Loss from operations was $225,000 versus $3.7 million a year ago
Austin, TX, May 20, 2024 (GLOBE NEWSWIRE) -- Digital Brands Group, Inc. (“DBG”) (NASDAQ: DBGI), a curated collection of luxury lifestyle, digital-first brands, today reported financial results for its first quarter ended March 31, 2024.
“Despite a timing shift in our wholesale shipments, which shifted revenue from the first quarter to the second quarter, we experienced significant operating expense leverage. We expect this operating leverage to continue throughout the year. In fact, this operating leverage coupled with higher revenues will result in higher flow through to our operating and net income,” said Hil Davis, CEO of Digital Brands Group.
Results for the First Quarter
- Net revenues were $3.6 million compared to $4.4 million a year ago
o Net revenues were negatively impacted by wholesale shipments that slipped from the end of March to the first half of April
o This wholesale revenue shift will benefit our second quarter revenue
- Gross profit margins increased to 48.1% compared to 45.5% a year ago
o Gross profit was $1.7 million compared to $2.0 million a year ago
- G&A expenses decreased to $1.0 million compared to $4.5 million a year ago
o G&A expense ratio was 27.2% compared to 100.5% a year ago
- Sales & Marketing expenses were $700,000 compared to $1.0 million a year ago
o Sales and marketing expenses ratio was 19.8% compared to 22.0% a year ago
- Net operating loss was $225,000 compared to a loss of $3.7 million a year ago
- Net loss was $684,000, or a loss of $0.46 per diluted share, compared to a loss of $6.1 million, or a loss of $27.48 per diluted share, a year ago
Conference Call and Webcast Details Updated
Management will host a conference call on Monday, May 20, 2024 at 10:30 a.m. ET to discuss the results. The live conference call can be accessed by dialing 888-506-0062 from the U.S. or internationally. The conference I.D. code is 817721 or referencing Digital Brands or via the web by using the following link: https://www.webcaster4.com/Webcast/Page/3044/50662.
Forward-looking Statements
Certain statements included in this release are "forward-looking statements" within the meaning of the federal securities laws. Forward-looking statements are made based on our expectations and beliefs concerning future events impacting DBG and therefore involve several risks and uncertainties. You can identify these statements by the fact that they use words such as “will,” “anticipate,” “estimate,” “expect,” “should,” and “may” and other words and terms of similar meaning or use of future dates, however, the absence of these words or similar expressions does not mean that a statement is not forward-looking. All statements regarding DBG’s plans, objectives, projections and expectations relating to DBG’s operations or financial performance, and assumptions related thereto are forward-looking statements. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements. DBG undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Potential risks and uncertainties that could cause the actual results of operations or financial condition of DBG to differ materially from those expressed or implied by forward-looking statements include, but are not limited to: risks arising from the widespread outbreak of an illness or any other communicable disease, or any other public health crisis, including the coronavirus (COVID-19) global pandemic; the level of consumer demand for apparel and accessories; disruption to DBGs distribution system; the financial strength of DBG’s customers; fluctuations in the price, availability and quality of raw materials and contracted products; disruption and volatility in the global capital and credit markets; DBG’s response to changing fashion trends, evolving consumer preferences and changing patterns of consumer behavior; intense competition from online retailers; manufacturing and product innovation; increasing pressure on margins; DBG’s ability to implement its business strategy; DBG’s ability to grow its wholesale and direct-to-consumer businesses; retail industry changes and challenges; DBG’s and its vendors’ ability to maintain the strength and security of information technology systems; the risk that DBG’s facilities and systems and those of our third-party service providers may be vulnerable to and unable to anticipate or detect data security breaches and data or financial loss; DBG’s ability to properly collect, use, manage and secure consumer and employee data; stability of DBG’s manufacturing facilities and foreign suppliers; continued use by DBG’s suppliers of ethical business practices; DBG’s ability to accurately forecast demand for products; continuity of members of DBG’s management; DBG’s ability to protect trademarks and other intellectual property rights; possible goodwill and other asset impairment; DBG’s ability to execute and integrate acquisitions; changes in tax laws and liabilities; legal, regulatory, political and economic risks; adverse or unexpected weather conditions; DBG's indebtedness and its ability to obtain financing on favorable terms, if needed, could prevent DBG from fulfilling its financial obligations; and climate change and increased focus on sustainability issues. More information on potential factors that could affect DBG’s financial results is included from time to time in DBG’s public reports filed with the SEC, including DBG’s Annual Report on Form 10-K, and Quarterly Reports on Form 10-Q, and Forms 8-K filed or furnished with the SEC.
DIGITAL BRANDS GROUP, INC
STATEMENT OF OPERATIONS
|
|
Three Months Ended |
|
|
|
March, 31 |
|
|
|
2024 |
|
|
2023 |
|
| Net revenues |
|
$ |
3,576,587 |
|
|
$ |
4,439,508 |
|
| Cost of net revenues |
|
|
1,855,851 |
|
|
|
2,420,194 |
|
| Gross profit |
|
|
1,720,736 |
|
|
|
2,019,314 |
|
|
|
|
|
|
|
|
|
|
| Operating expenses: |
|
|
|
|
|
|
|
|
| General and administrative |
|
|
971,732 |
|
|
|
4,460,462 |
|
| Sales and marketing |
|
|
708,150 |
|
|
|
977,154 |
|
| Distribution |
|
|
265,499 |
|
|
|
270,185 |
|
| Total operating expenses |
|
|
1,945,381 |
|
|
|
5,707,802 |
|
|
|
|
|
|
|
|
|
|
| Loss from operations |
|
|
(224,645 |
) |
|
|
(3,688,487 |
) |
|
|
|
|
|
|
|
|
|
| Other income (expense): |
|
|
|
|
|
|
|
|
| Interest expense |
|
|
(504,991 |
) |
|
|
(1,864,598 |
) |
| Other non-operating income (expenses) |
|
|
45,901 |
|
|
|
(678,989 |
) |
| Total other income (expense), net |
|
|
(459,090 |
) |
|
|
(2,543,587 |
) |
|
|
|
|
|
|
|
|
|
| Income tax benefit (provision) |
|
|
- |
|
|
|
- |
|
| Net loss from continuing operations |
|
|
(683,735 |
) |
|
|
(6,232,075 |
) |
| Income from discontinued operations, net of tax |
|
|
- |
|
|
|
95,726 |
|
| Net loss |
|
$ |
(683,735 |
) |
|
$ |
(6,136,349 |
) |
|
|
|
|
|
|
|
|
|
| Weighted average common shares outstanding - |
|
|
|
|
|
|
|
|
| basic and diluted |
|
|
1,485,210 |
|
|
|
226,814 |
|
| Net loss per common share - basic and diluted |
|
$ |
(0.46 |
) |
|
$ |
(27.48 |
) |
The accompanying notes are an integral part of these financial statements.
DIGITAL BRANDS GROUP, INC
STATEMENTS OF CASH FLOW
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2024 |
|
|
2023 |
|
| Cash flows from operating activities: |
|
|
|
|
|
|
|
|
| Net loss |
|
$ |
(683,735 |
) |
|
$ |
(6,136,349 |
) |
| Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
| Depreciation and amortization |
|
|
1,117,240 |
|
|
|
959,207 |
|
| Amortization of loan discount and fees |
|
|
492,858 |
|
|
|
1,412,425 |
|
| Loss on extinguishment of debt |
|
|
- |
|
|
|
689,100 |
|
| Stock-based compensation |
|
|
100,299 |
|
|
|
105,594 |
|
| Shares issued for services |
|
|
224,265 |
|
|
|
499,338 |
|
| Change in credit reserve |
|
|
(151,611 |
) |
|
|
109,298 |
|
| Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
| Accounts receivable, net |
|
|
(207,071 |
) |
|
|
282,947 |
|
| Due from factor, net |
|
|
(297,951 |
) |
|
|
(77,776 |
) |
| Inventory |
|
|
201,127 |
|
|
|
299,188 |
|
| Prepaid expenses and other current assets |
|
|
(24,545 |
) |
|
|
(218,286 |
) |
| Accounts payable |
|
|
(1,409,514 |
) |
|
|
(416,093 |
) |
| Accrued expenses and other liabilities |
|
|
(440,775 |
) |
|
|
464,855 |
|
| Deferred revenue |
|
|
- |
|
|
|
115,292 |
|
| Accrued interest |
|
|
(161,130 |
) |
|
|
218,740 |
|
| Net cash used in operating activities |
|
|
(1,240,541 |
) |
|
|
(1,692,520 |
) |
| Cash flows from investing activities: |
|
|
|
|
|
|
|
|
| Purchase of property, equipment and software |
|
|
(13,785 |
) |
|
|
- |
|
| Deposits |
|
|
- |
|
|
|
87,379 |
|
| Net cash provided by (used in) investing activities |
|
|
(13,785 |
) |
|
|
87,379 |
|
| Cash flows from financing activities: |
|
|
|
|
|
|
|
|
| Repayments from related party advances |
|
|
(1,233 |
) |
|
|
(104,170 |
) |
| Advances from factor |
|
|
27,936 |
|
|
|
217,625 |
|
| Issuance of loans and note payable |
|
|
- |
|
|
|
3,542,199 |
|
| Repayments of convertible notes and loan payable |
|
|
(518,026 |
) |
|
|
(5,677,621 |
) |
| Issuance of common stock for cash |
|
|
1,736,206 |
|
|
|
5,000,003 |
|
| Offering costs |
|
|
- |
|
|
|
(686,927 |
) |
| Net cash provided by financing activities |
|
|
1,244,882 |
|
|
|
2,291,109 |
|
| Net chane in cash and cash equivalents |
|
|
(9,443 |
) |
|
|
685,968 |
|
| Cash and cash equivalents at beginning of period |
|
|
20,773 |
|
|
|
1,283,282 |
|
| Cash and cash equivalents at end of period |
|
$ |
11,330 |
|
|
$ |
1,969,250 |
|
|
|
|
|
|
|
|
|
|
| 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: |
|
|
|
|
|
|
|
|
| Right of use asset |
|
$ |
- |
|
|
$ |
467,738 |
|
The accompanying notes are an integral part of these financial statements.
DIGITAL BRANDS GROUP, INC
STATEMENT OF BALANCE SHEETS
|
|
March 31, |
|
|
December 31, |
|
|
|
2024 |
|
|
2023 |
|
| ASSETS |
|
|
|
|
|
|
|
|
| Current assets: |
|
|
|
|
|
|
|
|
| Cash and cash equivalents |
|
$ |
11,330 |
|
|
$ |
20,773 |
|
| Accounts receivable, net |
|
|
281,904 |
|
|
|
74,833 |
|
| Due from factor, net |
|
|
759,437 |
|
|
|
337,811 |
|
| Inventory |
|
|
4,648,473 |
|
|
|
4,849,600 |
|
| Prepaid expenses and other current assets |
|
|
301,215 |
|
|
|
276,670 |
|
| Total current assets |
|
|
6,002,359 |
|
|
|
5,559,687 |
|
| Property, equipment and software, net |
|
|
69,294 |
|
|
|
55,509 |
|
| Goodwill |
|
|
8,973,501 |
|
|
|
8,973,501 |
|
| Intangible assets, net |
|
|
9,262,670 |
|
|
|
9,982,217 |
|
| Deposits |
|
|
75,431 |
|
|
|
75,431 |
|
| Right of use asset |
|
|
465,069 |
|
|
|
689,688 |
|
| Total assets |
|
$ |
24,848,324 |
|
|
$ |
25,336,033 |
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
| Current liabilities: |
|
|
|
|
|
|
|
|
| Accounts payable |
|
$ |
6,266,814 |
|
|
$ |
7,538,902 |
|
| Accrued expenses and other liabilities |
|
|
4,317,717 |
|
|
|
4,758,492 |
|
| Due to related parties |
|
|
398,779 |
|
|
|
400,012 |
|
| Convertible note payable, net |
|
|
100,000 |
|
|
|
100,000 |
|
| Accrued interest payable |
|
|
1,835,623 |
|
|
|
1,996,753 |
|
| Loan payable, current |
|
|
2,300,674 |
|
|
|
2,325,842 |
|
| Promissory note payable, net |
|
|
5,057,666 |
|
|
|
4,884,592 |
|
| Right of use liability, current portion |
|
|
1,073,389 |
|
|
|
1,210,814 |
|
| Total current liabilities |
|
|
21,350,662 |
|
|
|
23,215,407 |
|
| Loan payable |
|
|
150,000 |
|
|
|
150,000 |
|
| Deferred tax liability |
|
|
368,034 |
|
|
|
368,034 |
|
| Total liabilities |
|
|
21,868,696 |
|
|
|
23,733,441 |
|
|
|
|
|
|
|
|
|
|
| Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Stockholders' equity: |
|
|
|
|
|
|
|
|
| Undesignated preferred stock, $0.0001 par, 10,000,000 shares authorized, 0 shares |
|
|
|
|
|
|
|
|
| issued and outstanding as of both March 31, 2024 and December 31, 2023 |
|
|
- |
|
|
|
- |
|
| Series A convertible preferred stock, $0.0001 par, 6,300 shares designated, 6,300 shares issued and |
|
|
|
|
|
|
|
|
| outstanding as of both March 31, 2024 and December 31, 2023 |
|
|
1 |
|
|
|
1 |
|
| Series C convertible preferred stock, $0.0001 par, 3,239 and 4,786 shares issued and |
|
|
|
|
|
|
|
|
| outstanding as of March 31, 2024 and December 31, 2023, respectively |
|
|
1 |
|
|
|
1 |
|
| Common stock, $0.0001 par, 1,000,000,000 shares authorized, 1,714,157 and 1,114,359 shares |
|
|
|
|
|
|
|
|
| issued and outstanding as of March 31, 2024 and December 31, 2023, respectively |
|
|
169 |
|
|
|
110 |
|
| Additional paid-in capital |
|
|
117,657,641 |
|
|
|
115,596,929 |
|
| Accumulated deficit |
|
|
(114,678,184 |
) |
|
|
(113,994,449 |
) |
| Total stockholders' equity |
|
|
2,979,628 |
|
|
|
1,602,592 |
|
| Total liabilities and stockholders' equity |
|
$ |
24,848,324 |
|
|
$ |
25,336,033 |
|
The accompanying notes are an integral part of these financial statements.
About Digital Brands Group
We offer a wide variety of apparel through numerous brands on a both direct-to-consumer and wholesale basis. We have created a business model derived from our founding as a digitally native-first vertical brand. We focus on owning the customer's "closet share" by leveraging their data and purchase history to create personalized targeted content and looks for that specific customer cohort.
Digital Brands Group, Inc. Company Contact
Hil Davis, CEO
Email: invest@digitalbrandsgroup.co
Phone: (800) 593-1047
SOURCE Digital Brands Group, Inc.
Related Links
https://www.digitalbrandsgroup.co
https://ir.digitalbrandsgroup.co
