| | | | By order of the Board of Directors | |
| Dated: July 19, 2023 Austin, Texas | | | /s/ John Hilburn Davis IV John Hilburn Davis IV President and Chief Executive Officer | |
Class | | | Number of Shares | | | Votes/Share | | | Number of Votes | | |||
Common Stock | | | | | 7,927,549 | | | | One / share | | | 7,927,549 | |
Series A Convertible Preferred Stock | | | | | 6,300 | | | | One / share (voting on an as-converted basis) | | | 677,419(1) | |
Series B Preferred Stock | | | | | 1 | | | | 250,000,000 /share only on Reverse Stock Split Proposal | | | 250,000,000 votes only on Reverse Stock Split Proposal | |
Series C Convertible Preferred Stock | | | | | 5,761 | | | | One / share (voting on an as-converted basis) | | | 8,034,867(2) | |
| |||||||
| | THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL OF AN AMENDMENT OF THE COMPANY’S SIXTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT OF THE COMPANY’S OUTSTANDING COMMON STOCK AT AN EXCHANGE RATIO BETWEEN | | |
| | | Six Months Ended June 30, | | |||||||||
| | | 2022 | | | 2021 | | ||||||
Net revenues | | | | $ | 9,449,734 | | | | | $ | 13,765,815 | | |
Cost of net revenues | | | | | 4,948,290 | | | | | | 8,410,619 | | |
Gross profit | | | | | 4,501,444 | | | | | | 5,355,196 | | |
Operating expenses | | | | | 4,170,137 | | | | | | 4,301,578 | | |
Operating income | | | | | 331,307 | | | | | | 1,053,618 | | |
Other income (expenses) | | | | | (36,867) | | | | | | 652,104 | | |
Income before provision for income taxes | | | | | 294,440 | | | | | | 1,705,722 | | |
Provision for income taxes | | | | | (800) | | | | | | (800) | | |
Net income | | | | $ | 293,640 | | | | | $ | 1,704,922 | | |
| | | Six Months Ended June 30, | | |||||||||
| | | 2022 | | | 2021 | | ||||||
Net cash provided by operating activities: | | | | | | | | | | | | | |
Net income | | | | $ | 293,640 | | | | | $ | 1,704,922 | | |
Non-cash adjustments | | | | | 27,000 | | | | | | (653,742) | | |
Change in operating assets and liabilities | | | | | (3,916) | | | | | | (59,207) | | |
Net cash provided by operating activities | | | | | 316,724 | | | | | | 991,973 | | |
Net cash provided by (used in) investing activities | | | | | 18,982 | | | | | | (5,000) | | |
Net cash provided by (used in) financing activities | | | | | 272,700 | | | | | | (734,363) | | |
Net change in cash | | | | $ | 608,406 | | | | | $ | 252,611 | | |
| | | Year Ended December 31, | | |||||||||
| | | 2021 | | | 2020 | | ||||||
Net revenues | | | | $ | 22,800,825 | | | | | $ | 19,897,696 | | |
Cost of net revenues | | | | | 13,638,553 | | | | | | 8,525,612 | | |
Gross profit | | | | | 9,162,271 | | | | | | 11,372,084 | | |
Operating expenses | | | | | 8,657,442 | | | | | | 7,625,335 | | |
Operating income | | | | | 504,829 | | | | | | 3,746,749 | | |
Other income (expense) | | | | | 1,249,881 | | | | | | (45,527) | | |
Income before provision for income taxes | | | | | 1,754,710 | | | | | | 3,701,222 | | |
Provision for income taxes | | | | | 800 | | | | | | 800 | | |
Net income | | | | $ | 1,753,911 | | | | | $ | 3,700,422 | | |
| | | Year Ended December 31, | | |||||||||
| | | 2021 | | | 2020 | | ||||||
Net cash provided by operating activities: | | | | | | | | | | | | | |
Net income | | | | $ | 1,753,911 | | | | | $ | 3,700,422 | | |
Non-cash adjustments | | | | $ | (1,255,981) | | | | | $ | 149,618 | | |
Change in operating assets and liabilities | | | | $ | 421,928 | | | | | $ | (1,880,989) | | |
Net cash provided by (used in) operating activities | | | | $ | 919,859 | | | | | $ | 1,969,051 | | |
Net cash used in investing activities | | | | $ | — | | | | | $ | (11,430) | | |
Net cash provided by (used in) financing activities | | | | $ | (1,236,063) | | | | | $ | (1,429,829) | | |
Net change in cash | | | | $ | (316,204) | | | | | $ | 527,792 | | |
| | THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO APPROVE THE ADJOURNMENT PROPOSAL | | |
| |||||||
Name and Principal Position | | | Fiscal Year | | | Salary(1) | | | Bonus | | | Option Awards | | | All Other Compensation(2) | | | Total | | |||||||||||||||
John “Hil” Davis, President and Chief Executive Officer | | | 2021 | | | | $ | 350,000 | | | | | $ | — | | | | | | 3,704,483 | | | | | $ | 233,184 | | | | | $ | 4,287,667 | | |
| | | 2020 | | | | $ | 222,500 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 222,500 | | |
Laura Dowling, Chief Marketing Officer | | | 2021 | | | | $ | 300,000 | | | | | $ | — | | | | | $ | 691,135 | | | | | $ | — | | | | | $ | 991,135 | | |
| | | 2020 | | | | $ | 258,231 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 258,231 | | |
Reid Yeoman, Chief Financial Officer | | | 2021 | | | | $ | 250,000 | | | | | $ | — | | | | | $ | 176,623 | | | | | $ | — | | | | | $ | 426,623 | | |
| | | 2020 | | | | $ | 225,000 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 225,000 | | |
Name of Beneficial Owner | | | Number of Shares Beneficially Owned | | | Percentage of Shares Beneficially Owned | | ||||||
Executive Officers and Directors | | | | | | | | | | | | | |
John “Hil” Davis(1) | | | | | 1,713,641 | | | | | | 3.5% | | |
Laura Dowling(2) | | | | | 334,667 | | | | | | * | | |
Reid Yeoman(3) | | | | | 114,000 | | | | | | * | | |
Mark Lynn(4) | | | | | 507,386 | | | | | | 1.0% | | |
Trevor Pettennude(5) | | | | | 328,625 | | | | | | * | | |
Jameeka Aaron(6) | | | | | 15,000 | | | | | | * | | |
Huong “Lucy” Doan(7) | | | | | 20,000 | | | | | | * | | |
All executive officers, directors and director nominees as a group (7 persons)(8) | | | | | 3,033,319 | | | | | | % | | |
Additional 5% Stockholders | | | | | | | | | | | | | |
Drew Jones(9) | | | | | 2,192,771 | | | | | | 4.5% | | |
2736 Routh Street | | | | | | | | | | | | | |
Dallas, Texas 75201 | | | | | | | | | | | | | |
Moise Emquies | | | | | 1,046,462 | | | | | | 2.1% | | |
Norwest Venture Partners XI, LP | | | | | 664,151 | | | | | | 1.4% | | |
Norwest Venture Partners XII, LP | | | | | 664,151 | | | | | | 1.4% | | |
Name of Beneficial Owner | | | Number of Shares Beneficially Owned | | | Percentage of Shares Beneficially Owned | | ||||||
Executive Officers and Directors | | | | | | | | | | | | | |
John “Hil” Davis(1) | | | | | 17,136 | | | | | | * | | |
Laura Dowling(2) | | | | | 3,347 | | | | | | * | | |
Reid Yeoman(3) | | | | | 1,140 | | | | | | * | | |
Mark Lynn(4) | | | | | 5,074 | | | | | | * | | |
Trevor Pettennude(5) | | | | | 3,286 | | | | | | * | | |
Jameeka Aaron(6) | | | | | 150 | | | | | | * | | |
Huong “Lucy” Doan(7) | | | | | 200 | | | | | | * | | |
All executive officers, directors and director nominees as a group (7 persons)(8) | | | | | 30,333 | | | | | | * | | |
Five Percent Holders of Common Stock | | | | | | | | | | | | | |
D. Jones Tailored Collection, Ltd.(9) | | | | | 1,974,501 | | | | | | 24.91% | | |
Boco4-DSTLD-Senior Debt, LLC(10) | | | | | 677,419 | | | | | | 7.87% | | |
George Levy(11) | | | | | 2,642,957 | | | | | | 25% | | |
Matthieu Leblan(12) | | | | | 2,642,957 | | | | | | 25% | | |
Moise Emquies(13) | | | | | 1,370,297 | | | | | | 14.75% | | |
Carol Ann Emquies(14) | | | | | 906,556 | | | | | | 10.26% | | |
| | | Beneficial Ownership of Series A Preferred Stock | | |||||||||
Name of Beneficial Owner | | | Shares | | | Percent | | ||||||
John “Hil” Davis(1) | | | | | 1 | | | | | | 100% | | |
Name and Address of Beneficial Owner | | | Number of Shares of Series A Convertible Preferred Stock Beneficially Owned Before | | | Percentage of Shares Outstanding Before(1) | | | Number of Shares of Series A Convertible Preferred Stock Beneficially Owned After | | | Percentage of Shares Outstanding After | | ||||||||||||
Five Percent Holders of DBG Series A Convertible Preferred Stock | | | | | | | | | | | | | | | | | | | | | | | | | |
Boco4-DSTLD-Senior Debt, LLC(2) | | | | | 6,300 | | | | | | 100% | | | | | | 6,300 | | | | | | 100% | | |
Executive Officers and Directors | | | | | | | | | | | | | | | | | | | | | | | | | |
John “Hil” Davis | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Laura Dowling | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Reid Yeoman | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Mark Lynn | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Trevor Pettennude | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Jameeka Aaron | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Huong “Lucy” Doan | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
All executive officers, directors and director nominees as a group (7 persons) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Name and Address of Beneficial Owner | | | Number of Shares of Series B Convertible Preferred Stock Beneficially Owned Before | | | Percentage of Shares Outstanding Before | | | Number of Shares of Series B Convertible Preferred Stock Beneficially Owned After | | | Percentage of Shares Outstanding After | | ||||||||||||
Executive Officers and Directors | | | | | | | | | | | | | | | | | | | | | | | | | |
John “Hil” Davis(1) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Laura Dowling | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Reid Yeoman | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Mark Lynn | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Trevor Pettennude | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Jameeka Aaron | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Huong “Lucy” Doan | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
All executive officers, directors and director nominees as a group (7 persons) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Name and Address of Beneficial Owner | | | Number of Shares of Series C Convertible Preferred Stock Beneficially Owned Before | | | Percentage of Shares Outstanding Before(1) | | | Number of Shares of Series C Convertible Preferred Stock Beneficially Owned After | | | Percentage of Shares Outstanding After | | ||||||||||||
Five Percent Holders of DBG Series C Convertible Preferred Stock | | | | | | | | | | | | | | | | | | | | | | | | | |
George Levy(2) | | | | | 1,895 | | | | | | 32.90% | | | | | | 1,895 | | | | | | 32.90% | | |
Matthieu Leblan(3) | | | | | 1,895 | | | | | | 32.90% | | | | | | 1,895 | | | | | | 32.90% | | |
Moise Emquies(4) | | | | | 975 | | | | | | 16.92% | | | | | | 975 | | | | | | 16.92% | | |
Carol Ann Emquies(5) | | | | | 650 | | | | | | 11.28% | | | | | | 650 | | | | | | 11.28% | | |
Executive Officers and Directors | | | | | | | | | | | | | | | | | | | | | | | | | |
John “Hil” Davis | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Laura Dowling | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Reid Yeoman | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Mark Lynn | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Trevor Pettennude | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Jameeka Aaron | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Huong “Lucy” Doan | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
All executive officers, directors and director nominees as a group (7 persons) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | June 30, 2022 | | | December 31, 2021 | | ||||||
ASSETS | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash | | | | $ | 1,025,641 | | | | | $ | 417,235 | | |
Accounts receivable, net of allowance | | | | | 69,773 | | | | | | 124,342 | | |
Due from factor | | | | | 552,367 | | | | | | 590,022 | | |
Inventory | | | | | 4,999,496 | | | | | | 4,917,128 | | |
Prepaid expenses and other current assets | | | | | 242,982 | | | | | | 219,902 | | |
Total current assets | | | | | 6,890,259 | | | | | | 6,268,628 | | |
Fixed assets, net | | | | | 126,102 | | | | | | 161,954 | | |
Deposits | | | | | 9,612 | | | | | | 19,742 | | |
Total assets | | | | $ | 7,025,973 | | | | | $ | 6,450,324 | | |
LIABILITIES AND MEMBERS’ EQUITY | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable | | | | $ | 1,382,180 | | | | | $ | 1,142,671 | | |
Accrued liabilities | | | | | 390,774 | | | | | | 773,274 | | |
Loan payable, related party | | | | | 495,000 | | | | | | — | | |
Total liabilities | | | | | 2,267,954 | | | | | | 1,915,945 | | |
Commitments and contingencies (Note 7) | | | | | | | | | | | | | |
Members’ equity | | | | | 4,758,019 | | | | | | 4,534,379 | | |
Total members’ equity | | | | | 4,758,019 | | | | | | 4,534,379 | | |
Total liabilities and members’ equity | | | | $ | 7,025,973 | | | | | $ | 6,450,324 | | |
| | | Six Months Ended June 30, | | |||||||||
| | | 2022 | | | 2021 | | ||||||
Net revenues | | | | $ | 9,449,734 | | | | | $ | 13,765,815 | | |
Cost of goods sold | | | | | 4,948,290 | | | | | | 8,410,619 | | |
Gross profit | | | | | 4,501,444 | | | | | | 5,355,196 | | |
Operating expenses: | | | | | | | | | | | | | |
General and administrative | | | | | 1,853,295 | | | | | | 1,551,030 | | |
Distribution | | | | | 556,910 | | | | | | 570,665 | | |
Sales and marketing | | | | | 1,759,932 | | | | | | 2,179,883 | | |
Total operating expenses | | | | | 4,170,137 | | | | | | 4,301,578 | | |
Income from operations | | | | | 331,307 | | | | | | 1,053,618 | | |
Other income (expense), net | | | | | | | | | | | | | |
Other income | | | | | — | | | | | | 689,171 | | |
Interest expense | | | | | (36,867) | | | | | | (37,067) | | |
Total other income (expense), net | | | | | (36,867) | | | | | | 652,104 | | |
Provision for income taxes | | | | | 800 | | | | | | 800 | | |
Net income | | | | $ | 293,640 | | | | | $ | 1,704,922 | | |
| | | Members’ Equity | | |||
Balances at December 31, 2020 | | | | $ | 4,630,468 | | |
Distributions | | | | | (1,180,000) | | |
Net income | | | | | 1,704,922 | | |
Balances at June 30, 2021 | | | | $ | 5,155,390 | | |
Balances at December 31, 2021 | | | | $ | 4,534,379 | | |
Distributions | | | | | (70,000) | | |
Net income | | | | | 293,640 | | |
Balances at June 30, 2022 | | | | $ | 4,758,019 | | |
| | | Six Months Ended June 30, | | |||||||||
| | | 2022 | | | 2021 | | ||||||
Cash flows from operating activities: | | | | | | | | | | | | | |
Net income | | | | $ | 293,640 | | | | | $ | 1,704,922 | | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | | | | | | |
Depreciation and amortization | | | | | 27,000 | | | | | | 28,800 | | |
Bad debt | | | | | — | | | | | | 6,629 | | |
Other income – PPP forgiveness | | | | | — | | | | | | (689,171) | | |
Changes in operating assets and liabilities: | | | | | | | | | | | | | |
Accounts receivable | | | | | 54,569 | | | | | | (260,403) | | |
Due from factor | | | | | 189,953 | | | | | | 448,791 | | |
Inventory | | | | | (82,367) | | | | | | 854,796 | | |
Prepaid expenses and other current assets | | | | | (23,080) | | | | | | 6,673 | | |
Accounts payable | | | | | 239,509 | | | | | | (453,122) | | |
Accrued liabilities | | | | | (382,500) | | | | | | (655,942) | | |
Net cash provided by operating activities | | | | | 316,724 | | | | | | 991,973 | | |
Cash flows from investing activities: | | | | | | | | | | | | | |
Purchase of property and equipment | | | | | — | | | | | | (5,000) | | |
Proceeds from sale of property and equipment | | | | | 8,852 | | | | | | — | | |
Deposits | | | | | 10,130 | | | | | | — | | |
Net cash provided by (used in) investing activities | | | | | 18,982 | | | | | | (5,000) | | |
Cash flows from financing activities: | | | | | | | | | | | | | |
Proceeds from loans payable | | | | | — | | | | | | 630,637 | | |
Proceeds from loan payable, related party | | | | | 995,000 | | | | | | — | | |
Repayments to loan payable, related party | | | | | (500,000) | | | | | | — | | |
Factor advances (repayments), net | | | | | (152,300) | | | | | | (185,000) | | |
Distributions | | | | | (70,000) | | | | | | (1,180,000) | | |
Net cash provided by (used in) financing activities | | | | | 272,700 | | | | | | (734,363) | | |
Net change in cash and cash equivalents | | | | | 608,406 | | | | | | 252,611 | | |
Cash at beginning of period | | | | | 417,235 | | | | | | 733,440 | | |
Cash at end of period | | | | $ | 1,025,641 | | | | | $ | 986,051 | | |
Supplemental disclosure of cash flow information: | | | | | | | | | | | | | |
Cash paid for income taxes | | | | $ | 800 | | | | | $ | 800 | | |
Cash paid for interest | | | | $ | 36,867 | | | | | $ | 37,067 | | |
| | | June 30, 2022 | | | December 31, 2021 | | ||||||
Outstanding receivables | | | | | | | | | | | | | |
Without recourse | | | | $ | 1,696,907 | | | | | $ | 1,886,591 | | |
With recourse | | | | | — | | | | | | 11,000 | | |
| | | | | 1,696,907 | | | | | | 1,897,591 | | |
Advances | | | | | (1,057,000) | | | | | | (1,209,300) | | |
Credits due customers | | | | | (87,540) | | | | | | (98,269) | | |
Due from factor | | | | $ | 552,367 | | | | | $ | 590,022 | | |
| | | June 30, 2022 | | | December 31, 2021 | | ||||||
Raw materials | | | | $ | 1,775,982 | | | | | $ | 1,746,722 | | |
Work in progress | | | | | 1,984,240 | | | | | | 1,951,549 | | |
Finished goods | | | | | 1,239,274 | | | | | | 1,218,857 | | |
Inventory | | | | $ | 4,999,496 | | | | | $ | 4,917,128 | | |
| | | June 30, 2022 | | | December 31, 2021 | | ||||||
Leasehold improvements and showrooms | | | | $ | 198,658 | | | | | $ | 198,658 | | |
Furniture and equipment | | | | | 174,006 | | | | | | 183,005 | | |
Automobiles | | | | | 34,220 | | | | | | 34,072 | | |
| | | | | 406,883 | | | | | | 415,735 | | |
Less: accumulated depreciation and amortization | | | | | (280,781) | | | | | | (253,781) | | |
Fixed assets, net | | | | $ | 126,102 | | | | | $ | 161,954 | | |
| | | December 31, | | |||||||||
| | | 2021 | | | 2020 | | ||||||
ASSETS | | | | | | | | | | | | | |
Current assets: | | | | $ | 417,235 | | | | | $ | 733,440 | | |
Cash | | | | | | | | | | | | | |
Accounts receivable, net of allowance | | | | | 124,342 | | | | | | 179,057 | | |
Due from factor | | | | | 590,022 | | | | | | 1,086,405 | | |
Inventory | | | | | 4,917,128 | | | | | | 5,747,826 | | |
Prepaid expenses and other current assets | | | | | 219,901 | | | | | | 102,125 | | |
Total current assets | | | | | 6,268,628 | | | | | | 7,848,853 | | |
Fixed assets, net | | | | | 161,954 | | | | | | 215,805 | | |
Deposits | | | | | 19,742 | | | | | | 19,742 | | |
Total assets | | | | $ | 6,450,324 | | | | | $ | 8,084,400 | | |
LIABILITIES AND MEMBERS’ EQUITY | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable | | | | $ | 1,142,671 | | | | | $ | 1,400,793 | | |
Accrued liabilities | | | | | 773,274 | | | | | | 1,213,968 | | |
Loan payable, current | | | | | — | | | | | | 308,151 | | |
Total current liabilities | | | | | 1,915,945 | | | | | | 2,922,912 | | |
Loan payable, net of current portion | | | | | — | | | | | | 531,020 | | |
Total liabilities | | | | | 1,915,945 | | | | | | 3,453,932 | | |
Commitments and contingencies (Note 7) | | | | | | | | | | | | | |
Members’ equity | | | | | 4,534,379 | | | | | | 4,630,468 | | |
Total members’ equity | | | | | 4,534,379 | | | | | | 4,630,468 | | |
Total liabilities and members’ equity | | | | $ | 6,450,324 | | | | | $ | 8,084,400 | | |
| | | Year Ended December 31, | | |||||||||
| | | 2021 | | | 2020 | | ||||||
Net revenues | | | | $ | 22,800,825 | | | | | $ | 19,897,696 | | |
Cost of goods sold | | | | | 13,638,553 | | | | | | 8,525,612 | | |
Gross profit | | | | | 9,162,272 | | | | | | 11,372,084 | | |
Operating expenses: | | | | | | | | | | | | | |
General and administrative | | | | | 3,201,811 | | | | | | 2,823,334 | | |
Distribution | | | | | 1,080,964 | | | | | | 1,011,431 | | |
Sales and marketing | | | | | 4,374,667 | | | | | | 3,790,570 | | |
Total operating expenses | | | | | 8,657,442 | | | | | | 7,625,335 | | |
Income from operations | | | | | 504,830 | | | | | | 3,746,749 | | |
Other income (expense), net Other income | | | | | 1,319,899 | | | | | | 10,010 | | |
Interest expense | | | | | (70,018) | | | | | | (55,537) | | |
Total other income (expense), net | | | | | 1,249,881 | | | | | | (45,527) | | |
Provision for income taxes | | | | | 800 | | | | | | 800 | | |
Net income | | | | $ | 1,753,911 | | | | | $ | 3,700,422 | | |
| | | Members’ Equity | | |||
Balances at December 31, 2019 | | | | $ | 2,900,046 | | |
Distributions | | | | | (1,970,000) | | |
Net income | | | | | 3,700,422 | | |
Balances at December 31, 2020 | | | | | 4,630,468 | | |
Distributions | | | | | (1,850,000) | | |
Net income | | | | | 1,753,911 | | |
Balances at December 31, 2021 | | | | $ | 4,534,379 | | |
| | | Year Ended December 31, | | |||||||||
| | | 2021 | | | 2020 | | ||||||
Cash flows from operating activities: | | | | | | | | | | | | | |
Net income | | | | $ | 1,753,911 | | | | | $ | 3,700,422 | | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | | | | | | |
Depreciation and amortization | | | | | 53,851 | | | | | | 58,423 | | |
Bad debt | | | | | 9,976 | | | | | | 91,195 | | |
Other income – PPP forgiveness | | | | | (1,319,808) | | | | | | — | | |
Changes in operating assets and liabilities: | | | | | | | | | | | | | |
Accounts receivable | | | | | 44,740 | | | | | | (144,902) | | |
Due from factor | | | | | 363,083 | | | | | | (131,137) | | |
Inventory | | | | | 830,698 | | | | | | (2,100,608) | | |
Due from related party | | | | | — | | | | | | 92,318 | | |
Prepaid expenses and other current assets | | | | | (117,777) | | | | | | 56,145 | | |
Accounts payable | | | | | (258,122) | | | | | | 7,866 | | |
Accrued liabilities | | | | | (440,694) | | | | | | 339,329 | | |
Net cash provided by operating activities | | | | | 919,858 | | | | | | 1,969,051 | | |
Cash flows from investing activities: | | | | | | | | | | | | | |
Purchase of property and equipment | | | | | — | | | | | | (11,430) | | |
Net cash used in investing activities | | | | | — | | | | | | (11,430) | | |
Cash flows from financing activities: | | | | | | | | | | | | | |
Proceeds from loans payable | | | | | 480,637 | | | | | | 839,171 | | |
Factor advances (repayments), net | | | | | 133,300 | | | | | | (299,000) | | |
Distributions | | | | | (1,850,000) | | | | | | (1,970,000) | | |
Net cash used in financing activities | | | | | (1,236,063) | | | | | | (1,429,829) | | |
Net change in cash and cash equivalents | | | | | (316,205) | | | | | | 527,792 | | |
Cash and cash equivalents at beginning of year | | | | | 733,440 | | | | | | 205,648 | | |
Cash and cash equivalents at end of year | | | | $ | 417,235 | | | | | $ | 733,440 | | |
Supplemental disclosure of cash flow information: | | | | | | | | | | | | | |
Cash paid for income taxes | | | | $ | 800 | | | | | $ | 800 | | |
Cash paid for interest | | | | $ | 70,018 | | | | | $ | 55,537 | | |
| | | December 31, | | |||||||||
| | | 2021 | | | 2020 | | ||||||
Outstanding receivables | | | | | | | | | | | | | |
Without recourse | | | | $ | 1,886,591 | | | | | $ | 2,129,451 | | |
With recourse | | | | | 11,000 | | | | | | 43,948 | | |
| | | | | 1,897,591 | | | | | | 2,173,399 | | |
Advances | | | | | (1,209,300) | | | | | | (1,076,000) | | |
Credits due customers | | | | | (98,269) | | | | | | (10,994) | | |
Due from factor | | | | $ | 590,022 | | | | | $ | 1,086,405 | | |
| | | December 31, | | |||||||||
| | | 2021 | | | 2020 | | ||||||
Raw materials | | | | $ | 1,746,722 | | | | | $ | 2,273,060 | | |
Work in progress | | | | | 1,951,549 | | | | | | 2,231,811 | | |
Finished goods | | | | | 1,218,857 | | | | | | 1,242,955 | | |
Inventory | | | | $ | 4,917,128 | | | | | $ | 5,747,826 | | |
| | | December 31, | | |||||||||
| | | 2021 | | | 2020 | | ||||||
Leasehold improvements and showrooms | | | | $ | 198,658 | | | | | $ | 198,658 | | |
Furniture and equipment | | | | | 183,005 | | | | | | 183,005 | | |
Automobiles | | | | | 34,072 | | | | | | 34,072 | | |
| | | | | 415,735 | | | | | | 415,735 | | |
Less: accumulated depreciation and amortization | | | | | (253,781) | | | | | | (199,930) | | |
Fixed assets, net | | | | $ | 161,954 | | | | | $ | 215,805 | | |
| 2022 | | | | $ | 15,516 | | |
| | | | | $ | 15,516 | | |
| | | DBG | | | Sundry | | | Total | | | Pro Forma Adjustments | | | Pro Forma Combined | | |||||||||||||||
Net revenues | | | | $ | 7,171,411 | | | | | $ | 9,449,734 | | | | | $ | 16,621,145 | | | | | $ | — | | | | | $ | 16,621,145 | | |
Cost of net revenues | | | | | 3,526,833 | | | | | | 4,948,290 | | | | | | 8,475,123 | | | | | | — | | | | | | 8,475,123 | | |
Gross profit | | | | | 3,644,578 | | | | | | 4,501,444 | | | | | | 8,146,022 | | | | | | — | | | | | | 8,146,022 | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
General and administrative | | | | | 9,601,467 | | | | | | 1,853,295 | | | | | | 11,454,762 | | | | | | 2,408,227 | | | | | | 13,862,989 | | |
Sales and marketing | | | | | 2,745,863 | | | | | | 556,910 | | | | | | 3,302,773 | | | | | | — | | | | | | 3,302,773 | | |
Distribution | | | | | 424,773 | | | | | | 1,759,932 | | | | | | 2,184,705 | | | | | | — | | | | | | 2,184,705 | | |
Change in fair value of contingent consideration | | | | | 7,121,240 | | | | | | — | | | | | | 7,121,240 | | | | | | — | | | | | | 7,121,240 | | |
Total operating expenses | | | | | 19,893,343 | | | | | | 4,170,137 | | | | | | 24,063,480 | | | | | | 2,408,227 | | | | | | 26,471,707 | | |
Loss from operations | | | | | (16,248,765) | | | | | | 331,307 | | | | | | (15,917,458) | | | | | | (2,408,227) | | | | | | (18,325,685) | | |
Other income (expense): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest expense | | | | | (3,771,476) | | | | | | (36,867) | | | | | | (3,808,343) | | | | | | — | | | | | | (3,808,343) | | |
Other non-operating income (expenses) | | | | | 2,653,375 | | | | | | — | | | | | | 2,653,375 | | | | | | — | | | | | | 2,653,375 | | |
Total other income (expense), net | | | | | (1,118,101) | | | | | | (36,867) | | | | | | (1,154,968) | | | | | | — | | | | | | (1,154,968) | | |
Income tax benefit (provision) | | | | | — | | | | | | (800) | | | | | | (800) | | | | | | — | | | | | | (800) | | |
Net income (loss) | | | | $ | (17,366,866) | | | | | $ | 293,640 | | | | | $ | (17,073,226) | | | | | $ | (2,408,227) | | | | | $ | (19,481,453) | | |
| | | DBG | | | H&J | | | Stateside | | | Sundry | | | Total | | | Pro Forma Adjustments | | | | | | | | | Pro Forma Combined | | |||||||||||||||||||||
Net revenues | | | | $ | 7,584,859 | | | | | $ | 980,261 | | | | | $ | 3,269,481 | | | | | $ | 22,800,825 | | | | | $ | 34,635,426 | | | | | $ | — | | | | | | | | | | | $ | 34,635,426 | | |
Cost of net revenues | | | | | 4,689,200 | | | | | | 350,004 | | | | | | 1,194,693 | | | | | | 13,638,553 | | | | | | 19,872,450 | | | | | | — | | | | | | | | | | | | 19,872,450 | | |
Gross profit | | | | | 2,895,659 | | | | | | 630,257 | | | | | | 2,074,788 | | | | | | 9,162,271 | | | | | | 14,762,976 | | | | | | — | | | | | | | | | | | | 14,762,976 | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
General and administrative | | | | | 17,779,903 | | | | | | 410,891 | | | | | | 1,147,168 | | | | | | 3,201,811 | | | | | | 22,539,773 | | | | | | 6,197,028 | | | | | | (a) | | | | | | 28,736,800 | | |
Sales and marketing | | | | | 3,810,583 | | | | | | 349,338 | | | | | | 514,742 | | | | | | 4,374,667 | | | | | | 9,049,330 | | | | | | — | | | | | | | | | | | | 9,049,330 | | |
Distribution | | | | | 489,371 | | | | | | — | | | | | | 115,286 | | | | | | 1,080,964 | | | | | | 1,685,621 | | | | | | — | | | | | | | | | | | | 1,685,621 | | |
Impairment of intangible assets | | | | | 3,400,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,400,000 | | | | | | — | | | | | | | | | | | | 3,400,000 | | |
Change in fair value of contingent consideration | | | | | 8,764,460 | | | | | | — | | | | | | — | | | | | | — | | | | | | 8,764,460 | | | | | | — | | | | | | | | | | | | 8,764,460 | | |
Total operating expenses | | | | | 34,244,317 | | | | | | 760,229 | | | | | | 1,777,195 | | | | | | 8,657,442 | | | | | | 45,439,184 | | | | | | 6,197,028 | | | | | | | | | | | | 51,636,212 | | |
Loss from operations | | | | | (31,348,658) | | | | | | (129,972) | | | | | | 297,593 | | | | | | 504,829 | | | | | | (30,676,207) | | | | | | (6,197,028) | | | | | | | | | | | | (36,873,235) | | |
Other income (expense): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest expense | | | | | (3,663,921) | | | | | | (33,668) | | | | | | — | | | | | | (70,018) | | | | | | (3,767,607) | | | | | | (1,344,000) | | | | | | (b) | | | | | | (5,111,607) | | |
Other non-operating income (expenses) | | | | | 1,554,502 | | | | | | — | | | | | | (12,494) | | | | | | 1,319,899 | | | | | | 2,861,907 | | | | | | (1,319,899) | | | | | | (c) | | | | | | 1,542,008 | | |
Total other income (expense), net | | | | | (2,109,419) | | | | | | (33,668) | | | | | | (12,494) | | | | | | 1,249,881 | | | | | | (905,699) | | | | | | (2,663,899) | | | | | | | | | | | | (3,569,598) | | |
Income tax benefit (provision) | | | | | 1,100,120 | | | | | | — | | | | | | — | | | | | | (800) | | | | | | 1,099,320 | | | | | | — | | | | | | | | | | | | 1,099,320 | | |
Net income (loss) | | | | $ | (32,357,957) | | | | | $ | (163,640) | | | | | $ | 285,099 | | | | | $ | 1,753,911 | | | | | $ | (30,482,587) | | | | | $ | (8,860,927) | | | | | | | | | | | $ | (39,343,514) | | |
| | | DBG | | | Sundry | | | Total | | | Pro Forma Adjustments | | | | | | Pro Forma Combined | | | |||||||||||||||||
ASSETS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
Current assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
Cash and cash equivalents | | | | $ | 802,724 | | | | | $ | 1,025,641 | | | | | $ | 1,828,365 | | | | | $ | — | | | | | | | | $ | 1,828,365 | | | | ||
Accounts receivable, net | | | | | 190,056 | | | | | | 69,773 | | | | | | 259,829 | | | | | | — | | | | | | | | | 259,829 | | | | ||
Due from factor, net | | | | | 929,989 | | | | | | 552,367 | | | | | | 1,482,356 | | | | | | — | | | | | | | | | 1,482,356 | | | | ||
Inventory | | | | | 2,883,613 | | | | | | 4,999,496 | | | | | | 7,883,109 | | | | | | — | | | | | | | | | 7,883,109 | | | | ||
Prepaid expenses and other current assets | | | | | 813,681 | | | | | | 242,982 | | | | | | 1,056,663 | | | | | | — | | | | | | | | | 1,056,663 | | | | ||
Total current assets | | | | | 5,620,063 | | | | | | 6,890,259 | | | | | | 12,510,322 | | | | | | — | | | | | | | | | 12,510,322 | | | | ||
Deferred offering costs | | | | | 367,696 | | | | | | — | | | | | | 367,696 | | | | | | — | | | | | | | | | 367,696 | | | | ||
Property, equipment and software, net | | | | | 65,235 | | | | | | 126,102 | | | | | | 191,337 | | | | | | — | | | | | | | | | 191,337 | | | | ||
Goodwill | | | | | 18,264,822 | | | | | | — | | | | | | 18,264,822 | | | | | | 3,379,691 | | | | (b) | | | | | 21,644,513 | | | | ||
Intangible assets, net | | | | | 11,765,688 | | | | | | — | | | | | | 11,765,688 | | | | | | 21,454,063 | | | | (a), (b) | | | | | 33,219,751 | | | | ||
Deposits | | | | | 137,794 | | | | | | 9,612 | | | | | | 147,406 | | | | | | — | | | | | | | | | 147,406 | | | | ||
Right of use asset | | | | | 201,681 | | | | | | | | | | | | 201,681 | | | | | | | | | | | | | | | 201,681 | | | | ||
Total assets | | | | $ | 36,422,979 | | | | | $ | 7,025,973 | | | | | $ | 43,448,952 | | | | | $ | 24,833,754 | | | | | | | | $ | 68,282,706 | | | | ||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
Current liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
Accounts payable | | | | $ | 7,003,333 | | | | | $ | 1,382,180 | | | | | $ | 8,385,512 | | | | | $ | — | | | | | | | | $ | 8,385,512 | | | | ||
Accrued expenses and other liabilities | | | | | 3,698,717 | | | | | | 390,774 | | | | | | 4,089,491 | | | | | | — | | | | | | | | | 4,089,491 | | | | ||
Deferred revenue | | | | | 221,363 | | | | | | — | | | | | | 221,363 | | | | | | — | | | | | | | | | 221,363 | | | | ||
Due to related parties | | | | | 250,598 | | | | | | 495,000 | | | | | | 745,598 | | | | | | — | | | | | | | | | 745,598 | | | | ||
Contingent consideration liability | | | | | 19,300,716 | | | | | | — | | | | | | 19,300,716 | | | | | | — | | | | | | | | | 19,300,716 | | | | ||
Convertible notes, current | | | | | 100,000 | | | | | | — | | | | | | 100,000 | | | | | | — | | | | | | | | | 100,000 | | | | ||
Accrued interest payable | | | | | 1,801,303 | | | | | | — | | | | | | 1,801,303 | | | | | | — | | | | | | | | | 1,801,303 | | | | ||
Note payable – related party | | | | | 154,489 | | | | | | — | | | | | | 154,489 | | | | | | — | | | | | | | | | 154,489 | | | | ||
Venture debt, net of discount | | | | | 6,251,755 | | | | | | — | | | | | | 6,251,755 | | | | | | — | | | | | | | | | 6,251,755 | | | | ||
Loan payable, current | | | | | 1,489,335 | | | | | | — | | | | | | 1,489,335 | | | | | | — | | | | | | | | | 1,489,335 | | | | ||
Promissory note payable, current | | | | | 3,500,000 | | | | | | — | | | | | | 3,500,000 | | | | | | — | | | | | | | | | 3,500,000 | | | | ||
Right of use liability, current portion | | | | | 201,681 | | | | | | | | | | | | 201,681 | | | | | | — | | | | | | | | | 201,681 | | | | | |
Total current liabilities | | | | | 43,973,290 | | | | | | 2,267,954 | | | | | | 46,241,244 | | | | | | — | | | | | | | | | 46,241,244 | | | | ||
Convertible note payable, net | | | | | 5,986,068 | | | | | | — | | | | | | 5,986,068 | | | | | | — | | | | | | | | | 5,986,068 | | | | ||
Loan payable | | | | | 298,900 | | | | | | — | | | | | | 298,900 | | | | | | — | | | | | | | | | 298,900 | | | | ||
Derivative liability | | | | | 1,044,939 | | | | | | — | | | | | | 1,044,939 | | | | | | — | | | | | | | | | 1,044,939 | | | | ||
Warrant liability | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | — | | | | ||
Right of use liability | | | | | — | | | | | | | | | | | | — | | | | | | — | | | | | | | | | — | | | | | |
Total liabilities | | | | | 51,303,197 | | | | | | 2,267,954 | | | | | | 53,571,151 | | | | | | — | | | | | | | | | 53,571,151 | | | | ||
Stockholders’ equity (deficit): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
Common stock | | | | | 5,287 | | | | | | — | | | | | | 5,287 | | | | | | — | | | | | | | | | 5,287 | | | | ||
Additional paid-in capital | | | | | 68,185,315 | | | | | | — | | | | | | 68,185,315 | | | | | | 32,000,000 | | | | (b) | | | | | 100,185,315 | | | | ||
Members’ equity | | | | | — | | | | | | 4,758,019 | | | | | | 4,758,019 | | | | | | (4,758,019) | | | | (b) | | | | | — | | | | ||
Accumulated deficit | | | | | (83,070,820) | | | | | | — | | | | | | (83,070,820) | | | | | | (2,408,227) | | | | | | | | | (85,479,047) | | | | ||
Total stockholders’ equity (deficit) | | | | | (14,880,218) | | | | | | 4,758,019 | | | | | | (10,122,199) | | | | | | 24,833,754 | | | | | | | | | 14,711,555 | | | | ||
Total liabilities and stockholders’ equity (deficit) | | | | $ | 36,422,979 | | | | | $ | 7,025,973 | | | | | $ | 43,448,952 | | | | | $ | 24,833,754 | | | | | | | | $ | 68,282,706 | | | |
| Cash | | | | $ | 12,000,000 | | |
| Common stock | | | | | 20,000,000 | | |
| Purchase price consideration | | | | $ | 32,000,000 | | |
| Assets acquired | | | | $ | 7,025,973 | | |
| Goodwill | | | | | 3,379,691 | | |
| Intangible assets | | | | | 23,862,290 | | |
| Liabilities assumed | | | | | (2,267,954) | | |
| Purchase price consideration | | | | $ | 32,000,000 | | |