AUSTIN, Texas, Aug. 31, 2021 /PRNewswire/ -- Digital Brands
Group, Inc. ("DBG" or the "Company") (NASDAQ: DBGI), a
digitally first portfolio company, today announced a series of
significant corporate transactions.
Stateside Acquisition
The Company announced that it has completed its previously
announced acquisition of Stateside, a privately-owned elevated
basics brand, for an aggregate base purchase price of $10,000,000. As a result of the transaction,
Stateside has become a wholly owned subsidiary of the
Company. The purchase price was evenly split between $5,000,000 million in common stock based on the
30-trading day period volume-weighted average of the closing of the
Company's share price, and $5,000,000
in cash.
"Stateside is expected to be accretive to DBG's revenue and
earnings per share in both the third quarter and fiscal year of
2021. Additionally, we believe the Stateside brand will drive
meaningful near and long-term shareholder value," said Hil Davis, DBG's Chief Executive Officer.
Davis continued, "The acquisition of the Stateside brand
accelerates and validates Digital Brands Group's recent IPO and our
vision and strategy to grow our brand portfolio, revenue and cash
flow through acquisitions.
As we discussed in our S-1, we expect to continue to grow
through acquisitions and expect to continue to acquire companies
this year, most of which will require GAAP PCAOB audits. These
audits take time, which results in a delayed acquisition timeframe
weighted toward the back three to four months of 2021. We believe
the Stateside acquisition shows we are and will continue to deliver
on our acquisition promise."
Convertible Note
The Company announced that is has raised gross proceeds of
$5,000,000 through the issuance of a
senior secure convertible promissory note (the "Note") to Oasis
Capital, LLC, a Puerto Rico
limited liability company ("Oasis Capital"). The proceeds were
used to fund the Stateside acquisition mentioned above.
The Note, in the principal amount of $5,265,000, bears interest at 6% per annum and is
due and payable 18 months from the date of issuance, unless sooner
converted. The Note is convertible at the option of Oasis Capital
into shares of the Company's Common Stock at a conversion price
(the "Conversion Price") which is the lesser of (i) $3.601, and (ii) 90% of the average of the two
lowest VWAPs during the five consecutive trading day period
preceding the delivery of the notice of conversion. Oasis is
not permitted to submit conversion notices in any thirty day period
having conversion amounts equaling, in the aggregate, in excess of
$500,000. If the Conversion
Price set forth in any conversion notice is less than $3.00 per share, the Company, at its sole option,
may elect to pay the applicable conversion amount in cash rather
than issue shares of its Common Stock.
Equity Line of Credit
The Company announced that it has entered into an equity
purchase agreement with Oasis Capital. Under the purchase
agreement, the Company has the right to sell up to $17.5 million of its Common Stock to Oasis
Capital over a 24-month period, upon satisfaction of the conditions
in the equity purchase agreement including the effectiveness of a
resale registration statement which the Company will file on or
before December 31, 2021. The Company
will control the timing and amount of any sales to Oasis Capital,
and Oasis Capital is obligated to make purchases in accordance with
the equity purchase agreement. The equity purchase agreement allows
the Company to fund its needs in a more expedient and
cost-effective manner.
Mr. Davis stated, "With this equity line established, the
financial road ahead for Digital Brands has truly begun to smooth
out. This equity line alleviates the immediate need to go to the
capital markets for operational financing although we expect to
further access the capital markets to fund future
acquisitions."
The offer and sale of the securities by the Company in the above
transaction have not been registered under the Securities Act of
1933, as amended (the "Securities Act"), and have not been
registered or qualified under any state securities laws, and
therefore may not be offered or sold absent registration under the
Securities Act or an applicable exemption from such registration
requirements, and registration or qualification and under
applicable state securities or "Blue Sky" laws or an applicable
exemption from such registration or qualification requirements.
This press release does not constitute an offer to sell or the
solicitation of an offer to buy the securities, nor shall there be
any sale of the securities in any state in which such offer,
solicitation or sale would be unlawful prior to the registration or
qualification under the securities laws of such state.
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
the acquisition of Stateside, 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;
DBG's ability to implement its business strategy; DBG's ability to
execute and integrate acquisitions; and DBG's indebtedness and its
ability to obtain financing on favorable terms, if needed. 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.
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. Digital native first brands are brands
founded as e-commerce driven businesses, where online sales
constitute a meaningful percentage of net sales, although they
often subsequently also expand into wholesale or direct retail
channels., Unlike typical e-commerce brands, as a digitally native
vertical brand we control our own distribution, sourcing products
directly from our third-party manufacturers and selling directly to
the end consumer. 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. We have strategically expanded into an omnichannel brand
offering these styles and content not only on-line but at selected
wholesale and retail storefronts. We believe this approach allows
us opportunities to successfully drive Lifetime Value ("LTV") while
increasing new customer growth.
About Stateside
Stateside is a collection of elevated American basics influenced
by the evolution of the classic T-Shirt. All garments are designed
and produced in Los Angeles from
the finest fabrics. All knitting, dyeing, cutting and sewing is
sourced and manufactured locally in Los
Angeles. Stateside invested in quality and the local
communities.
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
View original
content:https://www.prnewswire.com/news-releases/digital-brands-group-announces-significant-corporate-transactions-301365898.html
SOURCE Digital Brands Group, Inc.