Digital Brands Group, Inc.
For the period ended Jun 30, 2025. Filed Aug 13, 2025.
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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, 2025 · Filed Aug 13, 2025
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 2025-03-31; filed 2025-05-15.
0001641172-25-010978
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-13.
0001641172-25-023614
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 97 previous paragraphs and 126 current paragraphs.
61 unchanged; 25 reworded; 35 added; 10 removed; 1 previous and 5 current paragraphs rearranged.
Tables are not compared: 25 previous and 13 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 (35)
Current report
We currently have $3.5 million in notes outstanding pursuant to our Bailey acquisition. However, we have recently generated cash flows through a private offering and have established business plans that we believe are sufficient to enable us to repay the outstanding notes, including principal, premium (if any), and interest on our indebtedness.
Current report
In addition, while our ability to make scheduled payments or refinance obligations under our debt agreements remains subject to prevailing economic and competitive conditions—as well as the financial and business risks described herein and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024—we believe our current liquidity position and forward-looking strategies provide us with the necessary resources to meet these obligations as they come due.
Current 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.
Current report
University of Alabama Partnership
Current report
In April 2025, the Company launched its apparel partnership with the University of Alabama with a collection of t-shirts and fleece tops and bottoms sold at the campus bookstores and also on the Yea Alabama website. With the guidance of the University of Alabama marketing team, the Company engaged a University of Alabama Tik Tok influencer and University of Alabama student athlete to design and create the product collaboration.
Current report
The Company plans to expand the product offering starting this summer ahead of the football season with a significant marketing increase during football season. The Company expects to continue to partner with major social media influencers and University of Alabama student-athletes to collaborate on monthly product capsules and also game day and campus bookstore events.
Current report
Amaze Partnership
Current report
On April 22, 2025, the Company announced a strategic partnership with Amaze, a global leader in creator-powered commerce. The Company was the first third-party partner to offer its products on the recently revamped Teespring Marketplace by Amaze.
Current report
Through this partnership, Amaze customers can shop AVO, one of the Company’s fashion labels that offers knits, wovens, and jeans for multiple occasions, directly within the Teespring Marketplace.
Current report
Amaze has over 12.3 million unique stores launched and attracts more than 1.2 billion unique visitors. These visitors now have access to AVO products, significantly boosting AVO’s brand visibility and introducing its amazing products to a massive audience.
Current report
Equity Offering
Current report
In August 2025, the Company completed a private offering consisting of the sale of shares of Series D convertible preferred stock for $11,225,000 and a warrant exercise for $5,000,000 for gross proceeds of $16,225,000, before deducting placement agent fees and commissions and other offering expenses, as further detailed below.
Current report
On August 13, 2025, the Company closed its previously announced private investment in public equity (the “PIPE Offering”) pursuant to the Securities Purchase Agreement, dated August 8, 2025 (the “Securities Purchase Agreement”), by and among the Company and select investors (each, an “Investor” and collectively, the “Investors”). At the closing, the Company issued to the Investors an aggregate of approximately 14,031.25 shares of its Series D Convertible Preferred Stock, par value $0.0001 per share (the “Series D Preferred Stock”), which are convertible into shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), subject to beneficial ownership limitations set by the Investors, at a conversion price equal to 80% of the lowest closing price of the Common Stock for each of the five trading days immediately prior to the conversion date. The aggregate cash purchase price for the Series D Preferred Stock was approximately $11,225,000 (the “Offering Proceeds”), before deducting placement agent fees and other offering expenses, having a stated value of approximately $14,031,250. The Company intends to use the proceeds from the PIPE Offering for general corporate and working capital purposes.
Current report
Alabama Exclusive Private Label Manufacturing Agreement
Current 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.
Current 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.
Current report
Traffic Holdco Private Label Manufacturing Agreement
Current 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.
Current 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.
Current 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.
Current 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.
Current report
Sundry License Agreement
Current 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.
Current 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.
Current report
Our gross margin was 32% for three months ended June 30, 2025, compared to 46% for the three months ended June 30, 2024. The decrease in gross margin was primarily due to the inventory write offs recognized in 2025.
Current report
Six Months Ended June 30, 2025 compared to Six Months Ended June 30, 2024
Current report
Net Revenues
Current report
Gross Profit
Current report
Our gross profit decreased by $1.7 million for the six months ended June 30, 2025 to $1.5 million from a gross profit of $3.3 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.
Current report
Operating Expenses
Current report
Other Expense
Current report
Other expense was $0.3 million for the six months ended June 30, 2025, compared to $1.7 million for the six months ended June 30, 2024, primarily consisting of interest expense.
Current report
Net Loss
Current report
Our net loss was $4.2 million for the six months ended June 30, 2025 compared to $4.2 million in 2024. Despite a decline in revenue, the Company maintained its net loss due to effective cost-cutting measures and operational efficiencies.
Current report
As of June 30, 2025, we had cash of $0.5 million and a working capital deficit of $8.9 million. The Company requires significant capital to meet its obligations as they become due. As of August 13, 2025, based on the current state of operations, the $15.0 million offering, the additional capital sources available to the Company, and the cash on hand of approximately $8 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.
Removed paragraphs (10)
Previous report
We currently have $3.5 million in notes outstanding pursuant to our Bailey acquisition. We are currently unable to repay or refinance borrowings so any such action by these lenders could force us into bankruptcy or liquidation.
Previous report
In addition, our ability to make scheduled payments on our indebtedness or to refinance our obligations under our debt agreements, will depend on our financial and operating performance, which, in turn, will be subject to prevailing economic and competitive conditions and to the financial and business risk factors we face as described in this section, many of which may be beyond our control. We may not be able to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.
Previous report
The Company produces almost all of its products in Los Angeles, with the exception of sweaters. The Company estimates that over 90% of all its products produced are Made in the USA. This significantly limits its exposure to any increases in tariffs. The Company believes this could be an opportunity to increase market share as the majority of apparel brands produce goods overseas and will need to increase prices to cover some or all of the increased tariffs, while the Company’s brands will not need to increase pricing. The Company believes this could be a meaningful competitive advantage both online and in wholesale.
Previous report
1800 Diagonal Promissory Note
Previous report
On January 16, 2025, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with 1800 Diagonal Lending, LLC (the “1800 Diagonal”), pursuant to which 1800 Diagonal made a loan to the Company, evidenced by a promissory note in the aggregate principal amount of $121,900, including an original issue discount (“OID”) of $15,900 (the “Note”). The purchase price of the Note was $106,000 (the “Purchase Price”). The Purchase Agreement contains certain customary representations, warranties, and covenants made by the Company. Under the Note, the Company is required to make nine payments of $15,170, which includes a one-time interest charge of 12% ($14,628). The first payment was due on February 16, 2025, with eight subsequent payments due each month thereafter. The Note matures on October 16, 2025, and contains customary events of default.
Previous report
Upon the occurrence of any event of default under the Note, (i) the Note will become immediately due and payable in an amount equal to 150% times the outstanding principal and accrued interest under the Note plus default interest at the rate of 22% per annum (the “Default Amount”), and (ii) 1800 Diagonal will have the right to convert the balance owed under the Note, including the Default Amount, into shares of the Company’s common stock at a conversion price equal to 61% of the lowest closing bid price during the 10 trading days prior to the conversion date. The Note provides that 1800 Diagonal and its affiliates may not own greater than 4.99% of the Company’s outstanding shares of common stock at any time, and that the total aggregate number of shares of common stock that may be issued upon conversion of the Note shall not exceed 19.99% of the shares of common stock outstanding as of January 16, 2025.
Previous report
The Company received the Purchase Price minus applicable fees on January 21, 2025, and intends to use the proceeds from the Note for general working capital purposes.
Previous report
David Joshua Bartch Note
Previous report
On January 22, 2025, the Company issued a promissory note in the principal amount of $260,000.00 (the “Second Note”) to Joshua Bartch (“Investor”), pursuant to which the Investor made a loan to the Company. The Second Note carries an original issue discount of $60,000.00, and accordingly the purchase price of the Second Note is $200,000.00. The Second Note matures on April 22, 2025, and contains customary events of default. Upon the occurrence of any event of default under the Second Note, the Second Note will become immediately due and payable in an amount equal to the outstanding principal and accrued interest under the Second Note plus default interest at the rate of sixteen percent (16%) per annum.
Previous report
As of March 31, 2025, we had cash of $2.2 million, but we had a working capital deficit of $8.2 million. The Company requires significant capital to meet its obligations as they become due. Throughout the next twelve months, the Company intends to fund its operations primarily from the funds raised through its operations. The Company may pursue secondary equity offerings or debt financings to provide working capital and satisfy debt obligations. There can be no assurance as to the availability or terms upon which such financing and capital might be available in the future. If the Company is unable to secure additional funding, it may be forced to curtail or suspend its business plans.
Reworded paragraphs (25)
Previous wording
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Current wording
I****TEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**
Previous wording
We define “closet share” as the percentage (“share”) of a customer’s clothing units that (“of closet”) she or he owns in her or his closet and the amount of those units that go to the brands that are selling these units. For example, if a customer buys 20 units of clothing a year and the brands that we own represent 10 of those units purchased, then our closet share is 50% of that customer’s closet, or 10 of our branded units divided by 20 units they purchased in entirety. Closet share is a similar concept to the widely used term wallet share, it is just specific to the customer’s closet. The higher our closet share, the higher our revenue as higher closet share suggests the customer is purchasing more of our brands than our competitors.
Current wording
We define “closet share” as the percentage (“share”) of a customer’s clothing units that (“of closet”) she or he owns in her or his closet and the amount of those units that go to the brands that are selling these units. For example, if a customer buys 20 units of clothing a year and the brands that we own represent 10 of those units purchased, then our closet share is 50% of that customer’s closet, or 10 of our branded units divided by 20 units they purchased in the entirety. Closet share is a similar concept to the widely used term wallet share; it is just specific to the customer’s closet. The higher our closet share, the higher our revenue, as higher closet share suggests the customer is purchasing more of our brands than our competitors.
Previous wording
We are subject to global supply chain disruptions, which may include longer lead times for raw fabrics, inbound shipping and longer production times. Supply chain issues have specifically impacted the following for our brands:
Current wording
We are subject to global supply chain disruptions, which may include longer lead times for raw fabrics, inbound shipping and longer production times. Supply chain issues have specifically impacted our brands as follows:
Previous wording
As of March 31, 2025, we had an aggregate principal amount of debt outstanding of approximately $6.5 million. We believe this is an amount of indebtedness which 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:
Current wording
As of June 30, 2025, 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 wording
On April 1, 2025, the Company entered into an Asset Purchase Agreement (the “Open Daily APA”) with Open Daily Technologies Inc. (“Open Daily”). Pursuant to the terms of the Open Daily APA, the Company agreed to purchase, and Open Daily agreed to sell certain intellectual property owned by Open Daily, including, but not limited to, patent applications, trademarks, and software products and platforms (the “Open Daily Assets”), but not any liability or obligation of Open Daily in connection with the Company’s purchase of the Open Daily Assets, in exchange for the issuance by the Company of 344,827 shares of the Company’s common stock (the “Open Daily Acquisition”). The Open Daily Acquisition closed on April 2, 2025.
Current wording
On April 1, 2025, the Company entered into an Asset Purchase Agreement (the “Open Daily APA”) with Open Daily Technologies Inc. (“Open Daily”), pursuant to which the Company acquired certain intellectual property assets from Open Daily, including patent applications, trademarks, and software products and platforms (collectively, the “Open Daily Assets”). In accordance with the terms of the Open Daily APA, the Company issued 344,827 shares of its common stock as consideration for the acquisition. The Company did not assume any liabilities or obligations of Open Daily in connection with the transaction.
Previous wording
The Open Daily APA contains certain covenants, representations, warranties and closing conditions customary for an agreement of this type, including, but not limited to, non-competition and non-solicitation provisions.
Current wording
The acquisition closed on April 2, 2025. The Open Daily APA included customary covenants, representations, warranties, and closing conditions, including non-competition and non-solicitation provisions.
Previous wording
For the three months ended March 31, 2025 and 2024, we generated net revenues of $1,871,701and $3,576,587, respectively, and reported net loss of $2,089,910 and $683,735, respectively. As noted in our unaudited consolidated financial statements, as of March 31, 2024, we had an accumulated deficit of $129,190,948.
Current wording
For the three months ended June 30, 2025 and 2024, we generated net revenues of $2.3 million and $3.4 million, respectively, and reported net loss of $2.1 million and $3.5 million, respectively. For the six months ended June 30, 2025 and 2024, we generated net revenues of $4.1 million and $7.0 million, respectively, and reported net loss of $4.2 million and $4.2 million, respectively. As noted in our unaudited condensed consolidated financial statements, as of June 30, 2025, we had an accumulated deficit of $131.0 million.
Previous wording
Our gross profit decreased by $0.8 million for the three months ended March 31, 2025 to $0.9 million from a gross profit of $1.7 million for the corresponding fiscal period in 2024. The decrease in gross margin was primarily attributable to a decrease in sales.
Current wording
Our gross profit decreased by $0.8 million for the three months ended June 30, 2025 to $0.7 million from a gross profit of $1.6 million for the corresponding fiscal period in 2024. The decrease in gross profit 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 wording
Other expense was $0.1 million for the three months ended March 31, 2025, compared to $0.5 million for the three months ended March 31, 2024, primarily consisting of interest expense.
Current wording
Other expense was $0.1 million for the three months ended June 30, 2025, compared to $1.2 million for the three months ended June 30, 2024, primarily consisting of interest expense.
Previous wording
Our net loss was $2.1 million for the three months ended March 31, 2025 compared to $0.7 million in 2024. The higher loss was primarily due to lower revenues and higher operating expenses.
Current wording
Our net loss was $2.1 million for the three months ended June 30, 2025 compared to $3.5 million in 2024. The decrease in net loss was primarily due to less interest expense and lower operating expenses.
Previous wording
Net revenues decreased by $1.7 million to $1.9 million for the three months ended March 31, 2025, compared to $3.6 million in the corresponding fiscal period in 2024. The decrease was primarily associated with the Company dropping its largest wholesale account due 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 quarter until the S-1 closed in mid February, a delay in wholesale shipments, and lower ecommerce revenues across each brand due to less digital advertising spend.
Current wording
Net revenues decreased by $2.8 million to $4.1 million for the six months ended June 30, 2025, compared to $7.0 million in the corresponding fiscal period in 2024. The decrease was primarily associated with the Company dropping its largest wholesale account due 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 the February 2025 Offering, a delay in wholesale shipments, and lower ecommerce revenues across each brand due to less digital advertising spend.
Previous wording
Despite limited marketing spend in the first quarter, the Company’s digital revenue increased over 80% from the previous quarter.
Current wording
Despite limited marketing spend in the first quarter of 2025, the Company’s digital revenue increased over 80% from the previous quarter. Digital revenue continued to increase in the second quarter.
Previous wording
Our gross margin was 46.6% for three months ended March 31, 2025, compared to 48.1% for the three months ended March 31, 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.
Current wording
Our gross margin was 38% for the six months ended June 30, 2025, compared to 47% for the six months ended June 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 wording
Operating expenses increased by $0.8 million for the three months ended March 31, 2025 as compared to the corresponding fiscal period in 2024, primarily driven by the extinguishment of $1.3 million in accounts payable in the first quarter of 2024.
Current wording
Operating expenses decreased by $0.2 million for the six months ended June 30, 2025, as compared to $5.8 million for the corresponding fiscal period in 2024, primarily driven by the extinguishment of $1.3 million in accounts payable in the first quarter of 2024.
Previous wording
In April and May 2025, the Company eliminated significant headcount and related operating expenses associated with that headcount. The Company expects to reduce its operating expenses by an additional $700,000 over the next 12 months associated with these reductions.
Current wording
In April and May 2025, the Company eliminated significant headcount and related operating expenses associated with that headcount. The Company expects to reduce its operating expenses by an additional $0.7 million over the next 12 months associated with these reductions.
Previous wording
The following table presents selected captions from our condensed statements of cash flows for the three months ended March 31, 2025 and 2024:
Current wording
The following table presents selected captions from our condensed statements of cash flows for the six months ended June 30, 2025 and 2024:
Previous wording
Cash Flows Used In Operating Activities
Current wording
Cash Flows Used In Investing Activities
Previous wording
Our cash used in operating activities increased by $3.3 million to $4.5 million for the three months ended March 31, 2025, compared to cash used in operating activities of $1.2 million for the corresponding fiscal period in 2024. The decrease in net cash used in operating activities was primarily driven by a higher net loss and less non-cash charges in 2025.
Current wording
Our cash used in operating activities increased by $3.2 million to $6.1 million for the six months ended June 30, 2025, compared to cash used in operating activities of $2.8 million for the corresponding fiscal period in 2024. The increase in net cash used in operating activities was primarily driven by less non-cash charges in 2025.
Previous wording
Our cash used in investing activities was nominal in 2024.
Current wording
Our cash used in investing activities was nominal in 2025 and 2024.
Previous wording
Cash provided by financing activities was $6.6 million for the three months ended March 31, 2025. Cash inflows included $6.6 million in net proceeds from the issuance from the common stock and pre-funded warrants.
Current wording
Cash provided by financing activities was $6.5 million for the six months ended June 30, 2025, compared to $3.0 million for the six months ended June 30, 2024. Cash inflows in 2025 included $6.6 million in net proceeds from the issuance from the common stock and pre-funded warrants.
Previous wording
As of March 31, 2025, we had $6.5 million in outstanding principal on debt, primarily our promissory notes due to the Bailey44 Sellers, PPP and merchant advances. Aside from our remaining non-current SBA obligations, all outstanding loans have maturity dates through 2025.
Current wording
As of June 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.
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.
Current 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.
Previous wording
We are an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and, as such, have elected to comply with certain reduced public company reporting requirements.
Current wording
We are an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), and, as such, have elected to comply with certain reduced public company reporting requirements.
Previous wording
Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”), for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may, therefore, not be comparable to those of companies that comply with such new or revised accounting standards.
Current wording
Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may, therefore, not be comparable to those of companies that comply with such new or revised accounting standards.
Previous wording
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the Securities and Exchange Commission.
Current wording
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
Net revenues decreased by $1.1 million to $2.3 million for the three months ended June 30, 2025, compared to $3.4 million in the corresponding fiscal period in 2024. The decrease was primarily associated with the Company dropping its largest wholesale account due its very low gross margins and operational costs required to manage this account.
Current report — wording carried from elsewhere
Operating expenses decreased by $1.2 million to $2.7 million for the three months ended June 30, 2025, as compared to $3.8 million for the corresponding fiscal period in 2024. In April and May 2025, the Company eliminated significant headcount and related operating expenses associated with that headcount. The Company expects to reduce its operating expenses by an additional $0.7 million over the next 12 months associated with these reductions.
Current report — wording carried from elsewhere
The following table presents our results of operations for the six months ended June 30, 2025 and 2024:
Current report — wording carried from 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.
Current report — wording carried from elsewhere
Cash Flows Used in Investing Activities
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Cash Flows Provided By (Used in) Investing Activities