Digital Brands Group, Inc.
For the period ended Mar 31, 2026. Filed May 20, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 20, 2026
DBGI$0.28-39.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-14.
0001493152-25-023616
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-20.
0001493152-26-024610
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 106 previous paragraphs and 79 current paragraphs.
58 unchanged; 8 reworded; 13 added; 38 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 13 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (13)
Current report
During the three months ended March 31, 2026, the Company continued to expand its collegiate apparel, marketing and strategic advisory platform through existing arrangements with AAA Tuscaloosa (University of Alabama), LLC, Traffic Holdco, LLC, Buffalo Sports Properties / Learfield, The Grove Collective, LLC and MavDB Consulting LLC.
Current report
Effective January 26, 2026, the Company entered into a Marketing and Sponsorship Agreement with Learfield in connection with the University of Colorado athletic program. Under the agreement, the Company is required to provide annual consideration consisting of cash and equity in exchange for sponsorship, media and marketing rights. The equity component is accounted for in accordance with ASC 718 and, as of March 31, 2026, no shares had been issued under the arrangement. The Company recorded a prepaid marketing asset with a corresponding stock payable liability and amortizes the prepaid balance over the related service period. The agreement includes a make-whole provision; however, no make-whole adjustment had been triggered as of March 31, 2026 because no shares had been issued.
Current report
Effective March 12, 2026, the Company entered into a consulting agreement with Athlete Capital Sports LLC pursuant to which the Company agreed to issue shares with an aggregate value of approximately $3.0 million in exchange for consulting and advisory services to be provided over a three-year term. As of March 31, 2026, no shares had been issued under the agreement. The Company recorded a prepaid consulting asset with a corresponding accrued liability/stock payable and amortizes the prepaid balance over the contractual service period. The agreement includes a make-whole provision that may result in variability in settlement; however, because no shares had been issued as of March 31, 2026, no derivative liability was recognized.
Current report
During the three months ended March 31, 2026, holders exercised 1,275,577 pre-funded warrants previously issued in connection with the MavDB Consulting LLC marketing services agreement, and the Company issued the related shares of common stock. In addition, holders exercised an aggregate of 4,464,604 common stock purchase warrants originally issued in connection with the February 2025 Offering, including 2,365,968 warrants exercised pursuant to warrant exchange agreements entered into on February 16, 2026. In consideration for such exercises, the Company issued 9,634,032 new common stock purchase warrants exercisable at $0.66 per share and expiring on June 17, 2026. To the extent a holder would have exceeded applicable beneficial ownership limitations, pre-funded warrants were issued in lieu of common stock purchase warrants.
Current report
During the three months ended March 31, 2026, holders also converted 1,250 shares of Series D Preferred Stock into 563,284 shares of the Company’s common stock.
Current report
Net revenues decreased by $0.6 million to $1.3 million for the three months ended March 31, 2026, compared to $1.9 million in the corresponding fiscal period in 2025. The decrease was primarily associated with lower wholesale activity period over period, partially offset by the Company’s continued investment in its direct-to-consumer brand portfolio. The Company expects revenue growth in subsequent periods through its expanded NIL and licensing partnerships, including the recently announced Penn State NIL agreement and Sundry / TJX licensing arrangement. However, the Company continues to experience pressure on gross margins due to the operational costs required to support and manage these programs and related wholesale relationships.
Current report
Our gross margin was approximately 3% for the three months ended March 31, 2026, compared to 47% for the three months ended March 31, 2025. The compression in gross margin reflects the lower revenue base relative to cost of goods sold during the period. The Company expects gross margins to recover as revenues increase, leveraging fixed costs, a higher mix of e-commerce revenue, and improved wholesale account mix.
Current report
Operating expenses totaled $7.5 million for the three months ended March 31, 2026, compared to $2.9 million for the corresponding period in 2025. The $4.6 million increase was primarily driven by higher sales and marketing expense reflecting amortization of prepaid marketing assets from the collegiate apparel name, image and likeness (“NIL”) agreements (AAA Tuscaloosa, Traffic Holdco, Grove Collective, Learfield/Buffalo Sports) and the MavDB Consulting agreement, all of which were entered into during 2025.
Current report
Other expense was $4.0 million for the three months ended March 31, 2026, compared to $0.1 million for the three months ended March 31, 2025. The increase was primarily driven by a $3.9 million non-cash charge for the change in fair value of the share-based payment liability arising from the make-whole provisions in the collegiate apparel NIL agreements. Interest expense remained consistent at approximately $0.1 million in both periods.
Current report
Our net loss was $11.4 million for the three months ended March 31, 2026 compared to a net loss of $2.1 million for the three months ended March 31, 2025. The increase in net loss was primarily driven by (i) the $3.9 million non-cash charge for the change in fair value of the share-based payment liability, (ii) higher sales and marketing expense from amortization of prepaid marketing assets, and (iii) lower gross profit from reduced revenue.
Current report
The Company requires significant capital to meet its obligations as they become due. Management believes its existing cash resources and planned operations—including revenues expected from its collegiate apparel program, continued cost reduction measures will be sufficient to fund operations for at least twelve months from the date of issuance of these financial statements. The Company may also pursue additional equity or debt financings as needed. There can be no assurance as to the availability or terms upon which such financing might be available. The Bailey sellers’ promissory note of $3,500,000 matured on December 8, 2025 and remains in default; management is in active discussions with the lender regarding repayment or extension.
Current report
Off-Balance Sheet Arrangements and Future Commitment
Current report
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Removed paragraphs (38)
Previous report
Limited Tariff Exposure
Previous report
The Company produces the vast majority of its products in Los Angeles, with the exception of sweaters. As a result, over 90% of its products are Made in the USA, which significantly limits the Company’s exposure to tariff impositions or increases, or potential tariff impositions or increases, on imported goods. This domestic production strategy has proven to be a competitive advantage, particularly in the first half of 2025, when increased China-related tariffs impacted the broader apparel industry. While many competitors were forced to raise prices in both retail and wholesale channels to offset tariff-driven cost increases on imported goods, the Company’s brands maintained stable pricing. This allowed the Company to preserve margin integrity and potentially gain wholesale market share, as customers sought more consistent and competitively priced domestic supply alternatives. Management believes this will continue to serve as a meaningful advantage for the Company’s online and wholesale segments moving forward.
Previous report
Series D Preferred Stock Offering
Previous report
In August 2025, the Company completed the initial closing of a private investment in public equity (PIPE) offering, issuing approximately 14,031.25 shares of Series D Convertible Preferred Stock, par value $0.0001 per share, with a stated value of $1,000 per share, for gross cash proceeds of approximately $11.2 million (aggregate stated value of $14.0 million). The shares are convertible into common stock at a price equal to 80% of the lowest closing price of the Company’s common stock for the five trading days immediately preceding the conversion date, subject to ownership limitations.
Previous report
In September 2025, pursuant to an amendment to the original agreement, the Company issued an additional 1,875 Series D Preferred shares to an investor for gross proceeds of $1.5 million, increasing the stated value to $1,150 per share (aggregate stated value of $2.16 million).
Previous report
The Company is required to hold the proceeds from the offering in a segregated bank account, with 50% released upon the second closing and the remaining 50% to be released upon satisfaction of the following conditions: (i) shareholder approval of the reverse stock split and 20% rule, and (ii) SEC effectiveness of the resale registration statement.
Previous report
The Series D Preferred Stock carries a conversion feature into common stock, subject to Nasdaq ownership limitations, and was issued at a discount, resulting in aggregate gross proceeds of $12.7 million before deducting offering costs.
Previous report
Alabama Exclusive Private Label Manufacturing Agreement
Previous report
On July 21, 2025, the Company signed and entered into that certain Exclusive Private Label Manufacturing Agreement (the “Alabama Agreement”) with AAA Tuscaloosa, LLC (“AAA”). Although the Alabama Agreement has a stated effective Date of July 16, 2025, the Alabama Agreement did not become a binding obligation of the Company until it was fully executed by the parties on July 21, 2025. AAA is acting as the name, image, and likeness (“NIL”) marketing agent for student-athletes attending the University of Alabama (the “University”). Pursuant to the terms of the Alabama Agreement, AAA has engaged the Company to manufacture private label knit apparel products for the University as set forth in the Alabama Agreement, but excluding any and all jerseys, polo shirts, collared shirts, quarter zips, and t-shirts or sweatshirts featuring the NIL, or trademark owned by a student-athlete or any game-related or team-related content (the “Alabama Exclusive Apparel Products”). Such Alabama Exclusive Apparel Products, manufactured exclusively by the Company, are to be sold directly by AAA through its website or any brick-and-mortar locations in Tuscaloosa, Alabama.
Previous report
The Company has general discretion to develop designs, technical specifications, and prototypes for the Alabama Exclusive Apparel Products and has agreed to use its best efforts to invest approximately $1,000,000 in its continued marketing, technology and product development by the end of 2025, with the majority of such investment to be deployed by the Company on digital ad spend, influencer marketing and related expenses.
Previous report
Traffic Holdco Private Label Manufacturing Agreement
Previous report
On July 21, 2025, the Company entered into that certain Exclusive Private Label Manufacturing Agreement (the “Traffic Holdco Agreement”) with Traffic Holdco, LLC,(“Traffic Holdco”). While the Traffic Holdco Agreement has a stated effective date of July 16, 2025, the Traffic Holdco Agreement did not become a binding obligation of the Company until it was fully executed by the parties on July 21, 2025. Holdco is acting as the NIL marketing agent for many universities (the “University Clients”) and hold the necessary licenses (the “Local Licenses”) to grant exclusive manufacturing rights to produce apparel products bearing the University Clients logos and trademarks, and using student-athlete NIL for distribution as a local licensee of the University Clients.
Previous report
Pursuant to the terms of the Traffic Holdco Agreement, Traffic Holdco engaged the Company to manufacture private label knit apparel products for the University Clients as set forth in the Traffic Holdco Agreement, but excluding any and all jerseys, polo shirts, collared shirts, quarter zips, and t-shirts or sweatshirts featuring the NIL, or trademark owned by a student-athlete or any game-related or team-related content (the “University Client Exclusive Apparel Products”). Such University Client Exclusive Apparel Products, manufactured exclusively by the Company, are to be sold directly by the University Clients through their respective websites or any brick-and-mortar locations within close proximity to such University Clients.
Previous report
Traffic Holdco has guaranteed that at least three University Clients will grant the Company exclusive manufacturing rights with respect to University Client Exclusive Apparel Products, whereby each of the University Clients will enter into a private label manufacturing agreement (each, an “Authorized Manufacturing Agreement”) with the Company, with current plans to secure additional agreements from collegiate institutions, including, but not limited to, instructions from the Southeastern Conference and the Big Ten Conference.
Previous report
The Company has general discretion to develop designs, technical specifications, and prototypes for the University Client Exclusive Apparel Products. In connection with the Company’s continued marketing, technology and product development initiatives, it has agreed to use its best efforts to invest approximately $1,000,000 during the first year of each Authorized Manufacture Agreement it enters into with each University Client, with the majority of such investment to be deployed by the Company on digital ad spend, influencer marketing and related expenses.
Previous report
Sundry License Agreement
Previous report
On June 9, 2025, the Company entered into a license agreement with The TJX Companies, Inc. (“TJX”), granting TJX a license to use the Company’s SUNDRY trademark and related intellectual property on specified categories of women’s apparel, accessories, and related promotional materials. TJX operates several retail chains, including T.J. Maxx, Marshalls, HomeGoods and HomeSense in the U.S. Under the terms of the agreement, the Company will receive royalties based on TJX’s cost of licensed merchandise. The agreement has an initial term through January 27, 2029, with automatic two-year renewal periods unless terminated by either party with advance notice. This agreement represents a significant expansion of the Company’s brand distribution into TJX’s retail channels.
Previous report
Net revenues decreased by $0.8 million to $1.6 million for the three months ended September 30, 2025, compared to $2.4 million in the corresponding fiscal period in 2024. The decrease was primarily associated with the Company dropping its largest wholesale account due to its very low gross margins and operational costs required to manage this account.
Previous report
Our gross margin was 43% for three months ended September 30, 2025, compared to 46% for the three months ended September 30, 2024.
Previous report
Operating expenses totaled $4.0 million for the three months ended September 30, 2025, consistent with $3.9 million for the corresponding period in 2024, reflecting no significant change year over year.
Previous report
Other expense was $0.1 million for the three months ended September 30, 2025, compared to $0.8 million for the three months ended September 30, 2024, primarily consisting of interest expense.
Previous report
Our net loss was $3.5 million for the three months ended September 30, 2025 compared to $3.5 million in 2024.
Previous report
Nine Months Ended September 30, 2025 compared to Nine Months Ended September 30, 2024
Previous report
Net Revenues
Previous report
Net revenues decreased by $3.6 million to $5.8 million for the nine months ended September 30, 2025, compared to $9.4 million in the corresponding fiscal period in 2024. The decrease was primarily associated with the Company dropping its largest wholesale account due to its very low gross margins and operational costs required to manage this account. The other major factor for the decline was limited cash for marketing for half the first quarter until the closing of February 2025 Offering, a delay in wholesale shipments, and lower ecommerce revenues across each brand due to less digital advertising spend.
Previous report
This decline in wholesale revenue will be offset throughout the year by the Company’s second largest wholesale account asking to double the number of domestic retail doors from 50 to 100 and also expand to their international doors.
Previous report
With the Company’s continued increase in marketing spend, digital revenue also showed growth during the third quarter.
Previous report
Gross Profit
Previous report
Our gross profit decreased by $2.1 million for the nine months ended September 30, 2025 to $2.3 million from a gross profit of $4.4 million for the corresponding fiscal period in 2024. The decrease in gross margin was primarily attributable to a decrease in sales, as well as approximately $0.5 million in inventory write-offs incurred in the second quarter of 2025.
Previous report
Our gross margin was 40% for nine months ended September 30, 2025, compared to 47% for the nine months ended September 30, 2024. The decrease in gross margin was due to the deleverage associated with fixed costs in gross margins including warehouse and distribution rent, patternmakers and other fixed costs over a lower revenue total, as well as approximately $0.5 million in inventory write-offs incurred in the second quarter of 2025.
Previous report
Operating Expenses
Previous report
Operating expenses decreased by $0.1 million for the nine months ended September 30, 2025, as compared to $9.7 million for the corresponding fiscal period in 2024.
Previous report
Other Expense
Previous report
Other expense was $0.4 million for the nine months ended September 30, 2025, compared to $2.46 million for the nine months ended September 30, 2024, primarily consisting of interest expense.
Previous report
Net Loss
Previous report
Our net loss was $7.7 million for the nine months ended September 30, 2025 compared to $7.7 million in 2024. Despite a decline in revenue, the Company maintained its net loss due to effective cost-cutting measures and operational efficiencies.
Previous report
In February 2025, the Company completed an offering consisting of the sale of common stock, warrants and pre-funded warrants for gross proceeds of $7,500,000, before deducting placement agent fees and commissions and other offering expenses.
Previous report
As of September 30, 2025, we had cash of $6.7 million, restricted cash of $5.7 million and a working capital deficit of $4.8 million. The Company requires significant capital to meet its obligations as they become due. As of November 14, 2025, based on the current state of operations, and the unrestricted cash on hand of approximately $5.7 million, the Company believes that the substantial doubt about the Company’s ability to continue as a going concern has been alleviated. Management believes that the Company has sufficient capital to meet its financial obligations for the next 12 months.
Reworded paragraphs (8)
Previous wording
A significant number of e-commerce retailers relied on the de minimis exemption, which the Company believes will require them to significantly increase their prices or to experience a significant decline in gross margin and profitability. The Company believes this change in the de minimis policy should reduce the number of online apparel brands, and create a less crowded marketplace.
Current wording
A significant number of e-commerce retailers relied on the de minimis exemption, which the Company believes will require them to significantly increase their prices or to experience a significant decline in gross margin and profitability. The Company has been approached by several e-commerce companies with the de minimis exposure seeking to sell their company at meaningfully reduced valuations. The Company believes this change in the de minimis policy should reduce the number of online apparel brands, and create a less crowded marketplace.
Previous wording
For the three months ended September 30, 2025 and 2024, we generated net revenues of $1.6 million and $2.4 million, respectively, and reported net loss of $3.5 million and $3.5 million, respectively. For the nine months ended September 30, 2025 and 2024, we generated net revenues of $5.8 million and $9.4 million, respectively, and reported net loss of $7.7 million and $7.7 million, respectively. As noted in our unaudited condensed consolidated financial statements, as of September 30, 2025, we had an accumulated deficit of $134.8 million.
Current wording
For the three months ended March 31, 2026 and 2025, we generated net revenues of $1.3 million and $1.9 million, respectively, and reported net loss of $11.4 million and $2.1 million, respectively. As noted in our unaudited condensed consolidated financial statements, as of March 31, 2026, we had an accumulated deficit of $166.8 million.
Previous wording
Our gross profit decreased by $0.4 million for the three months ended September 30, 2025 to $0.7 million from a gross profit of $1.1 million for the corresponding fiscal period in 2024. The decrease in gross profit was primarily attributable to a decrease in sales compared to corresponding figure in 2024.
Current wording
Our gross profit decreased by $0.8 million for the three months ended March 31, 2026 to $45,381 from a gross profit of $0.9 million for the corresponding fiscal period in 2025. The decrease in gross profit was primarily attributable to a decrease in revenue combined with higher cost of goods sold relative to revenue, reflecting product mix and inventory positioning.
Previous wording
The following table presents selected captions from our condensed statements of cash flows for the nine months ended September 30, 2025, and 2024:
Current wording
The following table presents selected captions from our condensed statements of cash flows for the three months ended March 31, 2026, and 2025:
Previous wording
Our cash used in operating activities increased by $7.8 million to $11.2 million for the nine months ended September 30, 2025, compared to cash used in operating activities of $3.3 million for the corresponding fiscal period in 2024. The increase in net cash used in operating activities was primarily driven by higher operational losses, including increased sales and marketing expenses, and lower non-cash charges in 2025.
Current wording
Our cash used in operating activities was $4.7 million for the three months ended March 31, 2026, compared to cash used in operating activities of $4.5 million for the corresponding fiscal period in 2025. The change in net cash used in operating activities was primarily driven by higher net loss in 2026 (offset by non-cash adjustments including the $3.9 million change in fair value of share-based payment liability), and changes in operating assets and liabilities compared to the prior period, higher operational losses, including increased sales and marketing expenses, and lower non-cash charges in 2025.
Previous wording
Our cash used in investing activities was nominal in 2025 and 2024.
Current wording
Net cash used in investing activities was approximately $0.3 million and $0 during the three months ended March 31, 2026 and March 31, 2025, respectively, primarily related to the purchase of a vehicle and payment of security deposit for Texas lease during the three months ended March 31, 2026.
Previous wording
Cash provided by financing activities was $23.4 million for the nine months ended September 30, 2025, compared to $3.7 million for the nine months ended September 30, 2024. Cash inflows in 2025 included $6.6 million in net proceeds from the issuance from the common stock and pre-funded warrants and $11.4 million from issuance of series D preferred stock and $ 5.5 million from proceeds received from exercise of warrants.
Current wording
Cash provided by financing activities was $2.4 million for the three months ended March 31, 2026, compared to $6.6 million for the three months ended March 31, 2025. Cash inflows in 2026 included approximately $2.6 million from the exercise of warrants offset by payment of loan. Cash inflows in 2025 primarily consists of $6.6 million in net proceeds from issuance of common stock and pre funded warrants.
Previous wording
As of September 30, 2025, we had $6.4 million in outstanding principal on debt, primarily our promissory notes due to the Bailey sellers, U.S. Small Business Association (“SBA”) Paycheck Protection Program (PPP) loans, and merchant advances. Aside from our remaining non-current SBA obligations, all outstanding loans have maturity dates through 2025.
Current wording
As of March 31, 2026, we had $6.1 million in outstanding principal on debt, primarily our promissory notes due to the Bailey sellers, U.S. Small Business Association (“SBA”) Paycheck Protection Program (PPP) loans, and merchant advances. Aside from our remaining non-current SBA obligations, all outstanding loans have maturity dates through 2025.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
The following table presents our results of operations for the nine months ended September 30, 2025 and 2024:
Previous report — wording carried elsewhere
The Company expects gross margins to expand as revenues increase and leverage fixed costs, a higher mix of e-commerce revenue, which as higher gross margins and the mix of wholesale accounts with higher gross margins.