Digital Brands Group, Inc.
For the period ended Jun 30, 2026. Filed Aug 19, 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.
Jun 30, 2026 · Filed Aug 19, 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 2026-03-31; filed 2026-05-20.
0001493152-26-024610
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-19.
0001493152-26-039208
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 79 previous paragraphs and 79 current paragraphs.
55 unchanged; 8 reworded; 16 added; 16 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 12 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 (16)
Current report
As of June 30, 2026, we had an aggregate principal amount of debt outstanding of approximately $17.4 million, including $11.2 million payable under our secured payment obligation to RallyTown, LLC. We believe this amount of indebtedness may limit our ability to obtain additional financing on acceptable terms, requires us to dedicate a portion of any cash flow from operations to debt service, and may restrict our flexibility in planning for changes in our business. In addition, subsequent to June 30, 2026 we issued a convertible promissory note in the principal amount of $3.5 million for gross proceeds of $3.0 million.
Current report
During the six months ended June 30, 2026, the Company continued to expand its collegiate apparel, marketing and name-image-likeness platform, entering into agreements covering additional universities and issuing common stock as consideration under several of those arrangements.
Current report
Effective January 26, 2026, the Company entered into a Marketing and Sponsorship Agreement with Learfield College, LLC relating to Vanderbilt University, providing for equity consideration of $925,000 over four contract years through June 30, 2029, together with cash and trade consideration. In May 2026 the Company issued 3,108 shares of common stock in satisfaction of the equity consideration.
Current report
Effective March 12, 2026, the Company entered into a consulting agreement with Athlete Capital Sports LLC, and in May 2026 issued 23,511 shares of common stock in settlement of the related stock payable. On May 1, 2026 the Company entered into an Exclusive Private Label Manufacturing Agreement with The Battle’s End, LLC, the marketing agent for Florida State University athletics, with stock consideration of $1,050,000.
Current report
During the six months ended June 30, 2026, holders exercised pre-funded warrants resulting in the issuance of 46,497 shares of common stock and exercised 203,613 common stock purchase warrants issued in connection with the February 2025 offering. On June 15, 2026 the Company placed a hold on 179,690 pre-funded warrants pending their expected cancellation, and on June 17, 2026 240,851 warrants issued under the February 2026 inducement expired unexercised.
Current report
For the three months ended June 30, 2026 and 2025, we generated net revenues of $1.2 million and $2.3 million, respectively, and reported net losses of $9.0 million and $2.1 million, respectively. For the six months ended June 30, 2026 and 2025, we generated net revenues of $2.5 million and $4.1 million, respectively, and reported net losses of $20.4 million and $4.2 million, respectively.
Current report
Net revenues decreased by $1.1 million to $1.2 million for the three months ended June 30, 2026, compared to $2.3 million in the corresponding period of 2025, and decreased by $1.6 million to $2.5 million for the six months ended June 30, 2026, compared to $4.1 million in the corresponding period of 2025. The decrease was driven primarily by lower wholesale shipments across the Company’s brands.
Current report
The Company expects wholesale revenue to benefit in the remainder of 2026 from its collegiate apparel programs, including the college bookstore distribution arrangement announced in July 2026, and has issued revenue guidance for the third quarter of 2026 of $8.5 million to $11.0 million.
Current report
Our gross profit decreased by $0.4 million to $324,265 for the three months ended June 30, 2026, from $711,552 for the corresponding period in 2025, and decreased by $1.2 million to $369,646 for the six months ended June 30, 2026, from $1,584,007 for the corresponding period in 2025.
Current report
Our gross margin was approximately 27% for the three months ended June 30, 2026, compared to 32% for the three months ended June 30, 2025, and 15% for the six months ended June 30, 2026 compared to 38% for the corresponding period in 2025. The compression reflects lower revenue against fixed costs of production together with a higher proportion of off-price wholesale shipments.
Current report
Operating expenses totaled $7.8 million for the three months ended June 30, 2026, compared to $2.7 million for the corresponding period in 2025, and $15.3 million for the six months ended June 30, 2026 compared to $5.6 million for the corresponding period in 2025. The increase is attributable principally to amortization of prepaid marketing arising from the Company’s collegiate apparel and name-image-likeness agreements, which is recorded within sales and marketing expenses and totaled $2.8 million and $5.3 million for the three and six months ended June 30, 2026, respectively, together with the impairment of the remaining MavDB Consulting prepaid balance of $764,424 recognized in the second quarter.
Current report
Other expense was $1.5 million for the three months ended June 30, 2026, compared to $0.1 million for the three months ended June 30, 2025. For the six months ended June 30, 2026 other expense was $5.5 million, compared to $0.2 million for the corresponding period in 2025. The movement is driven principally by changes in the fair value of the Company’s share-based payment liabilities, which produced a charge of $1.8 million in the second quarter and a charge of $5.6 million for the six-month period.
Current report
Our cash used in operating activities was $10.3 million for the six months ended June 30, 2026, compared to $4.5 million for the corresponding period in 2025. The increase reflects the higher operating loss for the period, partly offset by non-cash charges for amortization of prepaid marketing, the impairment of the MavDB prepaid balance and changes in the fair value of share-based payment liabilities.
Current report
Net cash used in investing activities was approximately $0.2 million for the six months ended June 30, 2026, compared to nil for the corresponding period in 2025, and related to purchases of property and equipment.
Current report
Cash provided by financing activities was $4.2 million for the six months ended June 30, 2026, compared to $6.6 million for the corresponding period in 2025, and comprised proceeds from warrant exercises, net proceeds of $1,677,052 from sales under the at-the-market program and $200,000 from the issuance of a promissory note, partly offset by repayments of merchant advances and other borrowings and a $70,000 payment applied to the RallyTown secured payment obligation.
Current report
As of June 30, 2026, we had $17.4 million in outstanding principal on debt, consisting principally of our secured payment obligation to RallyTown, LLC of $11.2 million, our promissory note due to the Bailey sellers of $3.5 million, a U.S. Small Business Administration loan, a Paycheck Protection Program note, merchant cash advances and the 1800 Diagonal Lending note. The RallyTown obligation is payable in monthly installments of $400,000 commencing August 1, 2026 and bears interest at 10% per annum. We also have operating lease obligations in respect of our Round Rock, Texas facility with future minimum payments of $6.1 million.
Removed paragraphs (16)
Previous report
As of March 31, 2026, we had an aggregate principal amount of debt outstanding of approximately $6.4 million. We believe this amount of indebtedness may be considered significant for a company of our size and current revenue base. Our substantial debt could have important consequences to us. For example, it could:
Previous 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.
Previous 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.
Previous 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.
Previous 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.
Previous report
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 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.
Previous report
The Company expects this decline in wholesale revenue to be offset in the remainder of 2025 as a result of the Company’s second largest wholesale account’s anticipated doubling of the number of its domestic retail doors from 50 to 100 and expansion of its international doors.
Previous report
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 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.
Previous 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.
Previous 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.
Previous report
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 report
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 report
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 report
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.
Reworded paragraphs (8)
Previous wording
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 wording
During the six months ended June 30, 2026, holders converted 1,250 shares of Series D Preferred Stock into 14,082 shares of common stock. In June 2026 the Company sold 36,335 shares under its at-the-market program for net proceeds of $1,677,052, and issued a promissory note to 1800 Diagonal Lending LLC in the principal amount of $238,050 for cash proceeds of $200,000.
Previous wording
Three Months Ended March 31, 2026 compared to Three Months Ended March 31, 2025.
Current wording
Three and Six Months Ended June 30, 2026 compared to Three and Six Months Ended June 30, 2025.
Previous wording
The following table presents our results of operations for the three months ended March 31, 2026 and 2025:
Current wording
The following table presents our results of operations for the three and six months ended June 30, 2026 and 2025:
Previous wording
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.
Current wording
The Company expects gross margins to expand as revenues increase and leverage fixed costs, with a higher mix of e-commerce and collegiate revenue, which carry higher gross margins than off-price wholesale.
Previous wording
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 wording
Our net loss was $9.0 million for the three months ended June 30, 2026, compared to a net loss of $2.1 million for the three months ended June 30, 2025, and $20.4 million for the six months ended June 30, 2026, compared to $4.2 million for the corresponding period in 2025.
Previous wording
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 wording
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 and continued cost reduction measures — together with sales of equity securities under the Company’s at-the-market facility and equity line of credit, may not be sufficient to fund operations for at least twelve months from the date of issuance of these financial statements, and substantial doubt exists about the Company’s ability to continue as a going concern. These plans depend in part on factors that are not within the Company’s control, including equity market conditions; see Note 2 to the condensed consolidated 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.
Previous wording
The following table presents selected captions from our condensed statements of cash flows for the three months ended March 31, 2026, and 2025:
Current wording
The following table presents selected captions from our condensed consolidated statements of cash flows for the six months ended June 30, 2026 and 2025:
Previous wording
Our management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, costs and expenses and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions. See Note 3 to the accompanying unaudited condensed consolidated financial statements, which disclosure is incorporated herein by reference.
Current wording
Our management’s discussion and analysis of financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of our condensed consolidated financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, costs and expenses and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions. See Note 3 to the accompanying unaudited condensed consolidated financial statements, which disclosure is incorporated herein by reference.