funded warrant exercises) and accompanying warrants, generating **$5.0 million in gross proceeds**[229](index=229&type=chunk)[232](index=232&type=chunk) - The company granted 152,380 warrants for merchant advances and issued 110,000 common shares to a former convertible noteholder due to default provisions[234](index=234&type=chunk) - 118,890 common shares were issued to Sundry executives based on employment agreements, and 1,952,580 common shares were issued for the H&J Settlement Agreement[235](index=235&type=chunk)[236](index=236&type=chunk) - 1 share of Series B Preferred Stock was issued to the CEO for $25,000, and 5,761 shares of Series C Convertible Preferred Stock were issued to Sundry Investors in exchange for debt cancellation[236](index=236&type=chunk)[237](index=237&type=chunk) [ITEM 3. Defaults upon Senior Securities](index=39&type=section&id=ITEM%203.%20Defaults%20upon%20Senior%20Securities) There were no defaults upon senior securities reported - No defaults upon senior securities were reported[239](index=239&type=chunk) [ITEM 4. Mine Safety Disclosures](index=39&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - This item is not applicable[240](index=240&type=chunk) [ITEM 5. Other Information](index=39&type=section&id=ITEM%205.%20Other%20Information) No other information is reported under this item - No other information is reported under this item[241](index=241&type=chunk) [ITEM 6. Exhibits](index=40&type=section&id=ITEM%206.%20Exhibits) This section lists all exhibits filed, including corporate governance documents, debt instruments, and securities purchase agreements - Exhibits include corporate governance documents (e.g., Certificates of Incorporation, Bylaws, Certificates of Designation for Series B and C Preferred Stock)[243](index=243&type=chunk) - Debt instruments (e.g., Form of Promissory Note, Fourth Amendment to Promissory Note) and warrant agreements are filed[243](index=243&type=chunk) - Securities Purchase Agreements related to recent equity issuances and settlement agreements (e.g., H&J Settlement Agreement, Sundry SPA) are included[243](index=243&type=chunk) - Certifications from the Principal Executive Officer and Principal Financial Officer are filed[244](index=244&type=chunk) [SIGNATURES](index=42&type=section&id=SIGNATURES) - The report was signed by John Hilburn Davis, IV (Chief Executive Officer) and Reid Yeoman (Chief Financial Officer) on August 21, 2023[249](index=249&type=chunk)

Financial Data and Key Metrics Changes - Net revenue increased by 69.6% in Q2 2023 to $4.5 million compared to $2.6 million a year ago [26] - Gross profit margins improved to 52% from 42% a year ago, with gross margins increasing by 40.4% to $2.2 million [26] - Net income attributable to common stockholders was $5 million or $0.38 per diluted share, compared to a loss of $9.5 million a year ago [27] Business Line Data and Key Metrics Changes - Sales and marketing expenses decreased by 20.1% to $1.1 million compared to $1.4 million a year ago, with a sales and marketing expense ratio of 50.9% compared to 89.3% a year ago [6] - General and administrative (G&A) expenses decreased by 4% to $4.1 million compared to $4.2 million a year ago, with G&A as a percent of revenue declining to 90.7% from 160.1% a year ago [16] Market Data and Key Metrics Changes - The company is experiencing strong feedback from wholesale bookings for Q3 and Q4, indicating higher revenue expectations [4][24] - The company is back in the wholesale market with Bailey 44, receiving its first license income check soon [15] Company Strategy and Development Direction - The acquisition of Sundry is viewed as a tipping point for scaling revenue faster, reducing overhead, and generating positive EBITDA and cash flow [17] - New revenue channels, including a proprietary affiliate program and multi-brand retail stores, are set to launch in the fall [4][28] Management's Comments on Operating Environment and Future Outlook - Management expressed excitement about the near and long-term future, indicating that the company has turned a corner and is experiencing significant momentum [18] - The company anticipates additional cost savings and synergies in Q3 and Q4, driven by layoffs and operational efficiencies [14] Other Important Information - The company expects to generate internal free cash flow on a weekly basis in October, which is seen as transformative [5] - The company has visibility into wholesale bookings, which are expected to drive higher revenues in the upcoming quarters [24] Q&A Session Summary Question: What are the expectations for revenue growth in the upcoming quarters? - Management indicated that based on current wholesale bookings and e-commerce trends, revenues for Q3 and Q4 will be meaningfully higher than Q2 [24] Question: How is the affiliate program performing? - The affiliate program has already created a waiting list due to its success, with past experiences showing significant revenue growth potential [25] Question: What impact has the Sundry acquisition had on the business? - The acquisition is seen as a game changer, providing the necessary scale to accelerate revenue growth and improve operational efficiencies [30]

TABLE OF CONTENTS As filed with the Securities and Exchange Commission on August 4, 2023 Registration Statement No. 333-272965 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 AMENDMENT NO. 2 TO FORM S-1 Digital Brands Group, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) Delaware 5699 46-1942864 (I.R.S. Employer Identification Number) 1400 Lavaca Street ...

TABLE OF CONTENTS As filed with the Securities and Exchange Commission on August 2, 2023 Registration Statement No. 333-272965 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 AMENDMENT NO. 1 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Digital Brands Group, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) Delaware 5699 46-1942864 (I ...

Table of Contents As filed with the Securities and Exchange Commission on June 27, 2023 Registration Statement No. 333- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Digital Brands Group, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) 1400 Lavaca Street Austin, TX 78701 Delaware 5699 46- ...

Digital Brands Group, Inc. (NASDAQ:DBGI) Q1 2023 Earnings Conference Call May 22, 2023 10:00 AM ET Company Participants John McNamara - IR Hil Davis - CEO Operator Hello, and welcome to the Digital Brands Group, Inc. Q1 2023 Earnings Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to John McNamara, Investor Relations. Please go ahead, John. John McNamara Thank you. Good morning, everyone, and welcome to the ...

Financial Performance - Net revenues increased by $1.7 million to $5.1 million for the three months ended March 31, 2023, compared to $3.4 million in the same period in 2022, primarily due to the acquisition of Sundry in December 2022 [117]. - Gross profit rose by $1.3 million to $2.4 million for the three months ended March 31, 2023, up from $1.1 million in the same period in 2022, attributed to increased revenue and gross profit from Sundry [118]. - Operating loss improved to $(3.6) million for the three months ended March 31, 2023, compared to $(5.6) million in the same period in 2022 [116]. - Gross margin increased to 47.9% for the three months ended March 31, 2023, compared to 33.2% for the same period in 2022, attributed to cost efficiencies post-Sundry acquisition and reduced discounting [119]. - Net loss decreased by $1.7 million to $6.1 million for the three months ended March 31, 2023, compared to a loss of $7.8 million in 2022, driven by higher gross profit and lower operating expenses [122]. Expenses - General and administrative expenses were $4.6 million for the three months ended March 31, 2023, compared to $4.3 million in the same period in 2022 [116]. - Sales and marketing expenses increased to $1.1 million for the three months ended March 31, 2023, from $1.0 million in the same period in 2022 [116]. - Operating expenses decreased by $0.7 million to $6.0 million for the three months ended March 31, 2023, from $6.7 million in 2022, primarily due to a $1.2 million change in fair value of contingent consideration in 2022 [120]. Cash Flow and Financing - Cash used in operating activities increased by $1.1 million to $1.7 million for the three months ended March 31, 2023, compared to $0.6 million in 2022, mainly due to changes in operating assets and liabilities [126]. - Cash provided by financing activities was $2.3 million for the three months ended March 31, 2023, including $4.3 million in net proceeds from a private transaction [128]. - Cash provided by investing activities was $87,379 in 2023 due to the return of deposits, compared to cash used of $5,576 in 2022 for property and equipment purchases [127]. - The company plans to fund its capital needs through public or private equity offerings, debt financings, or other sources over the next twelve months [124]. Debt and Working Capital - As of March 31, 2023, the company had cash of $2.0 million and a working capital deficit of $31.2 million, raising doubts about its ability to continue as a going concern [124]. - Outstanding principal on debt as of March 31, 2023, was $13.6 million, with maturity dates through 2024 [131]. Supply Chain and Costs - The company experienced increased costs in raw materials, with fabric prices rising between 10% to 100% depending on various factors [104]. - Shipping costs increased by 25% to 300% depending on the time of year and shipping origin [104]. - Supply chain disruptions have led to longer lead times for raw fabrics and increased production times [103]. Strategic Initiatives - The company aims to enhance its omnichannel strategy to drive customer acquisition and retention, leveraging both digital and physical retail channels [98]. - The company defines "closet share" as the percentage of a customer's clothing units that are from its brands, with a higher closet share indicating increased revenue potential [100]. Non-Cash Adjustments - Non-cash adjustments for the three months ended March 31, 2023, were $3.8 million, compared to $3.7 million in 2022 [125].

Digital Brands Group, Inc. (NASDAQ:DBGI) Q4 2022 Earnings Conference Call April 17, 2023 4:30 PM ET Company Participants John McNamara - Investor Relations Hil Davis - CEO Operator Greetings, and welcome to the Digital Brands Group, Inc. Q4 and Full Year 2022 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce to your host, John McNamara of Investor Relations. Thank you, Mr. McNamara. You may begin. John McNamara Thank you, Kimora. Good ...