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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Digital Brands Group Inc | NASDAQ:DBGI | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.15 | -8.33% | 1.65 | 1.00 | 7.20 | 1.8074 | 1.57 | 1.75 | 39,360 | 05:00:06 |
|
Delaware
|
| |
5699
|
| |
46-1942864
|
|
|
(State or other jurisdiction of
incorporation or organization) |
| |
(Primary Standard Industrial
Classification Code Number) |
| |
(I.R.S. Employer
Identification Number) |
|
|
Thomas J. Poletti, Esq.
Veronica Lah, Esq. Manatt, Phelps & Phillips, LLP 695 Town Center Drive, 14th Floor Costa Mesa, CA 92626 Tel: (714) 312-7500 |
| |
Louis A. Bevilacqua, Esq.
Bevilacqua PLLC 1050 Connecticut Avenue, NW, Suite 500 Washington, DC 20036 Tel: (202) 869-0888 |
|
|
☐ Large accelerated filer
|
| |
☐ Accelerated filer
|
| |
☐ Non-accelerated filer
|
| |
☒ Smaller reporting company
|
|
| | | | | | | | | |
☒ Emerging growth company
|
|
| | |
Per Share
|
| |
Per Pre-Funded
Warrant |
| |
Total
|
|
Public offering price
|
| |
|
| |
|
| |
|
|
Placement Agent fees(1)
|
| | | | | | | | | |
Proceeds to us, before expenses(2)
|
| | | | | | | | | |
| | | | | 1 | | | |
| | | | | 6 | | | |
| | | | | 8 | | | |
| | | | | 32 | | | |
| | | | | 33 | | | |
| | | | | 34 | | | |
| | | | | 35 | | | |
| Capitalization | | | | | 36 | | |
| | | | | 38 | | | |
| | | | | 64 | | | |
| | | | | 78 | | | |
| | | | | 86 | | | |
| | | | | 92 | | | |
| | | | | 94 | | | |
| | | | | 108 | | | |
| | | | | 114 | | | |
| | | | | 115 | | | |
| | | | | F-1 | | |
| | |
Actual
|
| |
Pro Forma
|
| |
Pro Forma
As Adjusted |
| |||||||||
Cash and cash equivalents
|
| | | $ | 1,969,250 | | | | | $ | 1,706,845 | | | | | | | | |
Total assets
|
| | | $ | 33,129,832 | | | | | $ | 30,111,865 | | | | | | | | |
Total current liabilities(1)
|
| | | $ | 40,140,987 | | | | | $ | 21,328,512 | | | | | | | | |
Total liabilities(1)
|
| | | $ | 40,992,853 | | | | | $ | 21,960,484 | | | | | | | | |
Stockholders' equity: | | | | | | | | | | | | | | | | | | | |
Common stock, $0.0001 par value, 1,000,000,000 shares
authorized actual, pro forma and pro forma as adjusted; 5,974,969 shares issued and outstanding actual, 7,927,549 shares issued and outstanding pro forma, and shares issued and outstanding pro forma as adjusted |
| | | | 598 | | | | | | 793 | | | | | | | | |
Series A Convertible Preferred Stock, par value $0.0001; 6,800 shares authorized actual, pro forma and pro forma as adjusted; 6,300 shares issued and outstanding actual, pro forma and pro forma as adjusted,
|
| | | | 1 | | | | | | 1 | | | | | | | | |
Series B Preferred Stock, par value $0.0001; no shares authorized actual; 1 share authorized pro forma and pro forma as adjusted; 0 shares issued and outstanding actual; 1 share issued and outstanding pro forma and pro forma, as adjusted
|
| | | | — | | | | | | — | | | | | | | | |
Series C Convertible Preferred Stock, par value $0.0001; no
shares authorized actual, 5,761 shares authorized pro forma and pro forma as adjusted; 0 shares issued and outstanding actual; 5,761 shares issued and outstanding pro forma and pro forma as adjusted |
| | | | — | | | | | | 6 | | | | | | | | |
Additional paid-in capital
|
| | | | 102,020,045 | | | | | | 109,029,844 | | | | | | | | |
Accumulated deficit
|
| | | | (109,883,665) | | | | | | (100,879,263) | | | | | | | | |
Total stockholders' equity (deficit)
|
| | | | (7,863,021) | | | | | | 8,151,381 | | | | | | | | |
Total capitalization
|
| | | $ | 33,129,832 | | | | | $ | 30,111,865 | | | | | | | | |
| | |
Three Months Ended
March 31, |
| |||||||||
| | |
2023
|
| |
2022
|
| ||||||
Net revenues
|
| | | $ | 5,095,234 | | | | | $ | 3,432,410 | | |
Cost of net revenues
|
| | | | 2,656,652 | | | | | | 2,292,191 | | |
Gross profit
|
| | | | 2,438,582 | | | | | | 1,140,219 | | |
General and administrative
|
| | | | 4,636,844 | | | | | | 4,277,955 | | |
Sales and marketing
|
| | | | 1,115,643 | | | | | | 1,040,572 | | |
Other operating expenses
|
| | | | 270,185 | | | | | | 1,403,169 | | |
Operating loss
|
| | | | (3,584,090) | | | | | | (5,581,477) | | |
Other expenses
|
| | | | (2,552,259) | | | | | | (2,251,465) | | |
Loss before provision for income taxes
|
| | | | (6,136,349) | | | | | | (7,832,942) | | |
Provision for income taxes
|
| | | | — | | | | | | — | | |
Net loss
|
| | | $ | (6,136,349) | | | | | $ | (7,832,942) | | |
| | |
Three Months Ended
March 31, |
| |||||||||
| | |
2023
|
| |
2022
|
| ||||||
Net cash provided by operating activities: | | | | | | | | | | | | | |
Net loss
|
| | | $ | (6,136,349) | | | | | $ | (7,832,942) | | |
Non-cash adjustments
|
| | | $ | 3,774,961 | | | | | $ | 3,652,067 | | |
Change in operating assets and liabilities
|
| | | $ | 668,867 | | | | | $ | 3,545,719 | | |
Net cash used in operating activities
|
| | | $ | (1,692,520) | | | | | $ | (635,156) | | |
Net cash provided by (used in) investing activities
|
| | | $ | 87,379 | | | | | $ | (5,576) | | |
Net cash provided by financing activities
|
| | | $ | 2,291,109 | | | | | $ | 678,351 | | |
Net change in cash
|
| | | $ | 685,968 | | | | | $ | 37,619 | | |
| | |
Year Ended
December 31, |
| |||||||||
| | |
2022
|
| |
2021
|
| ||||||
Net revenues
|
| | | $ | 13,971,178 | | | | | $ | 7,584,859 | | |
Cost of net revenues
|
| | | | 8,030,908 | | | | | | 5,716,587 | | |
Gross profit
|
| | | | 5,940,270 | | | | | | 1,868,272 | | |
General and administrative
|
| | | | 16,371,536 | | | | | | 16,752,516 | | |
Sales and marketing
|
| | | | 4,950,635 | | | | | | 3,810,583 | | |
Other operating expenses
|
| | | | 16,715,204 | | | | | | 12,653,831 | | |
Operating loss
|
| | | | (32,097,105) | | | | | | (31,348,658) | | |
Other expenses
|
| | | | (5,946,257) | | | | | | (2,109,419) | | |
Loss before provision for income taxes
|
| | | | (38,043,362) | | | | | | (33,458,077) | | |
Provision for income taxes
|
| | | | — | | | | | | 1,100,120 | | |
Net loss
|
| | | $ | (38,043,362) | | | | | $ | (32,357,957) | | |
| | |
Year Ended
December 31, |
| |||||||||
| | |
2022
|
| |
2021
|
| ||||||
Net cash provided by operating activities: | | | | | | | | | | | | | |
Net loss
|
| | | $ | (38,043,362) | | | | | $ | (32,357,957) | | |
Non-cash adjustments
|
| | | $ | 23,122,024 | | | | | $ | 17,758,597 | | |
Change in operating assets and liabilities
|
| | | $ | 4,350,447 | | | | | $ | 381,001 | | |
Net cash used in operating activities
|
| | | $ | (10,570,889) | | | | | $ | (14,218,359) | | |
Net cash used in investing activities
|
| | | $ | (7,313,384) | | | | | $ | (6,011,053) | | |
Net cash provided by financing activities
|
| | | $ | 18,639,161 | | | | | $ | 20,181,820 | | |
Net change in cash
|
| | | $ | 754,888 | | | | | $ | (47,592) | | |
| | |
Three Months Ended
March 31, |
| |||||||||
| | |
2023
|
| |
2022
|
| ||||||
Net revenues
|
| | | $ | 4,376,379 | | | | | $ | 7,803,268 | | |
Cost of net revenues
|
| | | | 2,383,139 | | | | | | 4,947,494 | | |
Gross profit
|
| | | | 1,993,240 | | | | | | 2,855,774 | | |
Operating expenses
|
| | | | 5,372,410 | | | | | | 7,157,934 | | |
Operating income (loss)
|
| | | | (3,379,170) | | | | | | (4,302,160) | | |
Other income (loss)
|
| | | | (2,433,587) | | | | | | (2,257,936) | | |
Loss before provision for income taxes
|
| | | | (5,812,757) | | | | | | (6,560,096) | | |
Provision for income taxes
|
| | | | — | | | | | | — | | |
Net loss
|
| | | $ | (5,812,757) | | | | | $ | (6,560,096) | | |
| | |
Three Months Ended
March 31, |
| |||||||||
| | |
2023
|
| |
2022
|
| ||||||
Net cash provided by operating activities: | | | | | | | | | | | | | |
Net loss
|
| | | $ | (5,812,757) | | | | | $ | (6,560,096) | | |
Non-cash adjustments
|
| | | $ | 3,774,962 | | | | | $ | 2,379,221 | | |
Change in operating assets and liabilities
|
| | | $ | 668,867 | | | | | $ | 3,545,719 | | |
Net cash used in operating activities
|
| | | $ | (1,368,928) | | | | | $ | (635,156) | | |
Net cash provided by (used in) investing activities
|
| | | $ | 87,379 | | | | | $ | (5,576) | | |
Net cash provided by financing activities
|
| | | $ | 2,291,109 | | | | | $ | 887,051 | | |
Net change in cash
|
| | | $ | 1,009,560 | | | | | $ | 246,319 | | |
| | | | | | | | |
Pro Forma
Adjustments |
| | | | | | | | | | |||||||||
| | |
DBGI
As Reported |
| |
H&J
|
| |
Sundry
Conversion and Norwest Waiver |
| |
Notes
|
| |
Pro Forma as
Adjusted |
| ||||||||||||
Net revenues
|
| | | $ | 5,095,234 | | | | | $ | (718,855) | | | | | $ | — | | | |
(c)
|
| | | $ | 4,376,379 | | |
Cost of net revenues
|
| | | | 2,656,652 | | | | | | (273,513) | | | | | | — | | | |
(c)
|
| | | | 2,383,139 | | |
Gross profit
|
| | | | 2,438,582 | | | | | | (445,342) | | | | | | — | | | | | | | | | 1,993,240 | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
General and administrative
|
| | | | 4,636,844 | | | | | | (473,971) | | | | | | — | | | |
(c), (d)
|
| | | | 4,162,873 | | |
Sales and marketing
|
| | | | 1,115,643 | | | | | | (176,292) | | | | | | — | | | |
(c)
|
| | | | 939,351 | | |
Distribution
|
| | | | 270,185 | | | | | | — | | | | | | — | | | | | | | | | 270,185 | | |
Total operating expenses
|
| | | | 6,022,672 | | | | | | (650,262) | | | | | | — | | | | | | | | | 5,372,410 | | |
Loss from operations
|
| | | | (3,584,090) | | | | | | 204,920 | | | | | | — | | | | | | | | | (3,379,170) | | |
Other income (expense): | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest expense
|
| | | | (1,873,270) | | | | | | 8,672 | | | | | | 110,000 | | | |
(c), (e)
|
| | | | (1,754,598) | | |
Other non-operating income (expenses)
|
| | | | (678,989) | | | | | | — | | | | | | — | | | | | | | | | (678,989) | | |
Total other income (expense), net
|
| | | | (2,552,259) | | | | | | 8,672 | | | | | | 110,000 | | | | | | | | | (2,433,587) | | |
Income tax benefit (provision)
|
| | | | — | | | | | | — | | | | | | — | | | | | | | | | — | | |
Net loss
|
| | | $ | (6,136,349) | | | | | $ | 213,592 | | | | | $ | 110,000 | | | | | | | | $ | (5,812,757) | | |
Weighted average common shares outstanding – basic and diluted
|
| | | | 5,670,362 | | | | | | | | | | | | | | | | | | | | | 7,622,942 | | |
Net loss per common share – basic and diluted
|
| | | $ | (1.08) | | | | | | | | | | | | | | | | | | | | $ | (0.76) | | |
| | | | | | | | | | | | | | |
Pro Forma
Adjustments |
| | | | | | | | | | |||||||||
| | |
DBGI
As Reported |
| |
Sundry (1)
|
| |
H&J
|
| |
Sundry
Conversion and Norwest Waiver |
| |
Notes
|
| |
Pro Forma
Adjustments |
| |||||||||||||||
Net revenues
|
| | | $ | 13,971,178 | | | | | $ | 14,548,083 | | | | | $ | (3,637,620) | | | | | $ | — | | | |
(b)
|
| | | $ | 24,881,640 | | |
Cost of net revenues
|
| | | | 8,030,908 | | | | | | 9,694,857 | | | | | | (1,241,594) | | | | | | — | | | |
(b)
|
| | | | 16,484,171 | | |
Gross profit
|
| | | | 5,940,270 | | | | | | 4,853,226 | | | | | | (2,396,026) | | | | | | — | | | | | | | | | 8,397,469 | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
General and administrative
|
| | | | 16,371,536 | | | | | | 3,433,633 | | | | | | (2,303,855) | | | | | | — | | | |
(b), (c)
|
| | | | 17,501,314 | | |
Sales and marketing
|
| | | | 4,950,635 | | | | | | 913,052 | | | | | | (931,650) | | | | | | — | | | |
(b)
|
| | | | 4,932,036 | | |
Distribution
|
| | | | 611,569 | | | | | | 2,736,181 | | | | | | — | | | | | | — | | | | | | | | | 3,347,750 | | |
Impairment
|
| | | | 15,539,332 | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 15,539,332 | | |
Change in fair value of contingent consideration
|
| | | | 564,303 | | | | | | — | | | | | | — | | | | | | (564,303) | | | |
(e)
|
| | | | — | | |
Total operating expenses
|
| | | | 38,037,375 | | | | | | 7,082,866 | | | | | | (3,235,505) | | | | | | (564,303) | | | | | | | | | 41,320,433 | | |
Loss from operations
|
| | | | (32,097,105) | | | | | | (2,229,640) | | | | | | 839,478 | | | | | | 564,303 | | | | | | | | | (32,922,963) | | |
Other income (expense): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest expense
|
| | | | (9,014,337) | | | | | | (9,099) | | | | | | 52,927 | | | | | | — | | | |
(b)
|
| | | | (8,970,509) | | |
Other non-operating income
(expenses) |
| | | | 3,068,080 | | | | | | (52,354) | | | | | | — | | | | | | — | | | | | | | | | 3,015,726 | | |
Total other income (expense), net
|
| | | | (5,946,257) | | | | | | (61,453) | | | | | | 52,927 | | | | | | — | | | | | | | | | (5,954,783) | | |
Income tax benefit (provision)
|
| | | | — | | | | | | (800) | | | | | | — | | | | | | — | | | | | | | | | — | | |
Net loss
|
| | | $ | (38,043,362) | | | | | $ | (2,291,893) | | | | | $ | 892,405 | | | | | $ | 564,303 | | | | | | | | $ | (38,877,746) | | |
Weighted average common shares outstanding – basic and
diluted |
| | | | 771,297 | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,723,877 | | |
Net loss per common share – basic and diluted
|
| | | $ | (49.32) | | | | | | | | | | | | | | | | | | | | | | | | | | $ | (14.27) | | |
| | | | | | | | |
Pro Forma
Adjustments |
| | | | | | | | | | |||||||||
| | |
DBGI
As Reported |
| |
H&J
|
| |
Sundry
Conversion and Norwest Waiver |
| |
Notes
|
| |
Pro Forma as
Adjusted |
| ||||||||||||
ASSETS | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 1,969,250 | | | | | $ | (262,405) | | | | | $ | — | | | |
(a)
|
| | | $ | 1,706,845 | | |
Accounts receivable, net
|
| | | | 345,439 | | | | | | (55,782) | | | | | | — | | | |
(a)
|
| | | | 289,657 | | |
Due from factor, net
|
| | | | 590,253 | | | | | | — | | | | | | — | | | | | | | | | 590,253 | | |
Inventory
|
| | | | 4,926,094 | | | | | | — | | | | | | — | | | | | | | | | 4,926,094 | | |
Prepaid expenses and other current assets
|
| | | | 1,071,330 | | | | | | (186,928) | | | | | | — | | | |
(a)
|
| | | | 884,402 | | |
Total current assets
|
| | | | 8,902,366 | | | | | | (505,115) | | | | | | — | | | | | | | | | 8,397,251 | | |
Property, equipment and software, net
|
| | | | 71,803 | | | | | | — | | | | | | — | | | | | | | | | 71,803 | | |
Goodwill
|
| | | | 10,103,812 | | | | | | (1,130,310) | | | | | | — | | | |
(a)
|
| | | | 8,973,502 | | |
Intangible assets, net
|
| | | | 13,473,151 | | | | | | (1,378,126) | | | | | | — | | | |
(a)
|
| | | | 12,095,025 | | |
Deposits
|
| | | | 110,962 | | | | | | (4,416) | | | | | | — | | | |
(a)
|
| | | | 106,546 | | |
Right of use asset
|
| | | | 467,738 | | | | | | — | | | | | | — | | | | | | | | | 467,738 | | |
Total assets
|
| | | $ | 33,129,832 | | | | | $ | (3,017,967) | | | | | $ | — | | | | | | | | $ | 30,111,865 | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accounts payable
|
| | | $ | 7,671,050 | | | | | $ | (45,969) | | | | | $ | — | | | |
(a)
|
| | | $ | 7,625,081 | | |
Accrued expenses and other liabilities
|
| | | | 4,921,970 | | | | | | (610,114) | | | | | | — | | | |
(a)
|
| | | | 4,311,856 | | |
Deferred revenue
|
| | | | 317,421 | | | | | | (317,421) | | | | | | — | | | |
(a)
|
| | | | — | | |
Due to related parties
|
| | | | 452,055 | | | | | | (1,008) | | | | | | — | | | |
(a)
|
| | | | 451,047 | | |
Contingent consideration liability
|
| | | | 12,098,475 | | | | | | (1,400,000) | | | | | | (10,698,475) | | | |
(a), (b)
|
| | | | — | | |
Convertible note payable, net
|
| | | | 100,000 | | | | | | — | | | | | | — | | | | | | | | | 100,000 | | |
Accrued interest payable
|
| | | | 1,780,535 | | | | | | — | | | | | | (110,000) | | | |
(b)
|
| | | | 1,670,535 | | |
Note payable – related party
|
| | | | 129,489 | | | | | | (129,489) | | | | | | — | | | |
(a)
|
| | | | — | | |
Loan payable, current
|
| | | | 1,329,507 | | | | | | — | | | | | | — | | | | | | | | | 1,329,507 | | |
Promissory note payable, net
|
| | | | 10,914,831 | | | | | | — | | | | | | (5,500,000) | | | |
(b)
|
| | | | 5,414,831 | | |
Right of use liability, current portion
|
| | | | 425,654 | | | | | | — | | | | | | — | | | | | | | | | 425,654 | | |
Total current liabilities
|
| | | | 40,140,987 | | | | | | (2,504,000) | | | | | | (16,308,475) | | | | | | | | | 21,328,512 | | |
Loan payable
|
| | | | 798,759 | | | | | | (219,894) | | | | | | — | | | |
(a)
|
| | | | 578,865 | | |
Right of use liability
|
| | | | 53,107 | | | | | | — | | | | | | — | | | | | | | | | 53,107 | | |
Total liabilities
|
| | | | 40,992,853 | | | | | | (2,723,895) | | | | | | (16,308,475) | | | | | | | | | 21,960,484 | | |
Commitments and contingencies | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Stockholders’ equity (deficit): | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Preferred stock
|
| | | | 1 | | | | | | — | | | | | | 6 | | | |
(b)
|
| | | | 7 | | |
Common stock
|
| | | | 598 | | | | | | — | | | | | | 195 | | | |
(b)
|
| | | | 793 | | |
Additional paid-in capital
|
| | | | 102,020,045 | | | | | | 1,400,000 | | | | | | 5,609,799 | | | |
(a), (b)
|
| | | | 109,029,844 | | |
Accumulated deficit
|
| | | | (109,883,665) | | | | | | (1,694,073) | | | | | | 10,698,475 | | | |
(a), (b)
|
| | | | (100,879,263) | | |
Total stockholders’ equity (deficit)
|
| | | | (7,863,021) | | | | | | (294,073) | | | | | | 16,308,475 | | | | | | | | | 8,151,381 | | |
Total liabilities and stockholders’ equity (deficit)
|
| | | $ | 33,129,832 | | | | | $ | (3,017,967) | | | | | $ | — | | | | | | | | $ | 30,111,865 | | |
|
Settlement of contingent consideration
|
| | | $ | 1,400,000 | | |
|
Less: cash payment to H&J Seller
|
| | | | (229,000) | | |
|
Less: common shares issued to H&J Seller
|
| | | | (1,400,000) | | |
|
Total fair value of consideration received
|
| | | | (229,000) | | |
| Carrying amount of assets and liabilities | | | | | | | |
|
Cash and cash equivalents
|
| | | | 33,405 | | |
|
Accounts receivable, net
|
| | | | 55,782 | | |
|
Prepaid expenses and other current assets
|
| | | | 186,928 | | |
|
Goodwill
|
| | | | 1,130,310 | | |
|
Intangible assets, net
|
| | | | 1,378,126 | | |
|
Deposits
|
| | | | 4,416 | | |
|
Accounts payable
|
| | | | (45,969) | | |
|
Accrued expenses and other liabilities
|
| | | | (610,114) | | |
|
Deferred revenue
|
| | | | (317,421) | | |
|
Due to related parties
|
| | | | (1,008) | | |
|
Loan payable
|
| | | | (219,894) | | |
|
Note payable – related party
|
| | | | (129,489) | | |
|
Total carrying amount of assets and liabilities
|
| | | | 1,465,073 | | |
|
Gain (loss) on disposal
|
| | | $ | (1,694,073) | | |
Location
|
| |
Type
|
| |
Square
Footage (approximate) |
| |
Lease
Expiration |
| ||||||
Vernon, California
|
| |
Corporate Warehouse and Distribution Center
|
| | | | 42,206 | | | | | | 2023 | | |
Los Angeles, California
|
| | Showroom | | | | | 2,000 | | | | | | 2025 | | |
Name
|
| |
Age
|
| |
Position
|
|
Executive Officers and Directors | | | | | | | |
John Hilburn Davis IV
|
| | 50 | | | Director, President and Chief Executive Officer | |
Laura Dowling
|
| | 44 | | | Chief Marketing Officer | |
Reid Yeoman
|
| | 40 | | | Chief Financial Officer | |
Mark T. Lynn
|
| | 39 | | | Director | |
Trevor Pettennude
|
| | 55 | | | Director | |
Jameeka Green Aaron
|
| | 42 | | | Director | |
Huong “Lucy” Doan
|
| | 53 | | | Director | |
Name and Principal Position
|
| |
Fiscal
Year |
| |
Salary
|
| |
Bonus
|
| |
Option
Awards |
| |
Stock
Awards(1) |
| |
Total
|
| ||||||||||||||||||
John “Hil” Davis
|
| | | | 2022 | | | | | $ | 350,000 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
President and Chief Executive Officer
|
| | | | 2021 | | | | | $ | 350,000 | | | | | $ | — | | | | | $ | 3,704,483 | | | | | $ | 233,184 | | | | | $ | 4,287,667 | | |
Laura Dowling
|
| | | | 2022 | | | | | $ | 300,000 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Chief Marketing Officer
|
| | | | 2021 | | | | | $ | 300,000 | | | | | $ | — | | | | | $ | 691,135 | | | | | $ | — | | | | | $ | 991,135 | | |
Reid Yeoman
|
| | | | 2022 | | | | | $ | 250,000 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Chief Financial Officer
|
| | | | 2021 | | | | | $ | 250,000 | | | | | $ | — | | | | | $ | 221,163 | | | | | $ | — | | | | | $ | 471,163 | | |
| | |
Option Awards
|
| | | | | | | |
Stock Awards
|
| ||||||||||||||||||||||||||||||||||||||||||
Name
|
| |
Number of
Securities Underlying Unexercised Options(#) Exercisable |
| |
Number of
Securities Underlying Unexercised Options(#) Unexercisable |
| |
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) |
| |
Option
Exercise Price ($) |
| |
Option
Expiration Date |
| |
Number of
Shares or Units of Stock That Have Not Vested (#) |
| |
Market
Value of Shares or Units of Stock That Have Not Vested |
| |
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested |
| |
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested |
| |||||||||||||||||||||||||||
John “Hil” Davis
|
| | | | 21,440 | | | | | | 18,909 | | | | | | 2,531 | | | | | $ | 421.88 | | | | | | May-23 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Laura Dowling
|
| | | | 4,640 | | | | | | 3,968 | | | | | | 672 | | | | | $ | 408.94 | | | | | | May-23 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Reid Yeoman
|
| | | | 1,760 | | | | | | 1,354 | | | | | | 406 | | | | | $ | 396.31 | | | | | | May-23 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Name of Beneficial Owner
|
| |
Number of
Shares Beneficially Owned Before Offering |
| |
Percentage of
Shares Outstanding Before Offering |
| |
Number of
Shares Beneficially Owned After Offering |
| |
Percentage of
Shares Outstanding After Offering |
| ||||||
Executive Officers and Directors | | | | | | | | | | | | | | | | | | | |
John “Hil” Davis(1)
|
| | | | 17,136 | | | |
*
|
| | | | 17,136 | | | |
*
|
|
Laura Dowling(2)
|
| | | | 3,347 | | | |
*
|
| | | | 3,347 | | | |
*
|
|
Reid Yeoman(3)
|
| | | | 1,140 | | | |
*
|
| | | | 1,140 | | | |
*
|
|
Mark Lynn(4)
|
| | | | 5,074 | | | |
*
|
| | | | 5,074 | | | |
*
|
|
Trevor Pettennude(5)
|
| | | | 3,286 | | | |
*
|
| | | | 3,286 | | | |
*
|
|
Jameeka Aaron(6)
|
| | | | 150 | | | |
*
|
| | | | 150 | | | |
*
|
|
Huong “Lucy” Doan(7)
|
| | | | 200 | | | |
*
|
| | | | 200 | | | |
*
|
|
All executive officers, directors and director nominees
as a group (7 persons)(8) |
| | | | 30,333 | | | |
*
|
| | | | 30,333 | | | |
*
|
|
Five Percent Holders of Common Stock | | | | | | | | | | | | | | | | | | | |
D. Jones Tailored Collection, Ltd.(9)
|
| | | | 1,974,501 | | | |
24.91%
|
| | | | 1,974,501 | | | |
24.91%
|
|
Boco4-DSTLD-Senior Debt, LLC(10)
|
| | | | 677,419 | | | |
7.87%
|
| | | | 677,419 | | | |
7.87%
|
|
George Levy(11)
|
| | | | 2,642,957 | | | |
25%
|
| | | | 2,642,957 | | | |
25%
|
|
Matthieu Leblan(12)
|
| | | | 2,642,957 | | | |
25%
|
| | | | 2,642,957 | | | |
25%
|
|
Moise Emquies(13)
|
| | | | 1,370,297 | | | |
14.75%
|
| | | | 1,370,297 | | | |
14.75%
|
|
Carol Ann Emquies(14)
|
| | | | 906,556 | | | |
10.26%
|
| | | | 906,556 | | | |
10.26%
|
|
Name and Address of Beneficial Owner
|
| |
Number of Shares
of Series A Convertible Preferred Stock Beneficially Owned Before |
| |
Percentage of
Shares Outstanding Before(1) |
| |
Number of Shares
of Series A Convertible Preferred Stock Beneficially Owned After |
| |
Percentage of
Shares Outstanding After |
| ||||||||||||
Five Percent Holders of DBG Series A Convertible Preferred Stock
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Boco4-DSTLD-Senior Debt, LLC(2)
|
| | | | 6,300 | | | | | | 100% | | | | | | 6,300 | | | | | | 100% | | |
Executive Officers and Directors
|
| | | | | | | | | | | | | | | | | | | | | | | | |
John “Hil” Davis
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Laura Dowling
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Reid Yeoman
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Mark Lynn
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Trevor Pettennude
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Jameeka Aaron
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Huong “Lucy” Doan
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
All executive officers, directors
and director nominees as a group (7 persons) |
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Name and Address of Beneficial Owner
|
| |
Number of Shares
of Series B Convertible Preferred Stock Beneficially Owned Before |
| |
Percentage of
Shares Outstanding Before |
| |
Number of Shares
of Series B Convertible Preferred Stock Beneficially Owned After |
| |
Percentage of
Shares Outstanding After |
| ||||||||||||
Executive Officers and Directors
|
| | | | | | | | | | | | | | | | | | | | | | | | |
John “Hil” Davis(1)
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Laura Dowling
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Reid Yeoman
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Mark Lynn
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Trevor Pettennude
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Jameeka Aaron
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Huong “Lucy” Doan
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
All executive officers, directors
and director nominees as a group (7 persons) |
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Name and Address of Beneficial Owner
|
| |
Number of Shares
of Series C Convertible Preferred Stock Beneficially Owned Before |
| |
Percentage of
Shares Outstanding Before(1) |
| |
Number of Shares
of Series C Convertible Preferred Stock Beneficially Owned After |
| |
Percentage of
Shares Outstanding After |
| ||||||||||||
Five Percent Holders of DBG Series C Convertible Preferred Stock
|
| | | | | | | | | | | | | | | | | | | | | | | | |
George Levy(2)
|
| | | | 1,895 | | | | | | 32.90% | | | | | | 1,895 | | | | | | 32.90% | | |
Matthieu Leblan(3)
|
| | | | 1,895 | | | | | | 32.90% | | | | | | 1,895 | | | | | | 32.90% | | |
Moise Emquies(4)
|
| | | | 975 | | | | | | 16.92% | | | | | | 975 | | | | | | 16.92% | | |
Carol Ann Emquies(5)
|
| | | | 650 | | | | | | 11.28% | | | | | | 650 | | | | | | 11.28% | | |
Executive Officers and Directors
|
| | | | | | | | | | | | | | | | | | | | | | | | |
John “Hil” Davis
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Laura Dowling
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Reid Yeoman
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Mark Lynn
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Trevor Pettennude
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Jameeka Aaron
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Huong “Lucy” Doan
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
All executive officers, directors
and director nominees as a group (7 persons) |
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | |
Per Share
|
| |
Per Pre-Funded
Warrant |
| |
Total
|
| |||||||||
Public offering price
|
| | | $ | | | | | $ | | | |
|
| |||||
Placement Agent fees(1)
|
| | | $ | | | | | $ | | | | | $ | | | |||
Proceeds to us, before expenses(2)
|
| | | $ | | | | | $ | | | | | $ | | | |
| | | | | F-3 | | | |
| | | | | F-4 | | | |
| | | | | F-5 | | | |
| | | | | F-6 | | | |
| | | | | F-7 | | |
| | | | | F-19 | | | |
| | | | | F-20 | | | |
| | | | | F-21 | | | |
| | | | | F-22 | | | |
| | | | | F-23 | | | |
| | | | | F-24 | | |
| | | | | F-57 | | | |
| | | | | F-58 | | | |
| | | | | F-59 | | | |
| | | | | F-60 | | | |
| | | | | F-61 | | |
| | | | | F-67 | | | |
| | | | | F-68 | | | |
| | | | | F-69 | | | |
| | | | | F-70 | | | |
| | | | | F-71 | | |
| | | | | F-78 | | | |
| | | | | F-80 | | | |
| | | | | F-81 | | | |
| | | | | F-82 | | | |
| | | | | F-83 | | | |
| | | | | F-84 | | |
| | |
March 31,
2023 |
| |
December 31,
2022 |
| ||||||
| | |
Unaudited
|
| |
Audited
|
| ||||||
ASSETS | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 1,969,250 | | | | | $ | 1,283,282 | | |
Accounts receivable, net
|
| | | | 345,439 | | | | | | 628,386 | | |
Due from factor, net
|
| | | | 590,253 | | | | | | 839,400 | | |
Inventory
|
| | | | 4,926,094 | | | | | | 5,225,282 | | |
Prepaid expenses and other current assets
|
| | | | 1,071,330 | | | | | | 853,044 | | |
Total current assets
|
| | | | 8,902,366 | | | | | | 8,829,394 | | |
Property, equipment and software, net
|
| | | | 71,803 | | | | | | 76,657 | | |
Goodwill
|
| | | | 10,103,812 | | | | | | 10,103,812 | | |
Intangible assets, net
|
| | | | 13,473,151 | | | | | | 14,427,503 | | |
Deposits
|
| | | | 110,962 | | | | | | 198,341 | | |
Right of use asset
|
| | | | 467,738 | | | | | | 102,349 | | |
Total assets
|
| | | $ | 33,129,832 | | | | | $ | 33,738,056 | | |
LIABILITIES AND STOCKHOLDERS’ DEFICIT | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable
|
| | | $ | 7,671,050 | | | | | $ | 8,098,165 | | |
Accrued expenses and other liabilities
|
| | | | 4,921,970 | | | | | | 4,457,115 | | |
Deferred revenue
|
| | | | 317,421 | | | | | | 202,129 | | |
Due to related parties
|
| | | | 452,055 | | | | | | 556,225 | | |
Contingent consideration liability
|
| | | | 12,098,475 | | | | | | 12,098,475 | | |
Convertible note payable, net
|
| | | | 100,000 | | | | | | 2,721,800 | | |
Accrued interest payable
|
| | | | 1,780,535 | | | | | | 1,561,795 | | |
Note payable – related party
|
| | | | 129,489 | | | | | | 129,489 | | |
Loans payable, current
|
| | | | 1,329,507 | | | | | | 1,966,250 | | |
Promissory notes payable, net
|
| | | | 10,914,831 | | | | | | 9,000,000 | | |
Right of use liability, current portion
|
| | | | 425,654 | | | | | | 102,349 | | |
Total current liabilities
|
| | | | 40,140,987 | | | | | | 40,893,792 | | |
Loans payable, net of current portion
|
| | | | 798,759 | | | | | | 297,438 | | |
Right of use liability
|
| | | | 53,107 | | | | | | — | | |
Total liabilities
|
| | | | 40,992,853 | | | | | | 41,191,230 | | |
Commitments and contingencies | | | | | | | | | | | | | |
Stockholders’ deficit: | | | | | | | | | | | | | |
Undesignated preferred stock, $0.0001 par, 10,000,000 shares authorized, 0 shares issued and outstanding as of both March 31, 2023 and December 31, 2022
|
| | | | — | | | | | | — | | |
Series A preferred stock, $0.0001 par, 1 share authorized, no shares issued and outstanding as of March 31, 2023 and December 31, 2022
|
| | | | — | | | | | | — | | |
Series A convertible preferred stock, $0.0001 par, 6,800 shares designated, 6,300 shares issued and outstanding as of both March 31, 2023 and December 31, 2022
|
| | | | 1 | | | | | | 1 | | |
Common stock, $0.0001 par, 1,000,000,000 shares authorized, 5,974,969 and 4,468,939 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively
|
| | | | 598 | | | | | | 447 | | |
Additional paid-in capital
|
| | | | 102,020,045 | | | | | | 96,293,694 | | |
Accumulated deficit
|
| | | | (109,883,665) | | | | | | (103,747,316) | | |
Total stockholders’ deficit
|
| | | | (7,863,021) | | | | | | (7,453,174) | | |
Total liabilities and stockholders’ deficit
|
| | | $ | 33,129,832 | | | | | $ | 33,738,056 | | |
| | |
Three Months Ended
March 31, |
| |||||||||
| | |
2023
|
| |
2022
|
| ||||||
| | | | | | | | |
Restated
|
| |||
Net revenues
|
| | | $ | 5,095,234 | | | | | $ | 3,432,410 | | |
Cost of net revenues
|
| | | | 2,656,652 | | | | | | 2,292,191 | | |
Gross profit
|
| | | | 2,438,582 | | | | | | 1,140,219 | | |
Operating expenses: | | | | | | | | | | | | | |
General and administrative
|
| | | | 4,636,844 | | | | | | 4,277,955 | | |
Sales and marketing
|
| | | | 1,115,643 | | | | | | 1,040,572 | | |
Distribution
|
| | | | 270,185 | | | | | | 202,848 | | |
Change in fair value of contingent consideration
|
| | | | — | | | | | | 1,200,321 | | |
Total operating expenses
|
| | | | 6,022,672 | | | | | | 6,721,696 | | |
Loss from operations
|
| | | | (3,584,090) | | | | | | (5,581,477) | | |
Other income (expense): | | | | | | | | | | | | | |
Interest expense
|
| | | | (1,873,270) | | | | | | (1,567,877) | | |
Other non-operating income (expenses)
|
| | | | (678,989) | | | | | | (683,588) | | |
Total other income (expense), net
|
| | | | (2,552,259) | | | | | | (2,251,465) | | |
Income tax benefit (provision)
|
| | | | — | | | | | | — | | |
Net loss
|
| | | $ | (6,136,349) | | | | | $ | (7,832,942) | | |
Weighted average common shares outstanding – basic and diluted
|
| | | | 5,670,362 | | | | | | 132,351 | | |
Net loss per common share – basic and diluted
|
| | | $ | (1.08) | | | | | $ | (59.18) | | |
| | |
Series A Convertible
Preferred Stock |
| |
Common Stock
|
| |
Additional
Paid-in Capital |
| |
Accumulated
Deficit |
| |
Total
Stockholders’ Deficit |
| |||||||||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| ||||||||||||||||||||||||||||||
Balances at December 31, 2021
|
| | | | — | | | | | $ | — | | | | | | 130,018 | | | | | $ | 13 | | | | | $ | 58,614,160 | | | | | $ | (65,703,954) | | | | | $ | (7,089,781) | | |
Conversion of notes into common stock
|
| | | | — | | | | | | — | | | | | | 8,739 | | | | | | 1 | | | | | | 1,201,581 | | | | | | — | | | | | | 1,201,582 | | |
Stock-based compensation
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 139,093 | | | | | | — | | | | | | 139,093 | | |
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (7,832,942) | | | | | | (7,832,942) | | |
Balances at March 31,
2022 |
| | | | — | | | | | $ | — | | | | | | 138,757 | | | | | $ | 14 | | | | | $ | 59,954,834 | | | | | $ | (73,536,896) | | | | | $ | (13,582,048) | | |
Balances at December 31, 2022
|
| | | | 6,300 | | | | | $ | 1 | | | | | | 4,468,939 | | | | | $ | 447 | | | | | $ | 96,293,694 | | | | | $ | (103,747,316) | | | | | $ | (7,453,174) | | |
Issuance of common stock pursuant to private placement
|
| | | | — | | | | | | — | | | | | | 1,277,140 | | | | | | 128 | | | | | | 4,999,875 | | | | | | — | | | | | | 5,000,003 | | |
Offering costs
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (536,927) | | | | | | — | | | | | | (536,927) | | |
Shares issued for services
|
| | | | — | | | | | | — | | | | | | 118,890 | | | | | | 12 | | | | | | 499,326 | | | | | | — | | | | | | 499,338 | | |
Shares and warrants issued with notes
|
| | | | — | | | | | | — | | | | | | 110,000 | | | | | | 11 | | | | | | 658,483 | | | | | | — | | | | | | 658,494 | | |
Stock-based compensation
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 105,594 | | | | | | — | | | | | | 105,594 | | |
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (6,136,349) | | | | | | (6,136,349) | | |
Balances at March 31,
2023 |
| | | | 6,300 | | | | | $ | 1 | | | | | | 5,974,969 | | | | | $ | 598 | | | | | $ | 102,020,045 | | | | | $ | (109,883,665) | | | | | $ | (7,863,021) | | |
| | |
Three Months Ended
March 31, |
| |||||||||
| | |
2023
|
| |
2022
|
| ||||||
Cash flows from operating activities: | | | | | | | | | | | | | |
Net loss
|
| | | $ | (6,136,349) | | | | | $ | (7,832,942) | | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 959,207 | | | | | | 552,004 | | |
Amortization of loan discount and fees
|
| | | | 1,412,425 | | | | | | 1,093,583 | | |
Loss on extinguishment of debt
|
| | | | 689,100 | | | | | | — | | |
Stock-based compensation
|
| | | | 105,594 | | | | | | 139,093 | | |
Shares issued for services
|
| | | | 499,338 | | | | | | — | | |
Change in credits due customers
|
| | | | 109,298 | | | | | | (9,067) | | |
Change in fair value of warrant liability
|
| | | | — | | | | | | (5,970) | | |
Change in fair value of derivative liability
|
| | | | — | | | | | | 682,103 | | |
Change in fair value of contingent consideration
|
| | | | — | | | | | | 1,200,321 | | |
Changes in operating assets and liabilities: | | | | | | | | | | | | | |
Accounts receivable, net
|
| | | | 282,947 | | | | | | (49,554) | | |
Factored receivables
|
| | | | (77,776) | | | | | | 294,439 | | |
Inventory
|
| | | | 299,188 | | | | | | 262,753 | | |
Prepaid expenses and other current assets
|
| | | | (218,286) | | | | | | (126,369) | | |
Accounts payable
|
| | | | (416,093) | | | | | | 1,972,441 | | |
Accrued expenses and other liabilities
|
| | | | 464,855 | | | | | | 669,514 | | |
Deferred revenue
|
| | | | 115,292 | | | | | | 71,707 | | |
Accrued interest
|
| | | | 218,740 | | | | | | 450,788 | | |
Net cash used in operating activities
|
| | | | (1,692,520) | | | | | | (635,156) | | |
Cash flows from investing activities: | | | | | | | | | | | | | |
Purchase of property, equipment and software
|
| | | | — | | | | | | (5,576) | | |
Deposits
|
| | | | 87,379 | | | | | | — | | |
Net cash provided by (used in) investing activities
|
| | | | 87,379 | | | | | | (5,576) | | |
Cash flows from financing activities: | | | | | | | | | | | | | |
Proceeds (repayments) from related party advances
|
| | | | (104,170) | | | | | | (11,105) | | |
Advances (repayments) from factor
|
| | | | 217,625 | | | | | | (179,126) | | |
Issuance of loans and notes payable
|
| | | | 3,542,199 | | | | | | 868,582 | | |
Repayments of convertible notes and loans payable
|
| | | | (5,677,621) | | | | | | — | | |
Issuance of common stock pursuant to private placement
|
| | | | 5,000,003 | | | | | | — | | |
Offering costs
|
| | | | (686,927) | | | | | | — | | |
Net cash provided by financing activities
|
| | | | 2,291,109 | | | | | | 678,351 | | |
Net change in cash and cash equivalents
|
| | | | 685,968 | | | | | | 37,619 | | |
Cash and cash equivalents at beginning of period
|
| | | | 1,283,282 | | | | | | 528,394 | | |
Cash and cash equivalents at end of period
|
| | | $ | 1,969,250 | | | | | $ | 566,013 | | |
Supplemental disclosure of cash flow information: | | | | | | | | | | | | | |
Cash paid for income taxes
|
| | | $ | — | | | | | $ | — | | |
Cash paid for interest
|
| | | $ | 60,465 | | | | | $ | — | | |
Supplemental disclosure of non-cash investing and financing activities: | | | | | | | | | | | | | |
Conversion of notes into common stock
|
| | | $ | — | | | | | $ | 1,201,582 | | |
Right of use asset
|
| | | $ | 467,738 | | | | | $ | 250,244 | | |
| | |
Fair Value Measurements
as of March 31, 2023 Using: |
| |||||||||||||||||||||
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Contingent consideration
|
| | | $ | — | | | | | $ | — | | | | | $ | 12,098,475 | | | | | $ | 12,098,475 | | |
| | | | $ | — | | | | | $ | — | | | | | $ | 12,098,475 | | | | | $ | 12,098,475 | | |
| | |
Fair Value Measurements
as of December 31, 2022 Using: |
| |||||||||||||||||||||
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Contingent consideration
|
| | | $ | — | | | | | $ | — | | | | | $ | 12,098,475 | | | | | $ | 12,098,475 | | |
| | | | $ | — | | | | | $ | — | | | | | $ | 12,098,475 | | | | | $ | 12,098,475 | | |
| | |
March 31,
2023 |
| |
December 31,
2022 |
| ||||||
Bailey
|
| | | $ | 10,698,475 | | | | | $ | 10,698,475 | | |
Harper & Jones
|
| | | | 1,400,000 | | | | | | 1,400,000 | | |
| | | | $ | 12,098,475 | | | | | $ | 12,098,475 | | |
| | |
March 31,
2023 |
| |
December 31,
2022 |
| ||||||
Raw materials
|
| | | $ | 1,512,651 | | | | | $ | 1,611,134 | | |
Work in process
|
| | | | 653,412 | | | | | | 888,643 | | |
Finished goods
|
| | | | 2,760,031 | | | | | | 2,725,505 | | |
Inventory
|
| | | $ | 4,926,094 | | | | | $ | 5,225,282 | | |
| | |
March 31,
|
| |||||||||
| | |
2023
|
| |
2022
|
| ||||||
Convertible notes
|
| | | | — | | | | | | 51,648 | | |
Series A convertible preferred stock
|
| | | | 108 | | | | | | — | | |
Common stock warrants
|
| | | | 5,943,626 | | | | | | 9,145 | | |
Stock options
|
| | | | 38,951 | | | | | | 38,951 | | |
Total potentially dilutive shares
|
| | | | 5,982,685 | | | | | | 99,744 | | |
| | |
Three Months Ended
March 31, 2022 |
| |||
Net revenues
|
| | | $ | 8,606,548 | | |
Net loss
|
| | | $ | (8,292,427) | | |
Net loss per common share
|
| | | $ | (62.65) | | |
| | |
March 31,
2023 |
| |
December 31,
2022 |
| ||||||
Outstanding receivables: | | | | | | | | | | | | | |
Without recourse
|
| | | $ | 1,065,335 | | | | | $ | 1,680,042 | | |
With recourse
|
| | | | 76,956 | | | | | | 65,411 | | |
Matured funds and deposits
|
| | | | 108,147 | | | | | | 81,055 | | |
Advances
|
| | | | (415,201) | | | | | | (632,826) | | |
Credits due customers
|
| | | | (244,984) | | | | | | (354,282) | | |
| | | | $ | 590,253 | | | | | $ | 839,400 | | |
| | |
March 31,
2023 |
| |
December 31
2022 |
| ||||||
Bailey
|
| | | $ | 3,158,123 | | | | | $ | 3,158,123 | | |
Harper & Jones
|
| | | | 1,130,311 | | | | | | 1,130,311 | | |
Stateside
|
| | | | 2,104,056 | | | | | | 2,104,056 | | |
Sundry
|
| | | | 3,711,322 | | | | | | 3,711,322 | | |
| | | | $ | 10,103,812 | | | | | $ | 10,103,812 | | |
| | |
Gross
Amount |
| |
Accumulated
Amortization |
| |
Carrying
Value |
| |||||||||
Amortized: | | | | | | | | | | | | | | | | | | | |
Customer relationships
|
| | | $ | 11,452,230 | | | | | $ | (4,554,959) | | | | | $ | 6,897,271 | | |
| | | | $ | 11,452,230 | | | | | $ | (4,554,959) | | | | | $ | 6,897,271 | | |
Indefinite-lived: | | | | | | | | | | | | | | | | | | | |
Brand name
|
| | | $ | 6,575,880 | | | | | | — | | | | | | 6,575,880 | | |
| | | | $ | 18,028,110 | | | | | $ | (4,554,959) | | | | | $ | 13,473,151 | | |
| | |
March 31,
2023 |
| |
December 31,
2022 |
| ||||||
Accrued expenses
|
| | | $ | 602,053 | | | | | $ | 705,135 | | |
Reserve for returns
|
| | | | 294,147 | | | | | | 307,725 | | |
Payroll related liabilities
|
| | | | 3,586,356 | | | | | | 2,974,362 | | |
Sales tax liability
|
| | | | 267,419 | | | | | | 339,843 | | |
Other liabilities
|
| | | | 171,995 | | | | | | 130,050 | | |
| | | | $ | 4,921,970 | | | | | $ | 4,457,115 | | |
| | |
Principal
|
| |
Unamortized
Debt Discount |
| |
Convertible Note
Payable, Net |
| |||||||||
Balance, December 31, 2022
|
| | | $ | 4,100,000 | | | | | $ | (1,378,200) | | | | | $ | 2,721,800 | | |
Repayments of notes
|
| | | | (4,000,000) | | | | | | — | | | | | | (4,000,000) | | |
Amortization of debt discount
|
| | | | — | | | | | | 689,100 | | | | | | 689,100 | | |
Loss on extinguishment of debt
|
| | | | — | | | | | | 689,100 | | | | | | 689,100 | | |
Balance, March 31, 2023
|
| | | $ | 100,000 | | | | | $ | — | | | | | $ | 100,000 | | |
| | |
March 31,
2023 |
| |
December 31,
2022 |
| ||||||
Bailey Note
|
| | | $ | 3,500,000 | | | | | $ | 3,500,000 | | |
Sundry Note
|
| | | | 5,500,000 | | | | | | 5,500,000 | | |
March 2023 Notes – principal
|
| | | | 2,458,750 | | | | | | — | | |
March 2023 Notes – unamortized debt discount
|
| | | | (543,919) | | | | | | — | | |
Promissory note payable, net
|
| | | $ | 10,914,831 | | | | | $ | 9,000,000 | | |
| | |
Common
Stock Warrants |
| |
Weighted
Average Exercise Price |
| ||||||
Outstanding – December 31, 2022
|
| | | | 4,418,320 | | | | | $ | 8.37 | | |
Granted
|
| | | | 2,327,446 | | | | | | 3.98 | | |
Exercised
|
| | | | (802,140) | | | | | | 3.92 | | |
Forfeited
|
| | | | — | | | | | | — | | |
Outstanding – March 31, 2023
|
| | | | 5,943,626 | | | | | $ | 7.75 | | |
Exercisable at December 31, 2022
|
| | | | 4,281,956 | | | | | $ | 8.42 | | |
Exercisable at March 31, 2023
|
| | | | 5,807,262 | | | | | $ | 7.78 | | |
| | |
December 31,
|
| |||||||||
| | |
2022
|
| |
2021
|
| ||||||
ASSETS | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 1,283,282 | | | | | $ | 528,394 | | |
Accounts receivable, net
|
| | | | 628,386 | | | | | | 89,394 | | |
Due from factor, net
|
| | | | 839,400 | | | | | | 985,288 | | |
Inventory
|
| | | | 5,225,282 | | | | | | 2,755,358 | | |
Prepaid expenses and other current assets
|
| | | | 853,044 | | | | | | 417,900 | | |
Total current assets
|
| | | | 8,829,394 | | | | | | 4,776,334 | | |
Deferred offering costs
|
| | | | — | | | | | | 367,696 | | |
Property, equipment and software, net
|
| | | | 76,657 | | | | | | 97,265 | | |
Goodwill
|
| | | | 10,103,812 | | | | | | 18,264,822 | | |
Intangible assets, net
|
| | | | 14,427,503 | | | | | | 12,841,313 | | |
Deposits
|
| | | | 198,341 | | | | | | 137,794 | | |
Right of use asset, net
|
| | | | 102,349 | | | | | | — | | |
Total assets
|
| | | $ | 33,738,056 | | | | | $ | 36,485,224 | | |
LIABILITIES AND STOCKHOLDERS’ DEFICIT | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable
|
| | | $ | 8,098,165 | | | | | $ | 6,562,690 | | |
Accrued expenses and other liabilities
|
| | | | 4,457,115 | | | | | | 2,237,145 | | |
Deferred revenue
|
| | | | 202,129 | | | | | | 276,397 | | |
Due to related parties
|
| | | | 556,225 | | | | | | 277,635 | | |
Contingent consideration liability
|
| | | | 12,098,475 | | | | | | 12,179,476 | | |
Convertible note payable, net
|
| | | | 2,721,800 | | | | | | 100,000 | | |
Accrued interest payable
|
| | | | 1,561,795 | | | | | | 1,110,679 | | |
Note payable – related party
|
| | | | 129,489 | | | | | | 299,489 | | |
Venture debt, net of discount
|
| | | | — | | | | | | 6,001,755 | | |
Loan payable, current
|
| | | | 1,966,250 | | | | | | 2,502,000 | | |
Promissory note payable
|
| | | | 9,000,000 | | | | | | 3,500,000 | | |
Right of use liability, current portion
|
| | | | 102,349 | | | | | | — | | |
Total current liabilities
|
| | | | 40,893,792 | | | | | | 35,047,266 | | |
Convertible note payable, net
|
| | | | — | | | | | | 5,501,614 | | |
Loan payable
|
| | | | 297,438 | | | | | | 713,182 | | |
Derivative liability
|
| | | | — | | | | | | 2,294,720 | | |
Warrant liability
|
| | | | — | | | | | | 18,223 | | |
Total liabilities
|
| | | | 41,191,230 | | | | | | 43,575,005 | | |
Commitments and contingencies | | | | | | | | | | | | | |
Stockholders’ deficit: | | | | | | | | | | | | | |
Undesignated preferred stock, $0.0001 par, 10,000,000 shares authorized, 0 shares issued and outstanding as of both December 31, 2022 and 2021
|
| | | | — | | | | | | — | | |
Series A preferred stock, $0.0001 par, 1 share authorized, no shares issued and
outstanding as of December 31, 2022 or 2021 |
| | | | — | | | | | | — | | |
Series A convertible preferred stock, $0.0001 par, 6,800 shares designated, 6,300 shares issued and outstanding as of December 31, 2022, none authorized or outstanding as of December 31, 2021
|
| | | | 1 | | | | | | — | | |
Common stock, $0.0001 par, 1,000,000,000 shares authorized, 4,468,939 and 130,018 shares issued and outstanding as of December 31, 2022 and 2021, respectively
|
| | | | 447 | | | | | | 13 | | |
Additional paid-in capital
|
| | | | 96,293,694 | | | | | | 58,614,160 | | |
Accumulated deficit
|
| | | | (103,747,316) | | | | | | (65,703,954) | | |
Total stockholders’ deficit
|
| | | | (7,453,174) | | | | | | (7,089,781) | | |
Total liabilities and stockholders’ deficit
|
| | | $ | 33,738,056 | | | | | $ | 36,485,224 | | |
| | |
Year Ended December 31,
|
| |||||||||
| | |
2022
|
| |
2021
|
| ||||||
| | | | | | | | |
As Restated
|
| |||
Net revenues
|
| | | $ | 13,971,178 | | | | | $ | 7,584,859 | | |
Cost of net revenues
|
| | | | 8,030,908 | | | | | | 5,716,587 | | |
Gross profit
|
| | | | 5,940,270 | | | | | | 1,868,272 | | |
Operating expenses: | | | | | | | | | | | | | |
General and administrative
|
| | | | 16,371,536 | | | | | | 16,752,516 | | |
Sales and marketing
|
| | | | 4,950,635 | | | | | | 3,810,583 | | |
Distribution
|
| | | | 611,569 | | | | | | 489,371 | | |
Impairment
|
| | | | 15,539,332 | | | | | | 3,400,000 | | |
Change in fair value of contingent consideration
|
| | | | 564,303 | | | | | | 8,764,460 | | |
Total operating expenses
|
| | | | 38,037,375 | | | | | | 33,216,930 | | |
Loss from operations
|
| | | | (32,097,105) | | | | | | (31,348,658) | | |
Other income (expense): | | | | | | | | | | | | | |
Interest expense
|
| | | | (9,014,337) | | | | | | (3,663,921) | | |
Other non-operating income (expenses)
|
| | | | 3,068,080 | | | | | | 1,554,502 | | |
Total other income (expense), net
|
| | | | (5,946,257) | | | | | | (2,109,419) | | |
Income tax benefit (provision)
|
| | | | — | | | | | | 1,100,120 | | |
Net loss
|
| | | $ | (38,043,362) | | | | | $ | (32,357,957) | | |
Weighted average common shares outstanding – basic and diluted
|
| | | | 771,297 | | | | | | 76,289 | | |
Net loss per common share – basic and diluted
|
| | | $ | (49.32) | | | | | $ | (424.15) | | |
| | |
Series Seed
Preferred Stock |
| |
Series A
Preferred Stock |
| |
Series A-2
Preferred Stock |
| |
Series A-3
Preferred Stock |
| |
Series CF
Preferred Stock |
| |
Series B
Preferred Stock |
| |
Series A Convertible
Preferred Stock |
| |
Common Stock
|
| |
Additional
Paid-in Capital |
| |
Accumulated
Deficit |
| |
Total
Stockholders’ Deficit |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances at December 31, 2020
|
| | | | 20,714,518 | | | | | $ | 2,071 | | | | | | 5,654,072 | | | | | $ | 565 | | | | | | 5,932,742 | | | | | $ | 593 | | | | | | 9,032,330 | | | | | $ | 904 | | | | | | 836,331 | | | | | $ | 83 | | | | | | 20,754,717 | | | | | $ | 2,075 | | | | | | — | | | | | $ | — | | | | | | 6,642 | | | | | $ | 1 | | | | | $ | 27,482,060 | | | | | $ | (33,345,997) | | | | | $ | (5,857,645) | | |
Conversion of preferred stock into common
stock |
| | | | (20,714,518) | | | | | | (2,071) | | | | | | (5,654,072) | | | | | | (565) | | | | | | (5,932,742) | | | | | | (593) | | | | | | (9,032,330) | | | | | | (904) | | | | | | (836,331) | | | | | | (83) | | | | | | (20,754,717) | | | | | | (2,075) | | | | | | — | | | | | | — | | | | | | 40,272 | | | | | | 4 | | | | | | 6,287 | | | | | | — | | | | | | — | | |
Issuance of common stock in public
offering |
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 24,096 | | | | | | 2 | | | | | | 10,000,000 | | | | | | — | | | | | | 10,000,002 | | |
Offering costs
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (2,116,957) | | | | | | — | | | | | | (2,116,957) | | |
Exercise of over-allotment option, net of offering costs
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,614 | | | | | | — | | | | | | 1,364,997 | | | | | | — | | | | | | 1,364,997 | | |
Conversion of debt into common stock
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 11,352 | | | | | | 1 | | | | | | 2,680,288 | | | | | | — | | | | | | 2,680,289 | | |
Conversion of related party notes and payables into common stock
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,524 | | | | | | — | | | | | | 257,515 | | | | | | — | | | | | | 257,515 | | |
Common stock issued in connection with business combination
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 32,943 | | | | | | 3 | | | | | | 11,428,735 | | | | | | — | | | | | | 11,428,738 | | |
Exercise of warrants
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,869 | | | | | | — | | | | | | 1,768,046 | | | | | | — | | | | | | 1,768,046 | | |
Common stock issued pursuant to consulting
agreement |
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,415 | | | | | | — | | | | | | 595,500 | | | | | | — | | | | | | 595,500 | | |
Issuance of common stock pursuant to equity
line of credit |
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,264 | | | | | | — | | | | | | 367,696 | | | | | | — | | | | | | 367,696 | | |
Common stock and warrants issued in connection with notes
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,300 | | | | | | — | | | | | | 501,658 | | | | | | — | | | | | | 501,658 | | |
Stock-based compensation
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 727 | | | | | | — | | | | | | 4,278,337 | | | | | | — | | | | | | 4,278,337 | | |
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (32,357,957) | | | | | | (32,357,957) | | |
Balances at December 31, 2021
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 130,018 | | | | | | 13 | | | | | | 58,614,160 | | | | | | (65,703,954) | | | | | | (7,089,781) | | |
Issuance of common stock in public
offering |
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 373,898 | | | | | | 37 | | | | | | 9,347,413 | | | | | | — | | | | | | 9,347,450 | | |
Issuance of common stock and exercise of pre-funded warrants in public offering
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,818,181 | | | | | | 182 | | | | | | 9,999,814 | | | | | | — | | | | | | 9,999,996 | | |
Offering costs
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (2,921,646) | | | | | | — | | | | | | (2,921,646) | | |
Common stock issued in connection with business combination
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 90,909 | | | | | | 9 | | | | | | 999,991 | | | | | | — | | | | | | 1,000,000 | | |
Common stock issued pursuant to consulting
agreement |
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 750 | | | | | | — | | | | | | 123,000 | | | | | | — | | | | | | 123,000 | | |
Warrant and common shares issued with notes
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 60,000 | | | | | | 6 | | | | | | 1,368,735 | | | | | | — | | | | | | 1,368,741 | | |
Conversion of notes and derivative liability into common stock
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,995,183 | | | | | | 200 | | | | | | 11,983,189 | | | | | | — | | | | | | 11,983,389 | | |
Conversion of venture debt into Series A convertible preferred stock
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,300 | | | | | | 1 | | | | | | — | | | | | | — | | | | | | 6,299,999 | | | | | | — | | | | | | 6,300,000 | | |
Stock-based compensation
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 479,038 | | | | | | — | | | | | | 479,038 | | |
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (38,043,362) | | | | | | (38,043,362) | | |
Balances at December 31, 2022
|
| | | | — | | | | | $ | — | | | | | | — | | | | | $ | — | | | | | | — | | | | | $ | — | | | | | | — | | | | | $ | — | | | | | | — | | | | | $ | — | | | | | | — | | | | | $ | — | | | | | | 6,300 | | | | | $ | 1 | | | | | | 4,468,939 | | | | | $ | 447 | | | | | $ | 96,293,694 | | | | | $ | (103,747,316) | | | | | $ | (7,453,174) | | |
| | |
Year Ended December 31,
|
| |||||||||
| | |
2022
|
| |
2021
|
| ||||||
Cash flows from operating activities: | | | | | | | | | | | | | |
Net loss
|
| | | $ | (38,043,362) | | | | | $ | (32,357,957) | | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 2,226,376 | | | | | | 1,220,736 | | |
Amortization of loan discount and fees
|
| | | | 6,506,384 | | | | | | 1,382,222 | | |
Stock-based compensation
|
| | | | 602,038 | | | | | | 4,800,337 | | |
Fees incurred in connection with debt financings
|
| | | | 568,149 | | | | | | 560,309 | | |
Change in fair value of warrant liability
|
| | | | (18,223) | | | | | | 11,958 | | |
Change in fair value of derivative liability
|
| | | | (1,354,434) | | | | | | (910,204) | | |
Change in fair value of contingent consideration
|
| | | | 564,303 | | | | | | 8,764,460 | | |
Impairment of goodwill and intangible assets
|
| | | | 15,539,332 | | | | | | 3,400,000 | | |
Forgiveness of Payroll Protection Program
|
| | | | (1,760,755) | | | | | | (407,994) | | |
Change in credit reserve
|
| | | | (118,840) | | | | | | 36,893 | | |
Deferred offering costs
|
| | | | 367,696 | | | | | | — | | |
Deferred income tax benefit
|
| | | | — | | | | | | (1,100,120) | | |
Changes in operating assets and liabilities:
|
| | | | | | | | | | | | |
Accounts receivable, net
|
| | | | (475,036) | | | | | | 150,288 | | |
Due from factor, net
|
| | | | 655,708 | | | | | | (399,701) | | |
Inventory
|
| | | | 471,831 | | | | | | (911,293) | | |
Prepaid expenses and other current assets
|
| | | | (402,515) | | | | | | (151,917) | | |
Accounts payable
|
| | | | 919,131 | | | | | | 456,690 | | |
Accrued expenses and other liabilities
|
| | | | 1,992,649 | | | | | | 834,489 | | |
Deferred revenue
|
| | | | (74,268) | | | | | | 4,882 | | |
Due to related parties
|
| | | | 278,590 | | | | | | (63,550) | | |
Accrued interest
|
| | | | 984,358 | | | | | | 461,113 | | |
Net cash used in operating activities
|
| | | | (10,570,889) | | | | | | (14,218,359) | | |
Cash flows from investing activities: | | | | | | | | | | | | | |
Cash acquired (consideration) pursuant to business combination
|
| | | | (7,247,303) | | | | | | (5,936,757) | | |
Purchase of property, equipment and software
|
| | | | (5,533) | | | | | | (43,179) | | |
Deposits
|
| | | | (60,548) | | | | | | (31,117) | | |
Net cash used in investing activities
|
| | | | (7,313,384) | | | | | | (6,011,053) | | |
Cash flows from financing activities: | | | | | | | | | | | | | |
Repayments of related party notes
|
| | | | (170,000) | | | | | | — | | |
Advances (repayments) from factor
|
| | | | (3,096) | | | | | | (41,200) | | |
Repayment of contingent consideration
|
| | | | (645,304) | | | | | | — | | |
Proceeds from venture debt
|
| | | | 237,500 | | | | | | — | | |
Issuance of loans payable
|
| | | | 3,280,360 | | | | | | 2,779,910 | | |
Repayments of convertible and promissory notes
|
| | | | (7,437,349) | | | | | | (2,006,628) | | |
Issuance of convertible notes payable
|
| | | | 6,951,250 | | | | | | 8,433,650 | | |
Proceeds from public offering
|
| | | | 19,347,446 | | | | | | 10,000,002 | | |
Exercise of over-allotment option with public offering, net
|
| | | | — | | | | | | 1,364,997 | | |
Exercise of warrants
|
| | | | — | | | | | | 1,768,046 | | |
Offering costs
|
| | | | (2,921,646) | | | | | | (2,116,957) | | |
Net cash provided by financing activities
|
| | | | 18,639,161 | | | | | | 20,181,820 | | |
Net change in cash and cash equivalents
|
| | | | 754,888 | | | | | | (47,592) | | |
Cash and cash equivalents at beginning of period
|
| | | | 528,394 | | | | | | 575,986 | | |
Cash and cash equivalents at end of period
|
| | | $ | 1,283,282 | | | | | $ | 528,394 | | |
Supplemental disclosure of cash flow information: | | | | | | | | | | | | | |
Cash paid for income taxes
|
| | | $ | — | | | | | $ | — | | |
Cash paid for interest
|
| | | $ | 734,869 | | | | | $ | 902,089 | | |
Supplemental disclosure of non-cash investing and financing activities: | | | | | | | | | | | | | |
Conversion of notes, warrants and derivatives into common stock
|
| | | $ | 11,983,389 | | | | | $ | 2,680,289 | | |
Right of use asset
|
| | | $ | 102,349 | | | | | $ | — | | |
Warrant and common shares issued with notes
|
| | | $ | 1,368,741 | | | | | $ | — | | |
Derivative liability in connection with convertible note
|
| | | $ | 559,957 | | | | | $ | 3,204,924 | | |
Conversion of venture debt into preferred stock
|
| | | $ | 6,300,000 | | | | | $ | — | | |
Conversion of related party notes and payables into preferred and common stock
|
| | | $ | — | | | | | $ | 257,515 | | |
Conversion of preferred stock into common stock
|
| | | $ | — | | | | | $ | 6,291 | | |
Conversion of contingent consideration into common stock
|
| | | $ | — | | | | | $ | 73,500 | | |
Common shares issued pursuant to equity line of credit
|
| | | $ | — | | | | | $ | 367,696 | | |
| | |
Fair Value Measurements
as of December 31, 2022 Using: |
| |||||||||||||||||||||
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Warrant liability
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Contingent consideration
|
| | | | — | | | | | | — | | | | | | 12,098,475 | | | | | | 12,098,475 | | |
Derivative liability
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | $ | — | | | | | $ | — | | | | | $ | 12,098,475 | | | | | $ | 12,098,475 | | |
| | |
Fair Value Measurements
as of December 31, 2021 Using: |
| |||||||||||||||||||||
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Warrant liability
|
| | | $ | — | | | | | $ | 18,223 | | | | | $ | — | | | | | $ | 18,223 | | |
Contingent consideration
|
| | | | — | | | | | | — | | | | | | 12,179,476 | | | | | | 12,179,476 | | |
Derivative liability
|
| | | | — | | | | | | — | | | | | | 2,294,720 | | | | | | 2,294,720 | | |
| | | | $ | — | | | | | $ | 18,223 | | | | | $ | 14,474,196 | | | | | $ | 14,492,419 | | |
| | |
Warrant
Liability |
| |||
Outstanding as of December 31, 2020
|
| | | $ | 6,265 | | |
Change in fair value
|
| | | | 11,958 | | |
Outstanding as of December 31, 2021
|
| | | | 18,223 | | |
Change in fair value
|
| | | | (18,223) | | |
Outstanding as of December 31, 2022
|
| | | $ | — | | |
| | |
Contingent
Consideration Liability |
| |||
Balance as of December 31, 2020
|
| | | $ | — | | |
Initial recognition in connection with acquisition of Harper & Jones
|
| | | | 3,421,516 | | |
Stock price guarantee per consulting agreement
|
| | | | 67,000 | | |
Conversion into shares
|
| | | | (73,500) | | |
Change in fair value
|
| | | | 8,764,460 | | |
Outstanding as of December 31, 2021
|
| | | | 12,179,476 | | |
Repayments to Harper & Jones seller
|
| | | | (645,304) | | |
Change in fair value
|
| | | | 564,303 | | |
Outstanding as of December 31, 2022
|
| | | $ | 12,098,475 | | |
| | |
December 31,
|
| |||||||||
| | |
2022
|
| |
2021
|
| ||||||
Bailey
|
| | | $ | 10,698,475 | | | | | | 7,935,016 | | |
Harper & Jones
|
| | | | 1,400,000 | | | | | | 4,244,460 | | |
| | | | $ | 12,098,475 | | | | | $ | 12,179,476 | | |
| | |
Derivative
Liability |
| |||
Outstanding as of December 31, 2020
|
| | | $ | — | | |
Initial fair value on issuance of convertible note
|
| | | | 3,204,924 | | |
Change in fair value
|
| | | | (910,204) | | |
Outstanding as of December 31, 2021
|
| | | | 2,294,720 | | |
Initial fair value on issuance of convertible note
|
| | | | 559,957 | | |
Conversion of underlying notes into common stock
|
| | | | (1,500,243) | | |
Change in fair value
|
| | | | (1,354,434) | | |
Outstanding as of December 31, 2022
|
| | | $ | — | | |
| | |
December 31,
|
| |||||||||
| | |
2022
|
| |
2021
|
| ||||||
Raw materials
|
| | | $ | 1,611,134 | | | | | $ | 292,167 | | |
Work in process
|
| | | | 888,643 | | | | | | 242,673 | | |
Finished goods
|
| | | | 2,725,505 | | | | | | 2,220,519 | | |
Inventory
|
| | | $ | 5,225,282 | | | | | $ | 2,755,358 | | |
|
Customer relationships
|
| |
3 years
|
|
| | |
Year Ended December 31,
|
| |||||||||
| | |
2022
|
| |
2021
|
| ||||||
Bailey brand name
|
| | | $ | 2,182,000 | | | | | $ | 3,400,000 | | |
Harper & Jones brand name
|
| | | | 1,485,000 | | | | | | — | | |
Total impairment of intangibles
|
| | | | 3,667,000 | | | | | | 3,400,000 | | |
Bailey goodwill
|
| | | | 3,321,095 | | | | | | — | | |
Harper & Jones goodwill
|
| | | | 8,551,237 | | | | | | — | | |
Total impairment of goodwill
|
| | | | 11,872,332 | | | | | | — | | |
Total impairment
|
| | | $ | 15,539,332 | | | | | $ | 3,400,000 | | |
| | |
December 31,
|
| |||||||||
| | |
2022
|
| |
2021
|
| ||||||
Convertible notes
|
| | | | 947,867 | | | | | | 47,912 | | |
Series A convertible preferred stock
|
| | | | 108,000 | | | | | | — | | |
Common stock warrants
|
| | | | 4,418,320 | | | | | | 35,801 | | |
Stock options
|
| | | | 38,951 | | | | | | 38,951 | | |
Total potentially dilutive shares
|
| | | | 5,513,138 | | | | | | 122,664 | | |
|
Cash
|
| | | $ | 7,500,000 | | |
|
Promissory notes payable
|
| | | | 5,500,000 | | |
|
Common stock
|
| | | | 1,000,000 | | |
|
Purchase price consideration
|
| | | $ | 14,000,000 | | |
| | |
Purchase Price
Allocation |
| |||
Cash and cash equivalents
|
| | | $ | 252,697 | | |
Accounts receivable, net
|
| | | | 63,956 | | |
Due from factor, net
|
| | | | 387,884 | | |
Inventory
|
| | | | 2,941,755 | | |
Prepaid expenses and other current assets
|
| | | | 32,629 | | |
Property, equipment and software, net
|
| | | | 48,985 | | |
Goodwill
|
| | | | 3,711,322 | | |
Intangible assets
|
| | | | 7,403,800 | | |
Accounts payable
|
| | | | (615,706) | | |
Accrued expenses and other liabilities
|
| | | | (227,321) | | |
Purchase price consideration
|
| | | $ | 14,000,000 | | |
|
Cash
|
| | | $ | 500,000 | | |
|
Common stock
|
| | | | 8,025,542 | | |
|
Contingent consideration
|
| | | | 3,421,516 | | |
|
Purchase price consideration
|
| | | $ | 11,947,058 | | |
| | |
Purchase Price
Allocation |
| |||
Cash and cash equivalents
|
| | | $ | 24,335 | | |
Accounts receivable, net
|
| | | | 49,472 | | |
Due from factor, net
|
| | | | — | | |
Inventory
|
| | | | 77,159 | | |
Prepaid expenses and other current assets
|
| | | | 69,715 | | |
Property, equipment and software, net
|
| | | | 83,986 | | |
Goodwill
|
| | | | 9,681,548 | | |
Intangible assets
|
| | | | 3,936,030 | | |
Accounts payable
|
| | | | (51,927) | | |
Accrued expenses and other liabilities
|
| | | | (107,957) | | |
Purchase price consideration
|
| | | $ | 11,947,058 | | |
|
Cash
|
| | | $ | 5,000,000 | | |
|
Common stock
|
| | | | 3,403,196 | | |
|
Purchase price consideration
|
| | | $ | 8,403,196 | | |
| | |
Purchase Price
Allocation |
| |||
Cash and cash equivalents
|
| | | | 32,700 | | |
Accounts receivable, net
|
| | | | 154,678 | | |
Due from factor, net
|
| | | | 371,247 | | |
Inventory
|
| | | | 603,625 | | |
Prepaid expenses and other current assets
|
| | | | 7,970 | | |
Deposits
|
| | | | 9,595 | | |
Property, equipment and software, net
|
| | | | — | | |
Goodwill
|
| | | | 2,104,056 | | |
Intangible assets
|
| | | | 5,939,140 | | |
Accounts payable
|
| | | | (374,443) | | |
Accrued expenses and other liabilities
|
| | | | (445,372) | | |
| | | | $ | 8,403,196 | | |
| | |
Year Ended December 31,
|
| |||||||||
| | |
2022
|
| |
2021
|
| ||||||
Net revenues
|
| | | $ | 28,519,261 | | | | | $ | 34,635,426 | | |
Net loss
|
| | | $ | (42,001,415) | | | | | $ | (33,171,473) | | |
Net loss per common share
|
| | | $ | (54.46) | | | | | $ | (434.81) | | |
| | |
December 31,
|
| |||||||||
| | |
2022
|
| |
2021
|
| ||||||
Outstanding receivables: | | | | | | | | | | | | | |
Without recourse
|
| | | $ | 564,548 | | | | | $ | 579,295 | | |
With recourse
|
| | | | 352,379 | | | | | | 361,584 | | |
Advances
|
| | | | 118,521 | | | | | | 121,617 | | |
Credits due customers
|
| | | | (196,048) | | | | | | (77,208) | | |
| | | | $ | 839,400 | | | | | $ | 985,288 | | |
| | |
Bailey
|
| |
Harper & Jones
|
| |
Stateside
|
| |
Sundry
|
| |
Total
|
| |||||||||||||||
Balances at December 31, 2020
|
| | | $ | 6,479,218 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 6,479,218 | | |
Business combinations
|
| | | | — | | | | | | 9,681,548 | | | | | | 2,104,056 | | | | | | — | | | | | | 11,785,604 | | |
Impairment
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Balances at December 31, 2021
|
| | | | 6,479,218 | | | | | | 9,681,548 | | | | | | 2,104,056 | | | | | | — | | | | | | 18,264,822 | | |
Business combination
|
| | | | — | | | | | | — | | | | | | — | | | | | | 3,711,322 | | | | | | 3,711,322 | | |
Impairment
|
| | | | (3,321,095) | | | | | | (8,551,237) | | | | | | — | | | | | | — | | | | | | (11,872,332) | | |
Balances at December 31, 2022
|
| | | $ | 3,158,123 | | | | | $ | 1,130,311 | | | | | $ | 2,104,056 | | | | | $ | 3,711,322 | | | | | $ | 10,103,812 | | |
December 31, 2022
|
| |
Gross
Amount |
| |
Accumulated
Amortization |
| |
Carrying
Value |
| |||||||||
Amortized: | | | | | | | | | | | | | | | | | | | |
Customer relationships
|
| | | $ | 11,452,230 | | | | | | (3,600,607) | | | | | $ | 7,851,623 | | |
| | | | | 11,452,230 | | | | | | (3,600,607) | | | | | | 7,851,623 | | |
Indefinite-lived: | | | | | | | | | | | | | | | | | | | |
Brand name
|
| | | $ | 6,575,880 | | | | | | — | | | | | | 6,575,880 | | |
| | | | $ | 18,028,110 | | | | | $ | (3,600,607) | | | | | $ | 14,427,503 | | |
December 31, 2021
|
| |
Gross
Amount |
| |
Accumulated
Amortization |
| |
Carrying
Value |
| |||||||||
Amortized: | | | | | | | | | | | | | | | | | | | |
Customer relationships
|
| | | $ | 6,453,750 | | | | | | (1,449,357) | | | | | $ | 5,004,393 | | |
| | | | | 6,453,750 | | | | | | (1,449,357) | | | | | | 5,004,393 | | |
Indefinite-lived: | | | | | | | | | | | | | | | | | | | |
Brand name
|
| | | $ | 7,836,920 | | | | | | — | | | | | | 7,836,920 | | |
| | | | $ | 14,290,670 | | | | | $ | (1,449,357) | | | | | $ | 12,841,313 | | |
Year Ending December 31,
|
| | | | | | |
2023
|
| | | | 3,496,577 | | |
2024
|
| | | | 2,688,886 | | |
2025
|
| | | | 1,666,160 | | |
| | | | $ | 7,851,623 | | |
| | |
December 31,
|
| |||||||||
| | |
2022
|
| |
2021
|
| ||||||
Accrued expenses
|
| | | $ | 705,135 | | | | | $ | 213,740 | | |
Reserve for returns
|
| | | | 307,725 | | | | | | 33,933 | | |
Payroll related liabilities
|
| | | | 2,974,361 | | | | | | 1,204,665 | | |
Sales tax liability
|
| | | | 339,843 | | | | | | 268,723 | | |
Due to seller
|
| | | | — | | | | | | 396,320 | | |
Other liabilities
|
| | | | 130,050 | | | | | | 119,764 | | |
| | | | $ | 4,457,115 | | | | | $ | 2,237,145 | | |
| | |
Principal
|
| |
Unamortized
Debt Discount |
| |
Convertible Note
Payable, Net |
| |||||||||
Balance, December 31, 2020
|
| | | $ | 100,000 | | | | | $ | — | | | | | $ | 100,000 | | |
Issuance of Oasis note, net of issuance costs
|
| | | | 5,265,000 | | | | | | (715,000) | | | | | | 4,550,000 | | |
Issuance of FirstFire First note, net of issuance costs
|
| | | | 1,575,000 | | | | | | (315,000) | | | | | | 1,260,000 | | |
Issuance of Second FirstFire note, net of issuance costs
|
| | | | 2,625,000 | | | | | | (530,000) | | | | | | 2,095,000 | | |
Derivative liability in connection with notes
|
| | | | — | | | | | | (3,204,924) | | | | | | (3,204,924) | | |
Amortization of debt discount
|
| | | | — | | | | | | 801,538 | | | | | | 801,538 | | |
Balance, December 31, 2021
|
| | | | 9,565,000 | | | | | | (3,963,386) | | | | | | 5,601,614 | | |
Proceeds from issuance of notes
|
| | | | 8,943,750 | | | | | | (1,992,500) | | | | | | 6,951,250 | | |
Repayments of notes
|
| | | | (4,943,750) | | | | | | — | | | | | | (4,943,750) | | |
Conversion of notes into common stock
|
| | | | (9,465,000) | | | | | | — | | | | | | (9,465,000) | | |
Warrant and common shares issued with convertible
notes |
| | | | — | | | | | | (1,368,741) | | | | | | (1,368,741) | | |
Derivative liability in connection with notes
|
| | | | — | | | | | | (559,957) | | | | | | (559,957) | | |
Amortization of debt discount
|
| | | | — | | | | | | 6,506,384 | | | | | | 6,506,384 | | |
Balance, December 31, 2022
|
| | | $ | 4,100,000 | | | | | $ | (1,378,200) | | | | | $ | 2,721,800 | | |
| | |
Common
Stock Warrants |
| |
Weighted
Average Exercise Price |
| ||||||
Outstanding – December 31, 2020
|
| | | | 9,146 | | | | | $ | 266 | | |
Granted
|
| | | | 30,120 | | | | | | 458 | | |
Conversion of preferred stock warrants upon IPO
|
| | | | 516 | | | | | | 766 | | |
Exercised
|
| | | | (3,869) | | | | | | 457 | | |
Forfeited
|
| | | | (112) | | | | | | 766 | | |
Outstanding – December 31, 2021
|
| | | | 35,801 | | | | | $ | 412 | | |
Granted
|
| | | | 6,032,700 | | | | | | 5.61 | | |
Exercised
|
| | | | (1,650,181) | | | | | | 5.25 | | |
Forfeited
|
| | | | — | | | | | | — | | |
Outstanding – December 31, 2022
|
| | | | 4,418,320 | | | | | $ | 8.37 | | |
Exercisable at December 31, 2021
|
| | | | 35,801 | | | | | $ | 412 | | |
Exercisable at December 31, 2022
|
| | | | 4,281,956 | | | | | $ | 8.42 | | |
| | |
Options
|
| |
Weighted
Average Exercise Price |
| ||||||
Outstanding – December 31, 2020
|
| | | | 11,631 | | | | | $ | 234 | | |
Granted
|
| | | | 27,320 | | | | | | 415 | | |
Exercised
|
| | | | — | | | | | | — | | |
Forfeited
|
| | | | — | | | | | | — | | |
Outstanding – December 31, 2021
|
| | | | 38,951 | | | | | $ | 362 | | |
Granted
|
| | | | — | | | | | | — | | |
Exercised
|
| | | | — | | | | | | — | | |
Forfeited
|
| | | | — | | | | | | — | | |
Outstanding – December 31, 2022
|
| | | | 38,951 | | | | | $ | 362 | | |
Exercisable at December 31, 2021
|
| | | | 31,646 | | | | | $ | 359 | | |
Exercisable at December 31, 2022
|
| | | | 34,713 | | | | | $ | 405 | | |
Weighted average duration (years) to expiration of outstanding options at
December 31, 2022 |
| | | | 7.00 | | | | | | | | |
| | |
Year Ended December 31,
|
| ||||||
| | |
2022
|
| |
2021
|
| |||
Risk Free Interest Rate
|
| | | | n/a | | | |
0.34% – 0.85%
|
|
Expected Dividend Yield
|
| | | | n/a | | | |
0.00%
|
|
Expected Volatility
|
| | | | n/a | | | |
58.00%
|
|
Expected Life (years)
|
| | | | n/a | | | |
5.18
|
|
| | |
December 31,
|
| |||||||||
| | |
2022
|
| |
2021
|
| ||||||
Deferred tax assets: | | | | | | | | | | | | | |
Net operating loss carryforwards
|
| | | $ | 16,733,582 | | | | | $ | 13,108,371 | | |
Deferred tax liabilities: | | | | | | | | | | | | | |
Depreciation timing differences
|
| | | | — | | | | | | (5,103) | | |
Valuation allowance
|
| | | | (16,733,582) | | | | | | (13,103,268) | | |
Net deferred tax assets
|
| | | $ | — | | | | | $ | — | | |
| | |
September 30,
2022 |
| |
December 31,
2021 |
| ||||||
ASSETS | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash
|
| | | $ | 762,607 | | | | | $ | 417,235 | | |
Accounts receivable, net of allowance
|
| | | | 238,779 | | | | | | 124,342 | | |
Due from factor
|
| | | | 416,226 | | | | | | 590,022 | | |
Inventory
|
| | | | 3,207,105 | | | | | | 4,917,128 | | |
Prepaid expenses and other current assets
|
| | | | 170,602 | | | | | | 219,902 | | |
Total current assets
|
| | | | 4,795,319 | | | | | | 6,268,628 | | |
Fixed assets, net
|
| | | | 112,602 | | | | | | 161,954 | | |
Deposits
|
| | | | 9,612 | | | | | | 19,742 | | |
Total assets
|
| | | $ | 4,917,533 | | | | | $ | 6,450,324 | | |
LIABILITIES AND MEMBERS’ EQUITY | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable
|
| | | $ | 1,345,197 | | | | | $ | 1,142,671 | | |
Accrued liabilities
|
| | | | 490,396 | | | | | | 773,274 | | |
Loan payable, related party
|
| | | | 495,000 | | | | | | — | | |
Total liabilities
|
| | | | 2,330,593 | | | | | | 1,915,945 | | |
Commitments and contingencies (Note 7) | | | | | | | | | | | | | |
Members’ equity
|
| | | | 2,586,939 | | | | | | 4,534,379 | | |
Total members’ equity
|
| | | | 2,586,939 | | | | | | 4,534,379 | | |
Total liabilities and members’ equity
|
| | | $ | 4,917,533 | | | | | $ | 6,450,324 | | |
| | |
Nine Months Ended
September 30, |
| |||||||||
| | |
2022
|
| |
2021
|
| ||||||
Net revenues
|
| | | $ | 11,868,420 | | | | | $ | 18,151,326 | | |
Cost of goods sold
|
| | | | 8,026,234 | | | | | | 10,890,796 | | |
Gross profit
|
| | | | 3,842,186 | | | | | | 7,260,530 | | |
Operating expenses: | | | | | | | | | | | | | |
General and administrative
|
| | | | 2,682,642 | | | | | | 2,286,956 | | |
Distribution
|
| | | | 731,545 | | | | | | 863,185 | | |
Sales and marketing
|
| | | | 2,260,763 | | | | | | 3,168,990 | | |
Total operating expenses
|
| | | | 5,674,950 | | | | | | 6,319,131 | | |
Income (loss) from operations
|
| | | | (1,832,764) | | | | | | 941,399 | | |
Other income (expense), net | | | | | | | | | | | | | |
Other income
|
| | | | — | | | | | | 689,171 | | |
Interest expense
|
| | | | (43,876) | | | | | | (50,510) | | |
Total other income (expense), net
|
| | | | (43,876) | | | | | | 638,661 | | |
Provision for income taxes
|
| | | | 800 | | | | | | 800 | | |
Net income (loss)
|
| | | $ | (1,877,440) | | | | | $ | 1,579,260 | | |
| | |
Members’
Equity |
| |||
Balances at December 31, 2020
|
| | | $ | 4,630,468 | | |
Distributions
|
| | | | (1,780,000) | | |
Net income
|
| | | | 1,579,260 | | |
Balances at September 30, 2021
|
| | | $ | 4,429,728 | | |
Balances at December 31, 2021
|
| | | $ | 4,534,379 | | |
Distributions
|
| | | | (70,000) | | |
Net loss
|
| | | | (1,877,440) | | |
Balances at September 30, 2022
|
| | | $ | 2,586,939 | | |
| | |
Nine Months Ended September 30,
|
| |||||||||
| | |
2022
|
| |
2021
|
| ||||||
Cash flows from operating activities: | | | | | | | | | | | | | |
Net income (loss)
|
| | | $ | (1,877,440) | | | | | $ | 1,579,260 | | |
Adjustments to reconcile net income (loss) to net cash provided by operating
activities: |
| | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 40,500 | | | | | | 43,200 | | |
Bad debt
|
| | | | — | | | | | | 7,068 | | |
Other income – PPP forgiveness
|
| | | | — | | | | | | (689,171) | | |
Changes in operating assets and liabilities:
|
| | | | | | | | | | | | |
Accounts receivable
|
| | | | (114,438) | | | | | | (140,037) | | |
Due from factor
|
| | | | 1,181,097 | | | | | | 721,984 | | |
Inventory
|
| | | | 1,710,023 | | | | | | 938,206 | | |
Prepaid expenses and other current assets
|
| | | | 49,300 | | | | | | (109,952) | | |
Accounts payable
|
| | | | 202,526 | | | | | | (690,300) | | |
Accrued liabilities
|
| | | | (282,878) | | | | | | (629,131) | | |
Net cash provided by operating activities
|
| | | | 908,690 | | | | | | 1,031,127 | | |
Cash flows from investing activities: | | | | | | | | | | | | | |
Purchase of property and equipment
|
| | | | — | | | | | | (5,000) | | |
Proceeds from sale of property and equipment
|
| | | | 8,852 | | | | | | — | | |
Deposits
|
| | | | 10,130 | | | | | | — | | |
Net cash provided by (used in) investing activities
|
| | | | 18,982 | | | | | | (5,000) | | |
Cash flows from financing activities: | | | | | | | | | | | | | |
Proceeds from loans payable
|
| | | | — | | | | | | 630,637 | | |
Proceeds from loan payable, related party
|
| | | | 995,000 | | | | | | — | | |
Repayments to loan payable, related party
|
| | | | (500,000) | | | | | | — | | |
Factor advances (repayments), net
|
| | | | (1,007,300) | | | | | | (185,000) | | |
Distributions
|
| | | | (70,000) | | | | | | (1,780,000) | | |
Net cash used in financing activities
|
| | | | (582,300) | | | | | | (1,334,363) | | |
Net change in cash and cash equivalents
|
| | | | 345,372 | | | | | | (308,236) | | |
Cash at beginning of period
|
| | | | 417,235 | | | | | | 733,440 | | |
Cash at end of period
|
| | | $ | 762,607 | | | | | $ | 425,204 | | |
Supplemental disclosure of cash flow information: | | | | | | | | | | | | | |
Cash paid for income taxes
|
| | | $ | 800 | | | | | $ | 800 | | |
Cash paid for interest
|
| | | $ | 43,876 | | | | | $ | 50,510 | | |
| | |
September 30,
2022 |
| |
December 31,
2021 |
| ||||||
Outstanding receivables | | | | | | | | | | | | | |
Without recourse
|
| | | $ | 702,432 | | | | | $ | 1,886,591 | | |
With recourse
|
| | | | 580 | | | | | | 11,000 | | |
| | | | | 703,012 | | | | | | 1,897,591 | | |
Advances
|
| | | | (202,000) | | | | | | (1,209,300) | | |
Credits due customers
|
| | | | (84,787) | | | | | | (98,269) | | |
Due from factor
|
| | | $ | 416,226 | | | | | $ | 590,022 | | |
| | |
September 30,
2022 |
| |
December 31,
2021 |
| ||||||
Raw materials
|
| | | $ | 1,139,267 | | | | | $ | 1,746,722 | | |
Work in progress
|
| | | | 1,272,861 | | | | | | 1,951,549 | | |
Finished goods
|
| | | | 794,977 | | | | | | 1,218,857 | | |
Inventory
|
| | | $ | 3,207,105 | | | | | $ | 4,917,128 | | |
| | |
September 30,
2022 |
| |
December 31,
2021 |
| ||||||
Leasehold improvements and showrooms
|
| | | $ | 198,658 | | | | | $ | 198,658 | | |
Furniture and equipment
|
| | | | 174,005 | | | | | | 183,005 | | |
Automobiles
|
| | | | 34,220 | | | | | | 34,072 | | |
| | | | | 406,883 | | | | | | 415,735 | | |
Less: accumulated depreciation and amortization
|
| | | | (294,281) | | | | | | (253,781) | | |
Fixed assets, net
|
| | | $ | 112,602 | | | | | $ | 161,954 | | |
| | |
December 30,
2022 |
| |||
ASSETS | | | | | | | |
Current assets: | | | | | | | |
Cash
|
| | | $ | 179,441 | | |
Accounts receivable, net of allowance
|
| | | | 63,956 | | |
Due from factor
|
| | | | 387,884 | | |
Inventory
|
| | | | 2,941,755 | | |
Prepaid expenses and other current assets
|
| | | | 83,120 | | |
Total current assets
|
| | | | 3,656,157 | | |
Fixed assets, net
|
| | | | 48,985 | | |
Deposits
|
| | | | 9,612 | | |
Total assets
|
| | | $ | 3,714,753 | | |
LIABILITIES AND MEMBERS’ EQUITY | | | | | | | |
Current liabilities: | | | | | | | |
Accounts payable
|
| | | $ | 613,595 | | |
Accrued liabilities
|
| | | | 633,672 | | |
Loan payable, related party
|
| | | | 395,000 | | |
Total liabilities
|
| | | | 1,642,267 | | |
Commitments and contingencies | | | | | | | |
Members’ equity
|
| | | | 2,072,486 | | |
Total members’ equity
|
| | | | 2,072,486 | | |
Total liabilities and members’ equity
|
| | | $ | 3,714,753 | | |
| | |
Period Ended
December 30, 2022 |
| |||
Net revenues
|
| | | $ | 14,548,083 | | |
Cost of goods sold
|
| | | | 9,694,857 | | |
Gross profit
|
| | | | 4,853,226 | | |
Operating expenses: | | | | | | | |
General and administrative
|
| | | | 3,433,633 | | |
Distribution
|
| | | | 913,052 | | |
Sales and marketing
|
| | | | 2,736,181 | | |
Total operating expenses
|
| | | | 7,082,866 | | |
Income (loss) from operations
|
| | | | (2,229,640) | | |
Other income (expense), net | | | | | | | |
Other income
|
| | | | 13,878 | | |
Other expenses
|
| | | | (66,232) | | |
Interest expense
|
| | | | (9,099) | | |
Total other income (expense), net
|
| | | | (61,453) | | |
Provision for income taxes
|
| | | | 800 | | |
Net income (loss)
|
| | | $ | (2,291,893) | | |
| | |
Members’
Equity |
| |||
Balances at December 31, 2021
|
| | | $ | 4,534,379 | | |
Distributions
|
| | | | (170,000) | | |
Net loss
|
| | | | (2,291,893) | | |
Balances at December 30, 2022
|
| | | $ | 2,072,486 | | |
| | |
Period Ended
December 30, 2022 |
| |||
Cash flows from operating activities: | | | | | | | |
Net loss
|
| | | $ | (2,291,893) | | |
Adjustments to reconcile net loss to net cash provided by operating activities: | | | | | | | |
Depreciation and amortization
|
| | | | 37,885 | | |
Changes in operating assets and liabilities:
|
| | | | | | |
Accounts receivable
|
| | | | 60,386 | | |
Due from factor
|
| | | | 473,341 | | |
Inventory
|
| | | | 1,975,373 | | |
Prepaid expenses and other current assets
|
| | | | 136,781 | | |
Accounts payable
|
| | | | (529,075) | | |
Accrued liabilities
|
| | | | (139,602) | | |
Net cash used in operating activities
|
| | | | (276,805) | | |
Cash flows from investing activities: | | | | | | | |
Proceeds from sale of property and equipment
|
| | | | 75,084 | | |
Deposits
|
| | | | 10,130 | | |
Net cash provided by (used in) investing activities
|
| | | | 85,214 | | |
Cash flows from financing activities: | | | | | | | |
Proceeds from loans payable
|
| | | | — | | |
Proceeds from loan payable, related party
|
| | | | 995,000 | | |
Repayments to loan payable, related party
|
| | | | (600,000) | | |
Factor advances (repayments), net
|
| | | | (271,203) | | |
Distributions
|
| | | | (170,000) | | |
Net cash used in financing activities
|
| | | | (46,203) | | |
Net change in cash
|
| | | | (237,794) | | |
Cash at beginning of period
|
| | | | 417,235 | | |
Cash at end of period
|
| | | $ | 179,441 | | |
Supplemental disclosure of cash flow information: | | | | | | | |
Cash paid for income taxes
|
| | | $ | 800 | | |
Cash paid for interest
|
| | | $ | 9,099 | | |
| | |
December 30,
2022 |
| |||
Outstanding receivables | | | | | | | |
Without recourse
|
| | | $ | 1,463,496 | | |
With recourse
|
| | | | 8,533 | | |
| | | | | 1,472,029 | | |
Advances
|
| | | | (938,097) | | |
Credits due customers
|
| | | | (146,048) | | |
Due from factor
|
| | | $ | 387,884 | | |
| | |
December 30,
2022 |
| |||
Raw materials
|
| | | $ | 1,214,778 | | |
Work in progress
|
| | | | 787,532 | | |
Finished goods
|
| | | | 939,445 | | |
Inventory
|
| | | $ | 2,941,755 | | |
| | |
December 30,
2022 |
| |||
Leasehold improvements and showrooms
|
| | | $ | 108,383 | | |
Furniture and equipment
|
| | | | 174,006 | | |
Automobiles
|
| | | | 34,220 | | |
| | | | | 316,608 | | |
Less: accumulated depreciation and amortization
|
| | | | (267,623) | | |
Fixed assets, net
|
| | | $ | 48,985 | | |
| | |
December 31,
2021 |
| |||
ASSETS | | | | | | | |
Current assets:
|
| | | $ | 417,235 | | |
Cash
|
| | | | | | |
Accounts receivable, net of allowance
|
| | | | 124,342 | | |
Due from factor
|
| | | | 590,022 | | |
Inventory
|
| | | | 4,917,128 | | |
Prepaid expenses and other current assets
|
| | | | 219,901 | | |
Total current assets
|
| | | | 6,268,628 | | |
Fixed assets, net
|
| | | | 161,954 | | |
Deposits
|
| | | | 19,742 | | |
Total assets
|
| | | $ | 6,450,324 | | |
LIABILITIES AND MEMBERS’ EQUITY | | | | | | | |
Current liabilities: | | | | | | | |
Accounts payable
|
| | | $ | 1,142,671 | | |
Accrued liabilities
|
| | | | 773,274 | | |
Loan payable, current
|
| | | | — | | |
Total current liabilities
|
| | | | 1,915,945 | | |
Loan payable, net of current portion
|
| | | | — | | |
Total liabilities
|
| | | | 1,915,945 | | |
Commitments and contingencies (Note 7) | | | | | | | |
Members’ equity
|
| | | | 4,534,379 | | |
Total members’ equity
|
| | | | 4,534,379 | | |
Total liabilities and members’ equity
|
| | | $ | 6,450,324 | | |
| | |
Year Ended
December 31, 2021 |
| |||
Net revenues
|
| | | $ | 22,800,825 | | |
Cost of goods sold
|
| | | | 13,638,553 | | |
Gross profit
|
| | | | 9,162,272 | | |
Operating expenses: | | | | | | | |
General and administrative
|
| | | | 3,201,811 | | |
Distribution
|
| | | | 1,080,964 | | |
Sales and marketing
|
| | | | 4,374,667 | | |
Total operating expenses
|
| | | | 8,657,442 | | |
Income from operations
|
| | | | 504,830 | | |
Other income (expense), net Other income
|
| | | | 1,319,899 | | |
Interest expense
|
| | | | (70,018) | | |
Total other income (expense), net
|
| | | | 1,249,881 | | |
Provision for income taxes
|
| | | | 800 | | |
Net income
|
| | | $ | 1,753,911 | | |
| | |
Members’
Equity |
| |||
Balances at December 31, 2020
|
| | | $ | 4,630,468 | | |
Distributions
|
| | | | (1,850,000) | | |
Net income
|
| | | | 1,753,911 | | |
Balances at December 31, 2021
|
| | | $ | 4,534,379 | | |
| | |
Year Ended
December 31, 2021 |
| |||
Cash flows from operating activities: | | | | | | | |
Net income
|
| | | $ | 1,753,911 | | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | |
Depreciation and amortization
|
| | | | 53,851 | | |
Bad debt
|
| | | | 9,976 | | |
Other income – PPP forgiveness
|
| | | | (1,319,808) | | |
Changes in operating assets and liabilities:
|
| | | | | | |
Accounts receivable
|
| | | | 44,740 | | |
Due from factor
|
| | | | 363,083 | | |
Inventory
|
| | | | 830,698 | | |
Due from related party
|
| | | | — | | |
Prepaid expenses and other current assets
|
| | | | (117,777) | | |
Accounts payable
|
| | | | (258,122) | | |
Accrued liabilities
|
| | | | (440,694) | | |
Net cash provided by operating activities
|
| | | | 919,858 | | |
Cash flows from investing activities: | | | | | | | |
Purchase of property and equipment
|
| | | | — | | |
Net cash used in investing activities
|
| | | | — | | |
Cash flows from financing activities: | | | | | | | |
Proceeds from loans payable
|
| | | | 480,637 | | |
Factor advances (repayments), net
|
| | | | 133,300 | | |
Distributions
|
| | | | (1,850,000) | | |
Net cash used in financing activities
|
| | | | (1,236,063) | | |
Net change in cash and cash equivalents
|
| | | | (316,205) | | |
Cash and cash equivalents at beginning of year
|
| | | | 733,440 | | |
Cash and cash equivalents at end of year
|
| | | $ | 417,235 | | |
Supplemental disclosure of cash flow information: | | | | | | | |
Cash paid for income taxes
|
| | | $ | 800 | | |
Cash paid for interest
|
| | | $ | 70,018 | | |
| | |
December 31,
2021 |
| |||
Outstanding receivables | | | | | | | |
Without recourse
|
| | | $ | 1,886,591 | | |
With recourse
|
| | | | 11,000 | | |
| | | | | 1,897,591 | | |
Advances
|
| | | | (1,209,300) | | |
Credits due customers
|
| | | | (98,269) | | |
Due from factor
|
| | | $ | 590,022 | | |
| | |
December 31,
2021 |
| |||
Raw materials
|
| | | $ | 1,746,722 | | |
Work in progress
|
| | | | 1,951,549 | | |
Finished goods
|
| | | | 1,218,857 | | |
Inventory
|
| | | $ | 4,917,128 | | |
| | |
December 31,
2021 |
| |||
Leasehold improvements and showrooms
|
| | | $ | 198,658 | | |
Furniture and equipment
|
| | | | 183,005 | | |
Automobiles
|
| | | | 34,072 | | |
| | | | | 415,735 | | |
Less: accumulated depreciation and amortization
|
| | | | (253,781) | | |
Fixed assets, net
|
| | | $ | 161,954 | | |
|
2022
|
| | | $ | 15,516 | | |
| | | | | $ | 15,516 | | |
|
SEC Filing Fee
|
| | | $ | 570.01 | | |
|
Placement Agent Expenses and non-accountable expense allowance
|
| | | $ | 664,900.00* | | |
|
Legal Fees and Expenses
|
| | | $ | 300,000.00* | | |
|
Accounting Fees and Expenses
|
| | | $ | 10,000.00* | | |
|
Transfer Agent and Registrar Expenses
|
| | | $ | 5,000.00* | | |
|
Miscellaneous Fees and Expenses, including FINRA filing fee
|
| | | $ | 19,529.99** | | |
|
Total
|
| | | $ | 1,000,000.00* | | |
|
NAME
|
| |
TITLE
|
| |
DATE
|
|
|
/s/ John Hilburn Davis IV
John Hilburn Davis IV
|
| |
Director, President and Chief Executive Officer
|
| |
August 2, 2023
|
|
|
/s/ Reid Yeoman
Reid Yeoman
|
| |
Chief Financial Officer
(Principal financial and accounting officer) |
| |
August 2, 2023
|
|
|
*
Mark T. Lynn
|
| |
Director
|
| |
August 2, 2023
|
|
|
*
Trevor Pettennude
|
| |
Director
|
| |
August 2, 2023
|
|
|
*
Jameeka Aaron Green
|
| |
Director
|
| |
August 2, 2023
|
|
|
*
Huong “Lucy” Doan
|
| |
Director
|
| |
August 2, 2023
|
|
|
*By:
/s/ John Hilburn Davis IV
John Hilburn Davis IV
attorney-in-fact |
| | | | |
August 2, 2023
|
|
EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the use, in this Registration Statement on Form S-1, of our report dated April 17, 2023, related to the consolidated financial statements of Digital Brands Group, Inc (the “Company”) as of December 31, 2022 and 2021, and for the years then ended, which includes an explanatory paragraph regarding the substantial doubt about the Company’s ability to continue as a going concern. We also consent to the reference to us under the heading “Experts” in such Registration Statement.
Newport Beach, California
August 2, 2023
EXHIBIT 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the use, in this Registration Statement on Form S-1, of our report dated April 18, 2022 related to the financial statements of Sunnyside LLC dba Sundry (the “Company”) as of December 31, 2022, and for the year then ended. We also consent to the reference to us under the heading “Experts” in such Registration Statement.
Newport Beach, California
August 2, 2023
Exhibit 107
Calculation of Filing Fee Tables
Form S-1
(Form Type)
DIGITAL BRANDS GROUP, INC.
(Exact Name of Registrant as Specified in its Charter)
Table 1: Newly Registered and Carry Forward Securities
Security Type |
Security Class Title |
Fee Calculation or Carry Forward Rule |
Amount Registered |
Proposed Maximum Offering Price Per Unit |
Maximum Aggregate Offering Price |
Fee Rate | Amount
of Registration Fee |
Carry Forward Form Type |
Carry Forward File Number |
Carry Forward Initial effective date |
Filing
Fee Previously Paid In Connection with Unsold Securities to be Carried Forward | |
Newly Registered Securities | ||||||||||||
Fees Previously Paid | Equity | Class A Common Stock, par value $0.001 per share | 457(o) | - | - | $5,000,000 (1) | $0.0001102 (2) | $551.00 (2) | ||||
Fees Previously Paid | Equity | Pre-Funded Warrants(3) | 457(g) | - | - | Included above | - | - | ​ | ​ | ​ | ​ |
Fees Previously Paid | Equity | Common Stock issuable upon exercise of the Pre-Funded Warrants | 457(g) | - | - | Included above | - | - | ​ | ​ | ​ | ​ |
Fees Previously Paid | Equity | Placement Agent Warrants(4) | 457(g) | - | - | - | - | - | ​ | ​ | ​ | ​ |
Fees Previously Paid | Equity | Common Stock issuable upon exercise of Placement Agent Warrants(4) | 457(o) | - | - | $172,500 | $0.0001102 (2) | $19.01 | ​ | ​ | ​ | ​ |
Carry Forward Securities | ||||||||||||
Carry Forward Securities | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||
Total Offering Amounts | $570.01 | |||||||||||
Total Fees Previously Paid | $779.39 | |||||||||||
Total Fee Offsets | ||||||||||||
Net Fee Due | $(209.38) |
(1) | Calculated pursuant to Rule 457(o) based on an estimate of the proposed maximum aggregate offering price, includes the number of shares of Common Stock (or pre-funded warrants in lieu of shares) issuable upon exercise of a 45-day option granted to the underwriters to cover over-allotments, if any. |
(2) | Calculated pursuant to Rule 457(o) under the Securities Act at a rate equal to $110.20 per $1,000,000 of the proposed maximum aggregate offering price, subject to offset pursuant to Rule 415(a)(6). |
(3) | The proposed maximum aggregate offering price of the common stock will be reduced on a dollar-for-dollar basis based on the offering price of any Pre-Funded Warrants sold in the offering, and the proposed maximum aggregate offering price of the Pre-Funded Warrants to be sold in the offering will be reduced on a dollar-for-dollar basis based on the offering price of any common stock sold in the offering. Accordingly, the proposed maximum aggregate offering price of the common stock and pre-funded warrants (including the common stock issuable upon exercise of the pre-funded warrants), if any, is $5,000,000. |
(4) | Represents warrants issuable to Spartan Capital Securities, LLC to purchase up to a number of shares of our common stock equal to 2% of the aggregate number of shares of common stock and pre-funded warrants being offered at an exercise price equal to 125% of the public offering price of the shares common stock. |
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