Digital Brands Group(US:DBGI)2022-11-13 16:00Financial Performance - Net revenues increased by $1.2 million to $3.4 million for the three months ended September 30, 2022, compared to $2.2 million in the same period in 2021[147]. - Gross profit rose by $0.5 million to $1.7 million for the three months ended September 30, 2022, with a gross margin of 48.3%, down from 55.9% in the same period in 2021[148][149]. - Operating loss for the three months ended September 30, 2022, was $2.6 million, an improvement from a loss of $7.9 million in the same period in 2021[146]. - Net revenues increased by $7.0 million to $10.6 million for the nine months ended September 30, 2022, compared to $3.6 million in the same period in 2021, primarily due to acquisitions of H&J and Stateside[155]. - Gross profit rose by $3.9 million to $5.3 million for the nine months ended September 30, 2022, compared to $1.4 million in the same period in 2021, with a gross margin of 50.0% compared to 39.1% in 2021[156][157]. - Net loss for the nine months ended September 30, 2022, was $22.3 million, a decrease of $0.4 million compared to a loss of $22.7 million in the same period in 2021[161]. Operating Expenses - Operating expenses decreased by $4.9 million to $4.2 million for the three months ended September 30, 2022, primarily due to a $4.0 million change in fair value of contingent consideration in 2021[151]. - Operating expenses increased by $1.6 million to $24.1 million for the nine months ended September 30, 2022, driven by higher general and administrative and marketing expenses[159]. - The company expects operating expenses to rise in total dollars and as a percentage of revenues as the revenue base increases[151]. Cash Flow and Financing - Cash used in operating activities decreased by $2.6 million to $8.7 million for the nine months ended September 30, 2022, compared to $11.5 million in 2021[167]. - Cash provided by financing activities was $8.4 million for the nine months ended September 30, 2022, down from $16.7 million in the same period in 2021[169]. - As of September 30, 2022, the company had cash of $195,399 and a working capital deficit of $40.7 million, raising doubts about its ability to continue as a going concern[163]. - The company plans to fund its capital needs through public or private equity offerings, debt financings, or other sources over the next twelve months[163]. - The company sold 373,898 shares of common stock at a public offering price of $2.50 per share, generating net proceeds of $8.1 million[164]. - The company has $9.9 million in outstanding principal related to convertible notes maturing through 2023[171]. Strategic Initiatives - The company has strategically expanded into an omnichannel brand offering, blending online and physical channels to enhance customer engagement and retention[128]. - The acquisition of Stateside in August 2021 contributed to increased revenue and gross profit in 2022[147]. - The company aims to increase "closet share," defined as the percentage of a customer's clothing units that belong to its brands, to drive higher revenue[127]. Supply Chain Challenges - Supply chain disruptions have led to increased costs in raw materials, shipping, and labor, with fabric prices rising between 10% to 100% depending on various factors[131][132].