| Delaware | | | 5699 | | | 46-1942864 | |
| (State or other jurisdiction of incorporation or organization) | | | (Primary Standard Industrial Classification Code Number) | | | (I.R.S. Employer Identification Number) | |
| Thomas J. Poletti, Esq. Veronica Lah, Esq. Manatt, Phelps & Phillips, LLP 695 Town Center Drive, 14th Floor Costa Mesa, CA Tel: (714) 312-7500 | | | Washington, Tel: (202) | |
| ☐ Large accelerated filer | | | ☐ Accelerated filer | | | ☐ Non-accelerated filer | | | ☒ Smaller reporting company | |
| | | | | | | | | | ☒ Emerging growth company | |
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Title of Each Class of Securities to be Registered | | | | Amount to be Registered | | | | Proposed Maximum Offering Price Per Share | | | | Proposed Maximum Aggregate Offering Price(1) | | | | Amount of Registration Fee(2) | | |||||||||
Common Stock $0.0001 par value(2)(3)(4) | | | | 2,300,000 shares | | | | | $ | 5.00 | | | | | | $ | 11,500,000 | | | | | | $ | 1,254.65 | | |
Warrants to purchase shares of common stock, par value $0.0001 per share(3)(4)(5) | | | | | | | | | | | | | | | | | | | | | | | | | | |
Shares of common stock, par value $0.0001 per share underlying warrants(2) | | | | 2,300,000 | | | | | | 5.50 | | | | | | $ | 12,650,000 | | | | | | $ | 1,380.12 | | |
Underwriters’ Warrants to purchase Common Stock(6) | | | | 160,000 warrants | | | | | | — | | | | | | | — | | | | | | | — | | |
Common Stock underlying Underwriters’ Warrants(2)(7) | | | | 160,000 shares | | | | | $ | 6.25 | | | | | | $ | 1,000,000 | | | | | | $ | 109.10 | | |
Total Registration Fee | | | | | | | | | | | | | | | | $ | 25,150,000 | | | | | | $ | 2,743.87 | | |
| | | Per Share and Warrant | | | Total | | ||||||
Public offering price | | | | $ | 5.00 | | | | | $ | 10,000,000 | | |
Underwriting discount and commissions(1) | | | | $ | 0.40 | | | | | $ | 800,000 | | |
Proceeds, before expenses, to us | | | | $ | 4.60 | | | | | $ | 9,200,000 | | |
| | | Per Share | | | Per Pre-Funded Warrant | | | Total | |
Public offering price | | | | | | | | |||
Placement Agent fees(1) | | | | | | | | | | |
Proceeds to us, before expenses(2) | | | | | | | | | | |
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| Capitalization | | | | | 36 | | |
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| | | Year Ended December 31, | | |||||||||||||||
| | | 2020 Pro Forma | | | 2020 Actual | | | 2019 Actual | | |||||||||
| | | (unaudited) | | | | | | | | | | | | | | |||
Net revenues | | | | $ | 9,801,981 | | | | | $ | 5,239,437 | | | | | $ | 3,034,216 | | |
Cost of net revenues | | | | | 6,603,865 | | | | | | 4,685,755 | | | | | | 1,626,505 | | |
Gross profit | | | | | 3,198,116 | | | | | | 553,682 | | | | | | 1,407,711 | | |
Operating expenses | | | | | 15,316,886 | | | | | | 9,701,572 | | | | | | 6,255,180 | | |
Operating loss | | | | | (12,118,771) | | | | | | (9,147,890) | | | | | | (4,847,469) | | |
Other expenses | | | | | (2,214,320) | | | | | | (1,566,764) | | | | | | (805,704) | | |
Loss before provision for income taxes | | | | | (14,333,091) | | | | | | (10,714,654) | | | | | | (5,653,173) | | |
Provision for income taxes | | | | | 13,641 | | | | | | 13,641 | | | | | | 800 | | |
Net loss | | | | $ | (14,346,732) | | | | | $ | (10,728,295) | | | | | $ | (5,653,973) | | |
Pro forma earnings per share – basic and diluted(1) | | | | | | | | | | | | | | | | | | | |
Basic | | | | $ | (1.50) | | | | | | | | | | | | | | |
Diluted | | | | $ | (1.50) | | | | | | | | | | | | | | |
Pro forma number of common shares outstanding – basic and diluted(1) | | | | | | | | | | | | | | | | | | | |
Basic | | | | | 9,569,349 | | | | | | | | | | | | | | |
Diluted | | | | | 9,569,349 | | | | | | | | | | | | | | |
| | | As of December 31, 2020 | | |||||||||||||||
| | | Actual | | | Pro Forma | | | Pro Forma as Adjusted | | |||||||||
| | | | | | | | | (unaudited) | | | (unaudited) | | ||||||
Total cash | | | | $ | 575,986 | | | | | $ | 627,301 | | | | | $ | 6,047,801 | | |
Total current assets | | | | | 2,008,656 | | | | | | 2,226,773 | | | | | | 7,647,273 | | |
Total assets | | | | | 16,352,169 | | | | | | 23,832,676 | | | | | | 29,253,176 | | |
Total current liabilities including current portion of long-term debt | | | | | 20,278,690 | | | | | | 21,991,487 | | | | | | 20,011,987 | | |
Total long-term obligations | | | | | 1,931,124 | | | | | | 2,342,878 | | | | | | 1,342,878 | | |
Total liabilities | | | | | 22,209,814 | | | | | | 24,334,365 | | | | | | 21,354,865 | | |
Total stockholders’ deficit | | | | | (5,857,645) | | | | | | (501,689) | | | | | | 7,898,311 | | |
Total liabilities and stockholders’ deficit | | | | $ | 16,352,169 | | | | | $ | 23,832,676 | | | | | $ | 29,253,176 | | |
| | | as of December 31, 2020 | | |||||||||||||||||||||||||||
| | | DBG | | | H&J | | | Total | | | Pro Forma | | | Pro Forma as Adjusted | | |||||||||||||||
Cash and cash equivalents | | | | $ | 575,986 | | | | | $ | 51,315 | | | | | $ | 627,301 | | | | | $ | 5,420,500 | | | | | $ | 6,047,801 | | |
Indebtedness, including current portion | | | | $ | 22,209,814 | | | | | $ | 1,544,551 | | | | | $ | 23,754,365 | | | | | | | | | | | $ | 21,354,865 | | |
Debt | | | | $ | 14,109,041 | | | | | $ | 972,695 | | | | | | 15,081,736 | | | | | $ | (3,415,815) | | | | | | 11,665,921 | | |
DBG preferred stock, $0.0001 par value, 125,000,000 shares authorized (actual), 10,000,000 shares authorized (pro forma and pro forma as adjusted), 62,924,710 shares issued and outstanding (actual), no shares issued and outstanding (pro forma as adjusted) | | | | | 6,291 | | | | | | — | | | | | | 6,291 | | | | | | (6,291) | | | | | | — | | |
DBG common stock, $0.0001 par value: 200,000,000 shares authorized (actual), 100,000,000 shares authorized (pro forma and pro forma as adjusted), 10,377,615 shares issued and outstanding (actual); 7,569,349 issued and outstanding (pro forma); 9,569,349 (pro forma as adjusted) | | | | | 1,038 | | | | | | — | | | | | | 1,038 | | | | | | (83) | | | | | | 955 | | |
Additional paid-in capital | | | | | 27,481,023 | | | | | | 102,083 | | | | | | 27,583,106 | | | | | | 19,422,189 | | | | | | 47,005,295 | | |
Accumulated deficit | | | | | (33,345,997) | | | | | | (1,284,027) | | | | | | (34,630,024) | | | | | | — | | | | | | (34,630,024) | | |
Total stockholders’ equity (deficit) | | | | $ | (5,857,645) | | | | | $ | (1,181,944) | | | | | $ | (7,039,589) | | | | | $ | 19,415,815 | | | | | $ | 12,376,226 | | |
Total capitalization | | | | $ | 8,251,396 | | | | | $ | (209,249) | | | | | $ | 8,042,147 | | | | | $ | 16,000,000 | | | | | $ | 24,042,147 | | |
| | | Actual | | | Pro Forma | | | Pro Forma As Adjusted | | |||||||||
Cash and cash equivalents | | | | $ | 1,969,250 | | | | | $ | 1,706,845 | | | | | | | | |
Total assets | | | | $ | 33,129,832 | | | | | $ | 30,111,865 | | | | | | | | |
Total current liabilities(1) | | | | $ | 40,140,987 | | | | | $ | 21,328,512 | | | | | | | | |
Total liabilities(1) | | | | $ | 40,992,853 | | | | | $ | 21,960,484 | | | | | | | | |
Stockholders' equity: | | | | | | | | | | | | | | | | | | | |
Common stock, $0.0001 par value, 1,000,000,000 shares authorized actual, pro forma and pro forma as adjusted; 5,974,969 shares issued and outstanding actual, 7,927,549 shares issued and outstanding pro forma, and shares issued and outstanding pro forma as adjusted | | | | | 598 | | | | | | 793 | | | | | | | | |
Series A Convertible Preferred Stock, par value $0.0001; 6,800 shares authorized actual, pro forma and pro forma as adjusted; 6,300 shares issued and outstanding actual, pro forma and pro forma as adjusted, | | | | | 1 | | | | | | 1 | | | | | | | | |
Series B Preferred Stock, par value $0.0001; no shares authorized actual; 1 share authorized pro forma and pro forma as adjusted; 0 shares issued and outstanding actual; 1 share issued and outstanding pro forma and pro forma, as adjusted | | | | | — | | | | | | — | | | | | | | | |
Series C Convertible Preferred Stock, par value $0.0001; no shares authorized actual, 5,761 shares authorized pro forma and pro forma as adjusted; 0 shares issued and outstanding actual; 5,761 shares issued and outstanding pro forma and pro forma as adjusted | | | | | — | | | | | | 6 | | | | | | | | |
Additional paid-in capital | | | | | 102,020,045 | | | | | | 109,029,844 | | | | | | | | |
Accumulated deficit | | | | | (109,883,665) | | | | | | (100,879,263) | | | | | | | | |
Total stockholders' equity (deficit) | | | | | (7,863,021) | | | | | | 8,151,381 | | | | | | | | |
Total capitalization | | | | $ | 33,129,832 | | | | | $ | 30,111,865 | | | | | | | | |
| Assumed public offering price per share | | | | | | | | | | $ | 5.00 | | |
| Pro forma net tangible book value per share as of December 31, 2020 | | | | $ | (2.91) | | | | | | | | |
| Increase in pro forma net tangible book value in this offering | | | | $ | 1.49 | | | | | | | | |
| Pro forma net tangible book value per share after this offering | | | | | | | | | | $ | (1.42) | | |
| Dilution in pro forma net tangible book value per share to new investors in this offering | | | | | | | | | | $ | 3.58 | | |
| | | Shares Purchased | | | Total Consisderation | | | Average Price Per Share | | |||||||||||||||||||||
| | | Number | | | Percentage | | | Number | | | Percentage | | ||||||||||||||||||
Existing Stockholders | | | | | 7,569,349 | | | | | | 79.1% | | | | | $ | 19,453,996 | | | | | | 66.0% | | | | | $ | 2.57 | | |
New investors in this offering | | | | | 2,000,000 | | | | | | 20.9% | | | | | | 10,000,000 | | | | | | 34.0% | | | | | $ | 5.00 | | |
Total capitalization | | | | | 9,569,349 | | | | | | 100.0% | | | | | $ | 29,453,996 | | | | | | 100.0% | | | | | | | | |
| | | | | | | | | Year Ended December 31, | | |||||||||
| | | 2020 Pro Forma | | | 2020 Actual | | | 2019 Actual | | |||||||||
| | | | | (unaudited) | | | | | | | | | | | | | | |
Net revenues | | | | $ | 9,801,981 | | | | | $ | 5,239,437 | | | | | $ | 3,034,216 | | |
Cost of net revenues | | | | | 6,603,865 | | | | | | 4,685,755 | | | | | | 1,626,505 | | |
Gross profit | | | | | 3,198,116 | | | | | | 553,682 | | | | | | 1,407,711 | | |
Operating expenses | | | | | 15,316,886 | | | | | | 9,701,572 | | | | | | 6,255,180 | | |
Operating loss | | | | | (12,118,771) | | | | | | (9,147,890) | | | | | | (4,847,469) | | |
Other expenses | | | | | (2,214,320) | | | | | | (1,566,764) | | | | | | (805,704) | | |
Loss before provision for income taxes | | | | | (14,333,091) | | | | | | (10,714,654) | | | | | | (5,653,173) | | |
Provision for income taxes | | | | | 13,641 | | | | | | 13,641 | | | | | | 800 | | |
Net loss | | | | $ | (14,346,732) | | | | | $ | (10,728,295) | | | | | $ | (5,653,973) | | |
| | | As of December 31, 2020 | | |||||||||
| | | Actual | | | Pro Forma | | ||||||
| | | | | | | | | (unaudited) | | |||
Total cash | | | | $ | 575,986 | | | | | $ | 627,301 | | |
Total current assets | | | | | 2,008,656 | | | | | | 2,226,773 | | |
Total assets | | | | | 16,352,169 | | | | | | 23,832,676 | | |
Total current liabilities including current portion of long-term debt | | | | | 20,278,690 | | | | | | 21,997,487 | | |
Total long-term obligations | | | | | 1,931,124 | | | | | | 2,342,878 | | |
Total liabilities | | | | | 22,209,814 | | | | | | 24,334,365 | | |
Total stockholders’ deficit | | | | | (5,857,645) | | | | | | (501,689) | | |
Total liabilities and stockholders’ deficit | | | | $ | 16,352,169 | | | | | $ | 23,832,676 | | |
| | | DBG | | | Bailey | | | H&J | | | Total | | | Pro Forma Adjustments | | | Pro Forma Combined | | ||||||||||||||||||
Net revenues | | | | $ | 5,239,437 | | | | | $ | 2,019,823 | | | | | $ | 2,542,721 | | | | | $ | 9,801,981 | | | | | $ | — | | | | | $ | 9,801,981 | | |
Cost of net revenues | | | | | 4,685,755 | | | | | | 1,020,237 | | | | | | 897,873 | | | | | | 6,603,865 | | | | | | — | | | | | | 6,603,865 | | |
Gross profit | | | | | 553,682 | | | | | | 999,586 | | | | | | 1,644,848 | | | | | | 3,198,116 | | | | | | — | | | | | | 3,198,116 | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
General and administrative | | | | | 7,149,210 | | | | | | 1,439,879 | | | | | | 1,044,397 | | | | | | 9,633,486 | | | | | | 1,484,257(a) | | | | | | 11,117,743 | | |
Sales and marketing | | | | | 576,469 | | | | | | 483,657 | | | | | | 1,163,124 | | | | | | 2,223,251 | | | | | | — | | | | | | 2,223,251 | | |
Distribution | | | | | 342,466 | | | | | | — | | | | | | — | | | | | | 342,466 | | | | | | — | | | | | | 342,466 | | |
Loss on disposal of property and equipment | | | | | 848,927 | | | | | | — | | | | | | — | | | | | | 848,927 | | | | | | — | | | | | | 848,927 | | |
Impairment of intangible assets | | | | | 784,500 | | | | | | — | | | | | | — | | | | | | 784,500 | | | | | | — | | | | | | 784,500 | | |
Total operating expenses | | | | | 9,701,572 | | | | | | 1,923,536 | | | | | | 2,207,521 | | | | | | 13,832,629 | | | | | | 1,484,257 | | | | | | 15,316,886 | | |
Loss from operations | | | | | (9,147,890) | | | | | | (923,950) | | | | | | (562,673) | | | | | | (10,634,514) | | | | | | (1,484,257) | | | | | | (12,118,771) | | |
Other income (expense): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest expense | | | | | (1,599,518) | | | | | | (25,396) | | | | | | (92,270) | | | | | | (1,717,184) | | | | | | (540,000)(b) | | | | | | (2,257,184) | | |
Other non-operating income (expenses) | | | | | 32,754 | | | | | | — | | | | | | 10,110 | | | | | | 42,864 | | | | | | — | | | | | | 42,864 | | |
Total other income (expense), net | | | | | (1,566,764) | | | | | | (25,396) | | | | | | (82,160) | | | | | | (1,674,320) | | | | | | (540,000) | | | | | | (2,214,320) | | |
Provision for income taxes | | | | | 13,641 | | | | | | — | | | | | | — | | | | | | 13,641 | | | | | | — | | | | | | 13,641 | | |
Net loss | | | | $ | (10,728,295) | | | | | $ | (949,346) | | | | | $ | (644,834) | | | | | $ | (12,322,475) | | | | | $ | (2,024,257) | | | | | $ | (14,346,732) | | |
| | | DBG | | | Bailey | | | H&J | | | Total | | | Pro Forma Adjustments | | | Pro Forma Combined | | ||||||||||||||||||
Net revenues | | | | $ | 3,034,216 | | | | | $ | 27,099,718 | | | | | $ | 3,325,761 | | | | | $ | 33,459,695 | | | | | $ | — | | | | | $ | 33,459,695 | | |
Cost of net revenues | | | | | 1,626,505 | | | | | | 12,663,514 | | | | | | 1,202,819 | | | | | | 15,492,838 | | | | | | — | | | | | | 15,492,838 | | |
Gross profit | | | | | 1,407,711 | | | | | | 14,436,204 | | | | | | 2,122,943 | | | | | | 17,966,858 | | | | | | — | | | | | | 17,966,858 | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
General and administrative | | | | | 4,584,010 | | | | | | 14,524,832 | | | | | | 717,901 | | | | | | 19,826,743 | | | | | | 1,797,781(a) | | | | | | 21,624,524 | | |
Sales and marketing | | | | | 869,285 | | | | | | 4,535,276 | | | | | | 1,577,478 | | | | | | 6,982,039 | | | | | | — | | | | | | 6,982,039 | | |
Distribution | | | | | 801,885 | | | | | | — | | | | | | — | | | | | | 801,885 | | | | | | — | | | | | | 801,885 | | |
Loss on disposal of property and equipment | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Impairment of intangible assets | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total operating expenses | | | | | 6,255,180 | | | | | | 19,060,108 | | | | | | 2,295,379 | | | | | | 27,610,667 | | | | | | 1,797,781 | | | | | | 29,408,449 | | |
Loss from operations | | | | | (4,847,469) | | | | | | (4,623,904) | | | | | | (172,437) | | | | | | (9,643,810) | | | | | | (1,797,781) | | | | | | (11,441,591) | | |
Other income (expense): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest expense | | | | | (772,592) | | | | | | (103,520) | | | | | | (53,955) | | | | | | (930,067) | | | | | | (540,000)(b) | | | | | | (1,470,067) | | |
Other non-operating income (expenses) | | | | | (33,112) | | | | | | (49,558) | | | | | | 50,000 | | | | | | (32,670) | | | | | | — | | | | | | (32,670) | | |
Total other income (expense), net | | | | | (805,704) | | | | | | (153,078) | | | | | | (3,955) | | | | | | (962,737) | | | | | | (540,000) | | | | | | (1,502,737) | | |
Provision for income taxes | | | | | 800 | | | | | | 14,890 | | | | | | — | | | | | | 15,690 | | | | | | — | | | | | | 15,690 | | |
Net loss | | | | $ | (5,653,973) | | | | | $ | (4,791,872) | | | | | $ | (176,391) | | | | | $ | (10,622,236) | | | | | $ | (2,337,781) | | | | | $ | (12,960,018) | | |
| | | DBG | | | H&J | | | Total | | | Pro Forma Adjustments | | | | | | Pro Forma Combined | | |||||||||||||||
ASSETS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents | | | | $ | 575,986 | | | | | $ | 51,315 | | | | | $ | 627,301 | | | | | $ | — | | | | | | | | $ | 627,301 | | |
Accounts receivable, net | | | | | 35,532 | | | | | | 38,689 | | | | | | 74,221 | | | | | | — | | | | | | | | | 74,221 | | |
Due from factor, net | | | | | 210,033 | | | | | | — | | | | | | 210,033 | | | | | | — | | | | | | | | | 210,033 | | |
Inventory | | | | | 1,163,279 | | | | | | 73,690 | | | | | | 1,236,969 | | | | | | — | | | | | | | | | 1,236,969 | | |
Prepaid expenses | | | | | 23,826 | | | | | | 54,423 | | | | | | 78,249 | | | | | | — | | | | | | | | | 78,249 | | |
Total current assets | | | | | 2,008,656 | | | | | | 218,117 | | | | | | 2,226,773 | | | | | | — | | | | | | | | | 2,226,773 | | |
Deferred offering costs | | | | | 214,647 | | | | | | — | | | | | | 214,647 | | | | | | — | | | | | | | | | 214,647 | | |
Property, equipment and software, net | | | | | 62,313 | | | | | | 140,074 | | | | | | 202,387 | | | | | | (202,387) | | | | (a) | | | | | — | | |
Goodwill | | | | | 6,479,218 | | | | | | — | | | | | | 6,479,218 | | | | | | 2,995,407 | | | | (c) | | | | | 9,474,625 | | |
Intangible assets, net | | | | | 7,494,667 | | | | | | — | | | | | | 7,494,667 | | | | | | 4,324,880 | | | | (a), (c) | | | | | 11,819,547 | | |
Deposits | | | | | 92,668 | | | | | | 4,416 | | | | | | 97,084 | | | | | | — | | | | | | | | | 97,084 | | |
Total assets | | | | $ | 16,352,169 | | | | | $ | 362,607 | | | | | $ | 16,714,776 | | | | | $ | 7,117,900 | | | | | | | | $ | 23,832,676 | | |
LIABILITIES AND STOCKHOLDERS’ DEFICIT | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accounts payable | | | | $ | 5,668,703 | | | | | $ | 187,516 | | | | | $ | 5,856,219 | | | | | $ | — | | | | | | | | $ | 5,856,219 | | |
Accrued expenses and other liabilities | | | | | 1,245,646 | | | | | | 119,538 | | | | | | 1,365,184 | | | | | | — | | | | | | | | | 1,365,184 | | |
Deferred revenue | | | | | 1,667 | | | | | | 264,802 | | | | | | 266,469 | | | | | | — | | | | | | | | | 266,469 | | |
Due to related parites | | | | | 441,453 | | | | | | — | | | | | | 441,453 | | | | | | — | | | | | | | | | 441,453 | | |
Convertible notes, current | | | | | 700,000 | | | | | | — | | | | | | 700,000 | | | | | | — | | | | | | | | | 700,000 | | |
Accrued interest payable | | | | | 737,039 | | | | | | — | | | | | | 737,039 | | | | | | 1,080,000 | | | | (b) | | | | | 1,817,039 | | |
Note payable – related party | | | | | 137,856 | | | | | | — | | | | | | 137,856 | | | | | | — | | | | | | | | | 137,856 | | |
Venture debt, net of discount | | | | | 5,854,326 | | | | | | — | | | | | | 5,854,326 | | | | | | — | | | | | | | | | 5,854,326 | | |
Loan payable, current | | | | | 992,000 | | | | | | 60,941 | | | | | | 1,052,941 | | | | | | — | | | | | | | | | 1,052,941 | | |
Promissory note payable | | | | | 4,500,000 | | | | | | — | | | | | | 4,500,000 | | | | | | — | | | | | | | | | 4,500,000 | | |
Total current liabilities | | | | | 20,278,690 | | | | | | 632,797 | | | | | | 20,911,487 | | | | | | 1,080,000 | | | | | | | | | 21,991,487 | | |
Convertible notes | | | | | 1,215,815 | | | | | | — | | | | | | 1,215,815 | | | | | | — | | | | | | | | | 1,215,815 | | |
Note payable – related party | | | | | — | | | | | | 635,000 | | | | | | 635,000 | | | | | | (500,000) | | | | (c) | | | | | 135,000 | | |
Loan payable | | | | | 709,044 | | | | | | 276,754 | | | | | | 985,798 | | | | | | — | | | | | | | | | 985,798 | | |
Warrant liability | | | | | 6,265 | | | | | | — | | | | | | 6,265 | | | | | | — | | | | | | | | | 6,265 | | |
Total liabilities | | | | | 22,209,814 | | | | | | 1,544,551 | | | | | | 23,754,365 | | | | | | 580,000 | | | | | | | | | 24,334,365 | | |
Commitments and contingencies (Note 13) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Stockholders’ deficit: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Series Seed convertible preferred stock | | | | | 2,071 | | | | | | — | | | | | | 2,071 | | | | | | — | | | | | | | | | 2,071 | | |
Series A convertible preferred stock | | | | | 565 | | | | | | — | | | | | | 565 | | | | | | — | | | | | | | | | 565 | | |
Series A-2 convertible preferred stock | | | | | 593 | | | | | | — | | | | | | 593 | | | | | | — | | | | | | | | | 593 | | |
Series A-3 convertible preferred stock | | | | | 904 | | | | | | — | | | | | | 904 | | | | | | — | | | | | | | | | 904 | | |
Series CF convertible preferred stock | | | | | 83 | | | | | | — | | | | | | 83 | | | | | | — | | | | | | | | | 83 | | |
Series B convertible preferred stock | | | | | 2,075 | | | | | | — | | | | | | 2,075 | | | | | | — | | | | | | | | | 2,075 | | |
Common stock | | | | | 1,038 | | | | | | — | | | | | | 1,038 | | | | | | 15,167 | | | | (c) | | | | | 16,205 | | |
Additional paid-in capital | | | | | 27,481,023 | | | | | | 102,083 | | | | | | 27,583,106 | | | | | | 8,982,750 | | | | (c) | | | | | 36,565,856 | | |
Accumulated deficit | | | | | (33,345,997) | | | | | | (1,284,027) | | | | | | (34,630,024) | | | | | | (2,460,017) | | | | | | | | | (37,090,041) | | |
Total stockholders’ deficit | | | | | (5,857,645) | | | | | | (1,181,944) | | | | | | (7,039,589) | | | | | | 6,537,900 | | | | | | | | | (501,689) | | |
Total liabilities and stockholders’ deficit | | | | $ | 16,352,169 | | | | | $ | 362,607 | | | | | $ | 16,714,776 | | | | | $ | 7,117,900 | | | | | | | | $ | 23,832,676 | | |
| Series B preferred stock | | | | $ | 11,000,000 | | |
| Promissory note payable | | | | | 4,500,000 | | |
| Purchase price consideration | | | | $ | 15,500,000 | | |
| | | Preliminary Purchase Price Allocation | | |||
Assets acquired | | | | $ | 4,705,086 | | |
Goodwill | | | | | 6,479,218 | | |
Intangible assets | | | | | 8,600,000 | | |
Liabilities assumed | | | | | (4,284,304) | | |
Purchase price consideration | | | | $ | 15,500,000 | | |
| Common stock | | | | $ | 9,100,000 | | |
| Purchase price consideration | | | | $ | 9,100,000 | | |
| | | Preliminary Purchase Price Allocation | | |||
Assets acquired | | | | $ | 362,607 | | |
Goodwill | | | | | 2,995,407 | | |
Intangible assets | | | | | 6,888,620 | | |
Liabilities assumed | | | | | (1,146,634) | | |
Purchase price consideration | | | | $ | 9,100,000 | | |
| | | Year Ended December 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Net revenues | | | | $ | 5,239,437 | | | | | $ | 3,034,216 | | |
Cost of net revenues | | | | | 4,685,755 | | | | | | 1,626,505 | | |
Gross profit | | | | | 553,682 | | | | | | 1,407,711 | | |
Operating expenses | | | | | 9,701,572 | | | | | | 6,255,180 | | |
Operating loss | | | | | (9,147,890) | | | | | | (4,847,469) | | |
Other expenses | | | | | (1,566,764) | | | | | | (805,704) | | |
Loss before provision for income taxes | | | | | (10,714,654) | | | | | | (5,653,173) | | |
Provision for income taxes | | | | | 13,641 | | | | | | 800 | | |
Net loss | | | | $ | (10,728,295) | | | | | $ | (5,653,973) | | |
| | | Year Ended December 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Net cash provided by operating activities: | | | | ||||||||||
Net loss | | | | $ | (10,728,295) | | | | | $ | (5,653,973) | | |
Non-cash adjustments | | | | $ | 2,413,918 | | | | | $ | 371,324 | | |
Change in operating assets and liabilities | | | | $ | 6,252,790 | | | | | $ | 1,413,284 | | |
Net cash used in operating activities | | | | $ | (2,061,587) | | | | | $ | (3,869,365) | | |
Net cash used in investing activities | | | | $ | 204,884 | | | | | $ | 6,642 | | |
Net cash provided by financing activities | | | | $ | 2,392,220 | | | | | $ | 3,318,711 | | |
Net change in cash | | | | $ | 535,517 | | | | | $ | (544,012) | | |
| | | December 31, | | |||||||||
Statement of Operations | | | 2019 | | | 2018 | | ||||||
Net revenue | | | | $ | 27,099,718 | | | | | $ | 29,037,497 | | |
Cost of net revenue | | | | $ | 12,663,514 | | | | | $ | 13,451,654 | | |
Gross profit | | | | $ | 14,436,204 | | | | | $ | 15,585,843 | | |
Operating expenses | | | | $ | 19,060,108 | | | | | $ | 17,756,807 | | |
Operating income | | | | $ | (4,623,904) | | | | | $ | (2,170,964) | | |
Other expense | | | | $ | (153,078) | | | | | $ | (531,599) | | |
Loss before provision for income taxes | | | | $ | (4,776,982) | | | | | $ | (2,702,563) | | |
Provision for income taxes | | | | $ | (14,890) | | | | | $ | (13,390) | | |
Net loss | | | | $ | (4,791,872) | | | | | $ | (2,715,953) | | |
| | | Three Months Ended March 31, | | |||||||||
| | | 2023 | | | 2022 | | ||||||
Net revenues | | | | $ | 5,095,234 | | | | | $ | 3,432,410 | | |
Cost of net revenues | | | | | 2,656,652 | | | | | | 2,292,191 | | |
Gross profit | | | | | 2,438,582 | | | | | | 1,140,219 | | |
General and administrative | | | | | 4,636,844 | | | | | | 4,277,955 | | |
Sales and marketing | | | | | 1,115,643 | | | | | | 1,040,572 | | |
Other operating expenses | | | | | 270,185 | | | | | | 1,403,169 | | |
Operating loss | | | | | (3,584,090) | | | | | | (5,581,477) | | |
Other expenses | | | | | (2,552,259) | | | | | | (2,251,465) | | |
Loss before provision for income taxes | | | | | (6,136,349) | | | | | | (7,832,942) | | |
Provision for income taxes | | | | | — | | | | | | — | | |
Net loss | | | | $ | (6,136,349) | | | | | $ | (7,832,942) | | |
| | | Three Months Ended March 31, | | |||||||||
| | | 2023 | | | 2022 | | ||||||
Net cash provided by operating activities: | | | | | | | | | | | | | |
Net loss | | | | $ | (6,136,349) | | | | | $ | (7,832,942) | | |
Non-cash adjustments | | | | $ | 3,774,961 | | | | | $ | 3,652,067 | | |
Change in operating assets and liabilities | | | | $ | 668,867 | | | | | $ | 3,545,719 | | |
Net cash used in operating activities | | | | $ | (1,692,520) | | | | | $ | (635,156) | | |
Net cash provided by (used in) investing activities | | | | $ | 87,379 | | | | | $ | (5,576) | | |
Net cash provided by financing activities | | | | $ | 2,291,109 | | | | | $ | 678,351 | | |
Net change in cash | | | | $ | 685,968 | | | | | $ | 37,619 | | |
| | | Year Ended December 31, | | |||||||||
| | | 2022 | | | 2021 | | ||||||
Net revenues | | | | $ | 13,971,178 | | | | | $ | 7,584,859 | | |
Cost of net revenues | | | | | 8,030,908 | | | | | | 5,716,587 | | |
Gross profit | | | | | 5,940,270 | | | | | | 1,868,272 | | |
General and administrative | | | | | 16,371,536 | | | | | | 16,752,516 | | |
Sales and marketing | | | | | 4,950,635 | | | | | | 3,810,583 | | |
Other operating expenses | | | | | 16,715,204 | | | | | | 12,653,831 | | |
Operating loss | | | | | (32,097,105) | | | | | | (31,348,658) | | |
Other expenses | | | | | (5,946,257) | | | | | | (2,109,419) | | |
Loss before provision for income taxes | | | | | (38,043,362) | | | | | | (33,458,077) | | |
Provision for income taxes | | | | | — | | | | | | 1,100,120 | | |
Net loss | | | | $ | (38,043,362) | | | | | $ | (32,357,957) | | |
| | | December 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
Net cash used in operating activities: | | | | | | | | | | | | | |
Net loss | | | | $ | (4,791,872) | | | | | $ | (2,715,953) | | |
Non-cash adjustments | | | | $ | 636,401 | | | | | $ | 469,318 | | |
Change in operating assets and liabilities | | | | $ | 2,269,173 | | | | | $ | 1,622,885 | | |
Net cash used in operating activities | | | | $ | (1,886,298) | | | | | $ | (623,750) | | |
Net cash used in investing activities | | | | $ | (557,328) | | | | | $ | (185,970) | | |
Net cash provided by financing activities | | | | $ | 1,840,039 | | | | | $ | 349,514 | | |
Net change in cash | | | | $ | (603,587) | | | | | $ | (460,206) | | |
| | | Year Ended December 31, | | |||||||||
| | | 2022 | | | 2021 | | ||||||
Net cash provided by operating activities: | | | | | | | | | | | | | |
Net loss | | | | $ | (38,043,362) | | | | | $ | (32,357,957) | | |
Non-cash adjustments | | | | $ | 23,122,024 | | | | | $ | 17,758,597 | | |
Change in operating assets and liabilities | | | | $ | 4,350,447 | | | | | $ | 381,001 | | |
Net cash used in operating activities | | | | $ | (10,570,889) | | | | | $ | (14,218,359) | | |
Net cash used in investing activities | | | | $ | (7,313,384) | | | | | $ | (6,011,053) | | |
Net cash provided by financing activities | | | | $ | 18,639,161 | | | | | $ | 20,181,820 | | |
Net change in cash | | | | $ | 754,888 | | | | | $ | (47,592) | | |
| | | Year Ended December 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Net revenues | | | | $ | 2,542,721 | | | | | $ | 3,325,761 | | |
Cost of net revenues | | | | | 897,873 | | | | | | 1,202,819 | | |
Gross profit | | | | | 1,644,848 | | | | | | 2,122,943 | | |
Operating expenses | | | | | 2,207,521 | | | | | | 2,295,379 | | |
Operating loss | | | | | (562,673) | | | | | | (172,437) | | |
Other expenses | | | | | 143,228 | | | | | | (3,955) | | |
Loss before provision for income taxes | | | | | (419,446) | | | | | | (176,391) | | |
Provision for income taxes | | | | | — | | | | | | — | | |
Net loss | | | | $ | (419,446) | | | | | $ | (176,391) | | |
| | | Year Ended December 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Net cash provided by operating activities: | | | | | | | | | | | | | |
Net Loss | | | | $ | (419,446) | | | | | $ | (176,391) | | |
Non-cash adjustments | | | | $ | (33,742) | | | | | $ | 82,422 | | |
Change in operating assets and liabilities | | | | $ | 61,146 | | | | | $ | 115,377 | | |
Net cash used in operating activities | | | | $ | (392,042) | | | | | $ | 21,407 | | |
Net cash used in investing activities | | | | $ | (65,750) | | | | | $ | (254,437) | | |
Net cash provided by financing activities | | | | $ | 490,598 | | | | | $ | 237,002 | | |
Net change in cash | | | | $ | 32,806 | | | | | $ | 3,972 | | |
| | | Year Ended December 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Net revenues | | | | $ | 9,801,981 | | | | | $ | 33,459,695 | | |
Cost of net revenues | | | | | 6,603,865 | | | | | | 15,492,838 | | |
Gross profit | | | | | 3,198,116 | | | | | | 17,966,858 | | |
Operating expenses | | | | | 15,316,886 | | | | | | 29,408,449 | | |
Operating loss | | | | | (12,118,771) | | | | | | (11,441,591) | | |
Other expenses | | | | | (2,214,320) | | | | | | (1,502,737) | | |
Loss before provision for income taxes | | | | | (14,333,091) | | | | | | (12,944,328) | | |
Provision for income taxes | | | | | 13,641 | | | | | | 15,690 | | |
Net loss | | | | $ | (14,346,732) | | | | | $ | (12,960,018) | | |
| | | Year Ended December 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Net cash provided by operating activities: | | | | | | | | | | | | | |
Net Loss | | | | $ | (14,121,344) | | | | | $ | (12,960,017) | | |
Non-cash adjustments | | | | $ | 3,913,836 | | | | | $ | 2,887,928 | | |
Change in operating assets and liabilities | | | | $ | 6,952,663 | | | | | $ | 4,337,833 | | |
Net cash used in operating activities | | | | $ | (3,254,845) | | | | | $ | (5,734,256) | | |
Net cash used in investing activities | | | | $ | 139,134 | | | | | $ | (805,123) | | |
Net cash provided by financing activities | | | | $ | 3,382,818 | | | | | $ | 5,395,752 | | |
Net change in cash | | | | $ | 267,107 | | | | | $ | (1,143,627) | | |
| | | Three Months Ended March 31, | | |||||||||
| | | 2023 | | | 2022 | | ||||||
Net revenues | | | | $ | 4,376,379 | | | | | $ | 7,803,268 | | |
Cost of net revenues | | | | | 2,383,139 | | | | | | 4,947,494 | | |
Gross profit | | | | | 1,993,240 | | | | | | 2,855,774 | | |
Operating expenses | | | | | 5,372,410 | | | | | | 7,157,934 | | |
Operating income (loss) | | | | | (3,379,170) | | | | | | (4,302,160) | | �� |
Other income (loss) | | | | | (2,433,587) | | | | | | (2,257,936) | | |
Loss before provision for income taxes | | | | | (5,812,757) | | | | | | (6,560,096) | | |
Provision for income taxes | | | | | — | | | | | | — | | |
Net loss | | | | $ | (5,812,757) | | | | | $ | (6,560,096) | | |
| | | Three Months Ended March 31, | | |||||||||
| | | 2023 | | | 2022 | | ||||||
Net cash provided by operating activities: | | | | | | | | | | | | | |
Net loss | | | | $ | (5,812,757) | | | | | $ | (6,560,096) | | |
Non-cash adjustments | | | | $ | 3,774,962 | | | | | $ | 2,379,221 | | |
Change in operating assets and liabilities | | | | $ | 668,867 | | | | | $ | 3,545,719 | | |
Net cash used in operating activities | | | | $ | (1,368,928) | | | | | $ | (635,156) | | |
Net cash provided by (used in) investing activities | | | | $ | 87,379 | | | | | $ | (5,576) | | |
Net cash provided by financing activities | | | | $ | 2,291,109 | | | | | $ | 887,051 | | |
Net change in cash | | | | $ | 1,009,560 | | | | | $ | 246,319 | | |
| | | | | | | | | Pro Forma Adjustments | | | | | | | | | | | |||||||||
| | | DBGI As Reported | | | H&J | | | Sundry Conversion and Norwest Waiver | | | Notes | | | Pro Forma as Adjusted | | ||||||||||||
Net revenues | | | | $ | 5,095,234 | | | | | $ | (718,855) | | | | | $ | — | | | | (c) | | | | $ | 4,376,379 | | |
Cost of net revenues | | | | | 2,656,652 | | | | | | (273,513) | | | | | | — | | | | (c) | | | | | 2,383,139 | | |
Gross profit | | | | | 2,438,582 | | | | | | (445,342) | | | | | | — | | | | | | | | | 1,993,240 | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
General and administrative | | | | | 4,636,844 | | | | | | (473,971) | | | | | | — | | | | (c), (d) | | | | | 4,162,873 | | |
Sales and marketing | | | | | 1,115,643 | | | | | | (176,292) | | | | | | — | | | | (c) | | | | | 939,351 | | |
Distribution | | | | | 270,185 | | | | | | — | | | | | | — | | | | | | | | | 270,185 | | |
Total operating expenses | | | | | 6,022,672 | | | | | | (650,262) | | | | | | — | | | | | | | | | 5,372,410 | | |
Loss from operations | | | | | (3,584,090) | | | | | | 204,920 | | | | | | — | | | | | | | | | (3,379,170) | | |
Other income (expense): | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest expense | | | | | (1,873,270) | | | | | | 8,672 | | | | | | 110,000 | | | | (c), (e) | | | | | (1,754,598) | | |
Other non-operating income (expenses) | | | | | (678,989) | | | | | | — | | | | | | — | | | | | | | | | (678,989) | | |
Total other income (expense), net | | | | | (2,552,259) | | | | | | 8,672 | | | | | | 110,000 | | | | | | | | | (2,433,587) | | |
Income tax benefit (provision) | | | | | — | | | | | | — | | | | | | — | | | | | | | | | — | | |
Net loss | | | | $ | (6,136,349) | | | | | $ | 213,592 | | | | | $ | 110,000 | | | | | | | | $ | (5,812,757) | | |
Weighted average common shares outstanding – basic and diluted | | | | | 5,670,362 | | | | | | | | | | | | | | | | | | | | | 7,622,942 | | |
Net loss per common share – basic and diluted | | | | $ | (1.08) | | | | | | | | | | | | | | | | | | | | $ | (0.76) | | |
| | | | | | | | | | | | | | | Pro Forma Adjustments | | | | | | | | | | | |||||||||
| | | DBGI As Reported | | | Sundry (1) | | | H&J | | | Sundry Conversion and Norwest Waiver | | | Notes | | | Pro Forma Adjustments | | |||||||||||||||
Net revenues | | | | $ | 13,971,178 | | | | | $ | 14,548,083 | | | | | $ | (3,637,620) | | | | | $ | — | | | | (b) | | | | $ | 24,881,640 | | |
Cost of net revenues | | | | | 8,030,908 | | | | | | 9,694,857 | | | | | | (1,241,594) | | | | | | — | | | | (b) | | | | | 16,484,171 | | |
Gross profit | | | | | 5,940,270 | | | | | | 4,853,226 | | | | | | (2,396,026) | | | | | | — | | | | | | | | | 8,397,469 | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
General and administrative | | | | | 16,371,536 | | | | | | 3,433,633 | | | | | | (2,303,855) | | | | | | — | | | | (b), (c) | | | | | 17,501,314 | | |
Sales and marketing | | | | | 4,950,635 | | | | | | 913,052 | | | | | | (931,650) | | | | | | — | | | | (b) | | | | | 4,932,036 | | |
Distribution | | | | | 611,569 | | | | | | 2,736,181 | | | | | | — | | | | | | — | | | | | | | | | 3,347,750 | | |
Impairment | | | | | 15,539,332 | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 15,539,332 | | |
Change in fair value of contingent consideration | | | | | 564,303 | | | | | | — | | | | | | — | | | | | | (564,303) | | | | (e) | | | | | — | | |
Total operating expenses | | | | | 38,037,375 | | | | | | 7,082,866 | | | | | | (3,235,505) | | | | | | (564,303) | | | | | | | | | 41,320,433 | | |
Loss from operations | | | | | (32,097,105) | | | | | | (2,229,640) | | | | | | 839,478 | | | | | | 564,303 | | | | | | | | | (32,922,963) | | |
Other income (expense): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest expense | | | | | (9,014,337) | | | | | | (9,099) | | | | | | 52,927 | | | | | | — | | | | (b) | | | | | (8,970,509) | | |
Other non-operating income (expenses) | | | | | 3,068,080 | | | | | | (52,354) | | | | | | — | | | | | | — | | | | | | | | | 3,015,726 | | |
Total other income (expense), net | | | | | (5,946,257) | | | | | | (61,453) | | | | | | 52,927 | | | | | | — | | | | | | | | | (5,954,783) | | |
Income tax benefit (provision) | | | | | — | | | | | | (800) | | | | | | — | | | | | | — | | | | | | | | | — | | |
Net loss | | | | $ | (38,043,362) | | | | | $ | (2,291,893) | | | | | $ | 892,405 | | | | | $ | 564,303 | | | | | | | | $ | (38,877,746) | | |
Weighted average common shares outstanding – basic and diluted | | | | | 771,297 | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,723,877 | | |
Net loss per common share – basic and diluted | | | | $ | (49.32) | | | | | | | | | | | | | | | | | | | | | | | | | | $ | (14.27) | | |
| | | | | | | | | Pro Forma Adjustments | | | | | | | | | | | |||||||||
| | | DBGI As Reported | | | H&J | | | Sundry Conversion and Norwest Waiver | | | Notes | | | Pro Forma as Adjusted | | ||||||||||||
ASSETS | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents | | | | $ | 1,969,250 | | | | | $ | (262,405) | | | | | $ | — | | | | (a) | | | | $ | 1,706,845 | | |
Accounts receivable, net | | | | | 345,439 | | | | | | (55,782) | | | | | | — | | | | (a) | | | | | 289,657 | | |
Due from factor, net | | | | | 590,253 | | | | | | — | | | | | | — | | | | | | | | | 590,253 | | |
Inventory | | | | | 4,926,094 | | | | | | — | | | | | | — | | | | | | | | | 4,926,094 | | |
Prepaid expenses and other current assets | | | | | 1,071,330 | | | | | | (186,928) | | | | | | — | | | | (a) | | | | | 884,402 | | |
Total current assets | | | | | 8,902,366 | | | | | | (505,115) | | | | | | — | | | | | | | | | 8,397,251 | | |
Property, equipment and software, net | | | | | 71,803 | | | | | | — | | | | | | — | | | | | | | | | 71,803 | | |
Goodwill | | | | | 10,103,812 | | | | | | (1,130,310) | | | | | | — | | | | (a) | | | | | 8,973,502 | | |
Intangible assets, net | | | | | 13,473,151 | | | | | | (1,378,126) | | | | | | — | | | | (a) | | | | | 12,095,025 | | |
Deposits | | | | | 110,962 | | | | | | (4,416) | | | | | | — | | | | (a) | | | | | 106,546 | | |
Right of use asset | | | | | 467,738 | | | | | | — | | | | | | — | | | | | | | | | 467,738 | | |
Total assets | | | | $ | 33,129,832 | | | | | $ | (3,017,967) | | | | | $ | — | | | | | | | | $ | 30,111,865 | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accounts payable | | | | $ | 7,671,050 | | | | | $ | (45,969) | | | | | $ | — | | | | (a) | | | | $ | 7,625,081 | | |
Accrued expenses and other liabilities | | | | | 4,921,970 | | | | | | (610,114) | | | | | | — | | | | (a) | | | | | 4,311,856 | | |
Deferred revenue | | | | | 317,421 | | | | | | (317,421) | | | | | | — | | | | (a) | | | | | — | | |
Due to related parties | | | | | 452,055 | | | | | | (1,008) | | | | | | — | | | | (a) | | | | | 451,047 | | |
Contingent consideration liability | | | | | 12,098,475 | | | | | | (1,400,000) | | | | | | (10,698,475) | | | | (a), (b) | | | | | — | | |
Convertible note payable, net | | | | | 100,000 | | | | | | — | | | | | | — | | | | | | | | | 100,000 | | |
Accrued interest payable | | | | | 1,780,535 | | | | | | — | | | | | | (110,000) | | | | (b) | | | | | 1,670,535 | | |
Note payable – related party | | | | | 129,489 | | | | | | (129,489) | | | | | | — | | | | (a) | | | | | — | | |
Loan payable, current | | | | | 1,329,507 | | | | | | — | | | | | | — | | | | | | | | | 1,329,507 | | |
Promissory note payable, net | | | | | 10,914,831 | | | | | | — | | | | | | (5,500,000) | | | | (b) | | | | | 5,414,831 | | |
Right of use liability, current portion | | | | | 425,654 | | | | | | — | | | | | | — | | | | | | | | | 425,654 | | |
Total current liabilities | | | | | 40,140,987 | | | | | | (2,504,000) | | | | | | (16,308,475) | | | | | | | | | 21,328,512 | | |
Loan payable | | | | | 798,759 | | | | | | (219,894) | | | | | | — | | | | (a) | | | | | 578,865 | | |
Right of use liability | | | | | 53,107 | | | | | | — | | | | | | — | | | | | | | | | 53,107 | | |
Total liabilities | | | | | 40,992,853 | | | | | | (2,723,895) | | | | | | (16,308,475) | | | | | | | | | 21,960,484 | | |
Commitments and contingencies | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Stockholders’ equity (deficit): | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Preferred stock | | | | | 1 | | | | | | — | | | | | | 6 | | | | (b) | | | | | 7 | | |
Common stock | | | | | 598 | | | | | | — | | | | | | 195 | | | | (b) | | | | | 793 | | |
Additional paid-in capital | | | | | 102,020,045 | | | | | | 1,400,000 | | | | | | 5,609,799 | | | | (a), (b) | | | | | 109,029,844 | | |
Accumulated deficit | | | | | (109,883,665) | | | | | | (1,694,073) | | | | | | 10,698,475 | | | | (a), (b) | | | | | (100,879,263) | | |
Total stockholders’ equity (deficit) | | | | | (7,863,021) | | | | | | (294,073) | | | | | | 16,308,475 | | | | | | | | | 8,151,381 | | |
Total liabilities and stockholders’ equity (deficit) | | | | $ | 33,129,832 | | | | | $ | (3,017,967) | | | | | $ | — | | | | | | | | $ | 30,111,865 | | |
| Settlement of contingent consideration | | | | $ | 1,400,000 | | |
| Less: cash payment to H&J Seller | | | | | (229,000) | | |
| Less: common shares issued to H&J Seller | | | | | (1,400,000) | | |
| Total fair value of consideration received | | | | | (229,000) | | |
| Carrying amount of assets and liabilities | | | | | | | |
| Cash and cash equivalents | | | | | 33,405 | | |
| Accounts receivable, net | | | | | 55,782 | | |
| Prepaid expenses and other current assets | | | | | 186,928 | | |
| Goodwill | | | | | 1,130,310 | | |
| Intangible assets, net | | | | | 1,378,126 | | |
| Deposits | | | | | 4,416 | | |
| Accounts payable | | | | | (45,969) | | |
| Accrued expenses and other liabilities | | | | | (610,114) | | |
| Deferred revenue | | | | | (317,421) | | |
| Due to related parties | | | | | (1,008) | | |
| Loan payable | | | | | (219,894) | | |
| Note payable – related party | | | | | (129,489) | | |
| Total carrying amount of assets and liabilities | | | | | 1,465,073 | | |
| Gain (loss) on disposal | | | | $ | (1,694,073) | | |
Location | | | Type | | | Square Footage (approximate) | | | Lease Expiration | | ||||||
Vernon, California | | | Corporate Warehouse and Distribution Center | | | | | 42,206 | | | | | | 2023 | | |
Los Angeles, California | | | Showroom | | | | | 2,000 | | | | | | 2020(1) | | |
Austin, Texas | | | Interim Corporate Headquarters | | | | | 500 | | | | | | 2021(2) | | |
Dallas, Texas | | | Office Space and Showroom | | | | | 2,860 | | | | | | 2022 | | |
Houston, Texas | | | Showroom | | | | | 1,117 | | | | | | 2021 | | |
New Orleans, Louisiana | | | Showroom | | | | | 1,015 | | | | | | 2021 | | |
Location | | | Type | | | Square Footage (approximate) | | | Lease Expiration | | ||||||
Vernon, California | | | Corporate Warehouse and Distribution Center | | | | | 42,206 | | | | | | 2023 | | |
Los Angeles, California | | | Showroom | | | | | 2,000 | | | | | | 2025 | | |
Name | | | Age | | | Position | |
Executive Officers and Directors | | | | | | | |
John | | | | | Director, President and Chief Executive Officer | | |
Laura Dowling | | | | | Chief Marketing Officer | | |
Reid Yeoman | | | | | Chief Financial Officer | | |
Mark T. Lynn | | | | | Director | | |
Trevor Pettennude | | | | | Director | | |
Jameeka Green Aaron | | | | | Director | | |
| | | | Director | |
Name and Principal Position | | Fiscal Year | | Salary(1) | | Bonus | | Option Awards | | All Other Compensation | | Total | | | Fiscal Year | | Salary | | Bonus | | Option Awards | | Stock Awards(1) | | Total | | ||||||||||||||||||||||||||||||||||||||||||||||||
John “Hil” Davis | | | | 2020 | | | | $ | 222,500 | | | | $ | | | | $ | | | | $ | | | | $ | | | | | | 2022 | | | | $ | 350,000 | | | | $ | — | | | | $ | — | | | | $ | — | | | | $ | — | | | ||||||||||||||||
President and Chief Executive Officer | | | | 2019 | | | | $ | 180,000 | | | | $ | — | | | | $ | — | | | | $ | — | | | | $ | | | | | | 2021 | | | | $ | 350,000 | | | | $ | — | | | | $ | 3,704,483 | | | | $ | 233,184 | | | | $ | 4,287,667 | | | |||||||||||||
Laura Dowling | | | | 2020 | | | | $ | 258,231 | | | | $ | — | | | | $ | — | | | | $ | — | | | | $ | | | | | | 2022 | | | | $ | 300,000 | | | | $ | — | | | | $ | — | | | | $ | — | | | | $ | — | | | |||||||||||||
Chief Marketing Officer | | | | 2019 | | | | $ | 211,538 | | | | $ | — | | | | $ | 16,836 | | | | $ | — | | | | $ | | | | | | 2021 | | | | $ | 300,000 | | | | $ | — | | | | $ | 691,135 | | | | $ | — | | | | $ | 991,135 | | | |||||||||||||
Reid Yeoman | | | | 2020 | | | | $ | 225,000 | | | | $ | — | | | | $ | — | | | | $ | — | | | | $ | | | | | | 2022 | | | | $ | 250,000 | | | | $ | — | | | | $ | — | | | | $ | — | | | | $ | — | | | |||||||||||||
Chief Financial Officer | | | | 2019 | | | | $ | 34,615 | | | | $ | — | | | | $ | 12,078 | | | | $ | — | | | | $ | | | | | | | 2021 | | | | $ | 250,000 | | | | $ | — | | | | $ | 221,163 | | | | $ | — | | | | $ | 471,163 | | |
| | | Option Awards | | | | | | | | | Stock Awards | | ||||||||||||||||||||||||||||||||||||||||||
Name | | | Number of Securities Underlying Unexercised Options(#) Exercisable | | | Number of Securities Underlying Unexercised Options(#) Unexercisable | | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | | | Option Exercise Price ($) | | | Option Expiration Date | | | Number of Shares or Units of Stock That Have Not Vested (#) | | | Market Value of Shares or Units of Stock That Have Not Vested | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested | | |||||||||||||||||||||||||||
John “Hil” Davis | | | | | 21,440 | | | | | | 18,909 | | | | | | 2,531 | | | | | $ | 421.88 | | | | | | May-23 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Laura Dowling | | | | | 4,640 | | | | | | 3,968 | | | | | | 672 | | | | | $ | 408.94 | | | | | | May-23 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Reid Yeoman | | | | | 1,760 | | | | | | 1,354 | | | | | | 406 | | | | | $ | 396.31 | | | | | | May-23 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Name | | | Title | | | Description | | | Total amount owed as of March 2021 | | | Cash be paid with net proceeds | | | Amounts to be converted | | | Shares to be issued upon conversion | | ||||||||||||
Mark Lynn | | | Director | | | Salary owed | | | | $ | 194,568 | | | | | $ | 144,568 | | | | | $ | 50,000 | | | | | | 14,286 | | |
Hil Davis | | | Chief Executive Officer / Chairman | | | Salary / expenses not reimbursed; short term loan payable | | | | $ | 369,741 | | | | | | | | | | | $ | 369,741 | | | | | | 105,641 | | |
Laura Dowling | | | Chief Marketing Officer | | | Unreimbursed moving / relocation expenses; additional outstanding sign-on bonus | | | | $ | 127,706 | | | | | $ | 127,706 | | | | | | — | | | | | | — | | |
Trevor Pettennude | | | Director | | | Short-term loan payable | | | | $ | 22,856 | | | | | | | | | | | $ | 22,856 | | | | | | 6,530 | | |
| | | Immediately Before Offering | | | Immediately After Offering | | ||||||||||||||||||
Name of Beneficial Owner | | | Number of Shares Beneficially Owned | | | Percentage of Shares Outstanding | | | Number of Shares Beneficially Owned | | | Percentage of Shares Outstanding | | ||||||||||||
Executive Officers and Directors | | | | | | | | | | | | | | | | | | | | | | | | | |
John “Hil” Davis(1)(2) | | | | | 1,713,641 | | | | | | 18.8% | | | | | | 1,713,641 | | | | | | 15.4% | | |
Laura Dowling(1)(3) | | | | | 334,667 | | | | | | 4.3% | | | | | | 334,667 | | | | | | 3.4% | | |
Reid Yeoman(1)(4) | | | | | 114,000 | | | | | | 1.5% | | | | | | 114,000 | | | | | | 1.2% | | |
Mark Lynn(2)(5) | | | | | 507,386 | | | | | | 6.5% | | | | | | 335,297 | | | | | | 5.2% | | |
Trevor Pettennude(2)(6) | | | | | 328,625 | | | | | | 4.3% | | | | | | 328,625 | | | | | | 3.4% | | |
Director Nominees(7) | | | | | | | | | | | | | | | | | | | | | | | | | |
Jameeka Aaron | | | | | | | | | | | | | | | | | | | | | | | | | |
Moise Emquies | | | | | | | | | | | | | | | | | | | | | | | | | |
All executive officers, directors and director nominees as a group (7 persons)(2)(8) | | | | | 2,998,319 | | | | | | 30.0% | | | | | | 2,998,319 | | | | | | 25.0% | | |
Additional 5% Stockholders | | | | | | | | | | | | | | | | | | | | | | | | | |
Drew Jones(9) | | | | | 1,820,000 | | | | | | 24.2% | | | | | | 1,820,000 | | | | | | 24.2% | | |
2736 Routh Street Dallas, Texas 75201 | | | | | | | | | | |
Name of Beneficial Owner | | | Number of Shares Beneficially Owned Before Offering | | | Percentage of Shares Outstanding Before Offering | | | Number of Shares Beneficially Owned After Offering | | | Percentage of Shares Outstanding After Offering | | ||||||
Executive Officers and Directors | | | | | | | | | | | | | | | | | | | |
John “Hil” Davis(1) | | | | | 17,136 | | | | * | | | | | 17,136 | | | | * | |
Laura Dowling(2) | | | | | 3,347 | | | | * | | | | | 3,347 | | | | * | |
Reid Yeoman(3) | | | | | 1,140 | | | | * | | | | | 1,140 | | | | * | |
Mark Lynn(4) | | | | | 5,074 | | | | * | | | | | 5,074 | | | | * | |
Trevor Pettennude(5) | | | | | 3,286 | | | | * | | | | | 3,286 | | | | * | |
Jameeka Aaron(6) | | | | | 150 | | | | * | | | | | 150 | | | | * | |
Huong “Lucy” Doan(7) | | | | | 200 | | | | * | | | | | 200 | | | | * | |
All executive officers, directors and director nominees as a group (7 persons)(8) | | | | | 30,333 | | | | * | | | | | 30,333 | | | | * | |
Five Percent Holders of Common Stock | | | | | | | | | | | | | | | | | | | |
D. Jones Tailored Collection, Ltd.(9) | | | | | 1,974,501 | | | | 24.91% | | | | | 1,974,501 | | | | 24.91% | |
Boco4-DSTLD-Senior Debt, LLC(10) | | | | | 677,419 | | | | 7.87% | | | | | 677,419 | | | | 7.87% | |
George Levy(11) | | | | | 2,642,957 | | | | 25% | | | | | 2,642,957 | | | | 25% | |
Matthieu Leblan(12) | | | | | 2,642,957 | | | | 25% | | | | | 2,642,957 | | | | 25% | |
Moise Emquies(13) | | | | | 1,370,297 | | | | 14.75% | | | | | 1,370,297 | | | | 14.75% | |
Carol Ann Emquies(14) | | | | | 906,556 | | | | 10.26% | | | | | 906,556 | | | | 10.26% | |
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) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | Per Share | | | Per Pre-Funded Warrant | | | Total | | |||||||||
Public offering price | | | | $ | | | | | $ | | | | | ||||||
Placement Agent fees(1) | | | | $ | | | | | $ | | | | | $ | | | |||
Proceeds to us, before expenses(2) | | | | $ | | | | | $ | | | | | $ | | | |
| | | Per Share and Warrant | | | Total Without Exercise of Over- Allotment Option | | | Total With Exercise of Over- Allotment Option | | |||||||||
Public offering price | | | | $ | 5.00 | | | | | $ | | | | | $ | | | ||
Underwriting discount and commissions | | | | $ | | | | | $ | | | | | $ | | | |||
Nonaccountable expense allowance (1%) | | | | $ | | | | | | $ | | | | | | $ | | | |
Proceeds, before expenses, to DBG | | | | $ | | | | | $ | | | | | $ | | | |
| | | | F-3 | | | ||
| | | | | F-4 | | | |
| | | | | F-5 | | | |
| | | | | F-6 | | | |
| | | | | F-7 | | |
| ||||||||||||
| | | | | | |||||||
| | | | | | | ||||||
| | | | | | | ||||||
| | | | | | | ||||||
| | | | | | | ||||||
| | | | | F-24 | | |
| | | | | F-57 | | | |
| | | | | F-58 | | | |
| | | | | F-59 | | | |
| | | | | F-60 | | | |
| | | | | | |
| | | | | F-67 | | | |
| | | | | F-68 | | | |
| | | | | F-69 | | | |
| | | | | F-70 | | | |
| | | | | F-71 | | |
| | | | | F-78 | | | |
| | | | | F-80 | | | |
| | | | | F-81 | | | |
| | | | | F-82 | | | |
| | | | | F-83 | | | |
| | | | | F-84 | | |
| | | March 31, 2023 | | | December 31, 2022 | | ||||||
| | | Unaudited | | | Audited | | ||||||
ASSETS | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash and cash equivalents | | | | $ | 1,969,250 | | | | | $ | 1,283,282 | | |
Accounts receivable, net | | | | | 345,439 | | | | | | 628,386 | | |
Due from factor, net | | | | | 590,253 | | | | | | 839,400 | | |
Inventory | | | | | 4,926,094 | | | | | | 5,225,282 | | |
Prepaid expenses and other current assets | | | | | 1,071,330 | | | | | | 853,044 | | |
Total current assets | | | | | 8,902,366 | | | | | | 8,829,394 | | |
Property, equipment and software, net | | | | | 71,803 | | | | | | 76,657 | | |
Goodwill | | | | | 10,103,812 | | | | | | 10,103,812 | | |
Intangible assets, net | | | | | 13,473,151 | | | | | | 14,427,503 | | |
Deposits | | | | | 110,962 | | | | | | 198,341 | | |
Right of use asset | | | | | 467,738 | | | | | | 102,349 | | |
Total assets | | | | $ | 33,129,832 | | | | | $ | 33,738,056 | | |
LIABILITIES AND STOCKHOLDERS’ DEFICIT | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable | | | | $ | 7,671,050 | | | | | $ | 8,098,165 | | |
Accrued expenses and other liabilities | | | | | 4,921,970 | | | | | | 4,457,115 | | |
Deferred revenue | | | | | 317,421 | | | | | | 202,129 | | |
Due to related parties | | | | | 452,055 | | | | | | 556,225 | | |
Contingent consideration liability | | | | | 12,098,475 | | | | | | 12,098,475 | | |
Convertible note payable, net | | | | | 100,000 | | | | | | 2,721,800 | | |
Accrued interest payable | | | | | 1,780,535 | | | | | | 1,561,795 | | |
Note payable – related party | | | | | 129,489 | | | | | | 129,489 | | |
Loans payable, current | | | | | 1,329,507 | | | | | | 1,966,250 | | |
Promissory notes payable, net | | | | | 10,914,831 | | | | | | 9,000,000 | | |
Right of use liability, current portion | | | | | 425,654 | | | | | | 102,349 | | |
Total current liabilities | | | | | 40,140,987 | | | | | | 40,893,792 | | |
Loans payable, net of current portion | | | | | 798,759 | | | | | | 297,438 | | |
Right of use liability | | | | | 53,107 | | | | | | — | | |
Total liabilities | | | | | 40,992,853 | | | | | | 41,191,230 | | |
Commitments and contingencies | | | | | | | | | | | | | |
Stockholders’ deficit: | | | | | | | | | | | | | |
Undesignated preferred stock, $0.0001 par, 10,000,000 shares authorized, 0 shares issued and outstanding as of both March 31, 2023 and December 31, 2022 | | | | | — | | | | | | — | | |
Series A preferred stock, $0.0001 par, 1 share authorized, no shares issued and outstanding as of March 31, 2023 and December 31, 2022 | | | | | — | | | | | | — | | |
Series A convertible preferred stock, $0.0001 par, 6,800 shares designated, 6,300 shares issued and outstanding as of both March 31, 2023 and December 31, 2022 | | | | | 1 | | | | | | 1 | | |
Common stock, $0.0001 par, 1,000,000,000 shares authorized, 5,974,969 and 4,468,939 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively | | | | | 598 | | | | | | 447 | | |
Additional paid-in capital | | | | | 102,020,045 | | | | | | 96,293,694 | | |
Accumulated deficit | | | | | (109,883,665) | | | | | | (103,747,316) | | |
Total stockholders’ deficit | | | | | (7,863,021) | | | | | | (7,453,174) | | |
Total liabilities and stockholders’ deficit | | | | $ | 33,129,832 | | | | | $ | 33,738,056 | | |
| | | Three Months Ended March 31, | | |||||||||
| | | 2023 | | | 2022 | | ||||||
| | | | | | | | | Restated | | |||
Net revenues | | | | $ | 5,095,234 | | | | | $ | 3,432,410 | | |
Cost of net revenues | | | | | 2,656,652 | | | | | | 2,292,191 | | |
Gross profit | | | | | 2,438,582 | | | | | | 1,140,219 | | |
Operating expenses: | | | | | | | | | | | | | |
General and administrative | | | | | 4,636,844 | | | | | | 4,277,955 | | |
Sales and marketing | | | | | 1,115,643 | | | | | | 1,040,572 | | |
Distribution | | | | | 270,185 | | | | | | 202,848 | | |
Change in fair value of contingent consideration | | | | | — | | | | | | 1,200,321 | | |
Total operating expenses | | | | | 6,022,672 | | | | | | 6,721,696 | | |
Loss from operations | | | | | (3,584,090) | | | | | | (5,581,477) | | |
Other income (expense): | | | | | | | | | | | | | |
Interest expense | | | | | (1,873,270) | | | | | | (1,567,877) | | |
Other non-operating income (expenses) | | | | | (678,989) | | | | | | (683,588) | | |
Total other income (expense), net | | | | | (2,552,259) | | | | | | (2,251,465) | | |
Income tax benefit (provision) | | | | | — | | | | | | — | | |
Net loss | | | | $ | (6,136,349) | | | | | $ | (7,832,942) | | |
Weighted average common shares outstanding – basic and diluted | | | | | 5,670,362 | | | | | | 132,351 | | |
Net loss per common share – basic and diluted | | | | $ | (1.08) | | | | | $ | (59.18) | | |
| | | Series A Convertible Preferred Stock | | | Common Stock | | | Additional Paid-in Capital | | | Accumulated Deficit | | | Total Stockholders’ Deficit | | |||||||||||||||||||||||||||
| | | Shares | | | Amount | | | Shares | | | Amount | | ||||||||||||||||||||||||||||||
Balances at December 31, 2021 | | | | | — | | | | | $ | — | | | | | | 130,018 | | | | | $ | 13 | | | | | $ | 58,614,160 | | | | | $ | (65,703,954) | | | | | $ | (7,089,781) | | |
Conversion of notes into common stock | | | | | — | | | | | | — | | | | | | 8,739 | | | | | | 1 | | | | | | 1,201,581 | | | | | | — | | | | | | 1,201,582 | | |
Stock-based compensation | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 139,093 | | | | | | — | | | | | | 139,093 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (7,832,942) | | | | | | (7,832,942) | | |
Balances at March 31, 2022 | | | | | — | | | | | $ | — | | | | | | 138,757 | | | | | $ | 14 | | | | | $ | 59,954,834 | | | | | $ | (73,536,896) | | | | | $ | (13,582,048) | | |
Balances at December 31, 2022 | | | | | 6,300 | | | | | $ | 1 | | | | | | 4,468,939 | | | | | $ | 447 | | | | | $ | 96,293,694 | | | | | $ | (103,747,316) | | | | | $ | (7,453,174) | | |
Issuance of common stock pursuant to private placement | | | | | — | | | | | | — | | | | | | 1,277,140 | | | | | | 128 | | | | | | 4,999,875 | | | | | | — | | | | | | 5,000,003 | | |
Offering costs | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (536,927) | | | | | | — | | | | | | (536,927) | | |
Shares issued for services | | | | | — | | | | | | — | | | | | | 118,890 | | | | | | 12 | | | | | | 499,326 | | | | | | — | | | | | | 499,338 | | |
Shares and warrants issued with notes | | | | | — | | | | | | — | | | | | | 110,000 | | | | | | 11 | | | | | | 658,483 | | | | | | — | | | | | | 658,494 | | |
Stock-based compensation | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 105,594 | | | | | | — | | | | | | 105,594 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (6,136,349) | | | | | | (6,136,349) | | |
Balances at March 31, 2023 | | | | | 6,300 | | | | | $ | 1 | | | | | | 5,974,969 | | | | | $ | 598 | | | | | $ | 102,020,045 | | | | | $ | (109,883,665) | | | | | $ | (7,863,021) | | |
| | | Three Months Ended March 31, | | |||||||||
| | | 2023 | | | 2022 | | ||||||
Cash flows from operating activities: | | | | | | | | | | | | | |
Net loss | | | | $ | (6,136,349) | | | | | $ | (7,832,942) | | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | | | |
Depreciation and amortization | | | | | 959,207 | | | | | | 552,004 | | |
Amortization of loan discount and fees | | | | | 1,412,425 | | | | | | 1,093,583 | | |
Loss on extinguishment of debt | | | | | 689,100 | | | | | | — | | |
Stock-based compensation | | | | | 105,594 | | | | | | 139,093 | | |
Shares issued for services | | | | | 499,338 | | | | | | — | | |
Change in credits due customers | | | | | 109,298 | | | | | | (9,067) | | |
Change in fair value of warrant liability | | | | | — | | | | | | (5,970) | | |
Change in fair value of derivative liability | | | | | — | | | | | | 682,103 | | |
Change in fair value of contingent consideration | | | | | — | | | | | | 1,200,321 | | |
Changes in operating assets and liabilities: | | | | | | | | | | | | | |
Accounts receivable, net | | | | | 282,947 | | | | | | (49,554) | | |
Factored receivables | | | | | (77,776) | | | | | | 294,439 | | |
Inventory | | | | | 299,188 | | | | | | 262,753 | | |
Prepaid expenses and other current assets | | | | | (218,286) | | | | | | (126,369) | | |
Accounts payable | | | | | (416,093) | | | | | | 1,972,441 | | |
Accrued expenses and other liabilities | | | | | 464,855 | | | | | | 669,514 | | |
Deferred revenue | | | | | 115,292 | | | | | | 71,707 | | |
Accrued interest | | | | | 218,740 | | | | | | 450,788 | | |
Net cash used in operating activities | | | | | (1,692,520) | | | | | | (635,156) | | |
Cash flows from investing activities: | | | | | | | | | | | | | |
Purchase of property, equipment and software | | | | | — | | | | | | (5,576) | | |
Deposits | | | | | 87,379 | | | | | | — | | |
Net cash provided by (used in) investing activities | | | | | 87,379 | | | | | | (5,576) | | |
Cash flows from financing activities: | | | | | | | | | | | | | |
Proceeds (repayments) from related party advances | | | | | (104,170) | | | | | | (11,105) | | |
Advances (repayments) from factor | | | | | 217,625 | | | | | | (179,126) | | |
Issuance of loans and notes payable | | | | | 3,542,199 | | | | | | 868,582 | | |
Repayments of convertible notes and loans payable | | | | | (5,677,621) | | | | | | — | | |
Issuance of common stock pursuant to private placement | | | | | 5,000,003 | | | | | | — | | |
Offering costs | | | | | (686,927) | | | | | | — | | |
Net cash provided by financing activities | | | | | 2,291,109 | | | | | | 678,351 | | |
Net change in cash and cash equivalents | | | | | 685,968 | | | | | | 37,619 | | |
Cash and cash equivalents at beginning of period | | | | | 1,283,282 | | | | | | 528,394 | | |
Cash and cash equivalents at end of period | | | | $ | 1,969,250 | | | | | $ | 566,013 | | |
Supplemental disclosure of cash flow information: | | | | | | | | | | | | | |
Cash paid for income taxes | | | | $ | — | | | | | $ | — | | |
Cash paid for interest | | | | $ | 60,465 | | | | | $ | — | | |
Supplemental disclosure of non-cash investing and financing activities: | | | | | | | | | | | | | |
Conversion of notes into common stock | | | | $ | — | | | | | $ | 1,201,582 | | |
Right of use asset | | | | $ | 467,738 | | | | | $ | 250,244 | | |
| | | Fair Value Measurements as of March 31, 2023 Using: | | |||||||||||||||||||||
| | �� | Level 1 | | | Level 2 | | | Level 3 | | | Total | | ||||||||||||
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Contingent consideration | | | | $ | — | | | | | $ | — | | | | | $ | 12,098,475 | | | | | $ | 12,098,475 | | |
| | | | $ | — | | | | | $ | — | | | | | $ | 12,098,475 | | | | | $ | 12,098,475 | | |
| | | Fair Value Measurements as of December 31, 2022 Using: | | |||||||||||||||||||||
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | | ||||||||||||
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Contingent consideration | | | | $ | — | | | | | $ | — | | | | | $ | 12,098,475 | | | | | $ | 12,098,475 | | |
| | | | $ | — | | | | | $ | — | | | | | $ | 12,098,475 | | | | | $ | 12,098,475 | | |
| | | March 31, 2023 | | | December 31, 2022 | | ||||||
Bailey | | | | $ | 10,698,475 | | | | | $ | 10,698,475 | | |
Harper & Jones | | | | | 1,400,000 | | | | | | 1,400,000 | | |
| | | | $ | 12,098,475 | | | | | $ | 12,098,475 | | |
| | | March 31, 2023 | | | December 31, 2022 | | ||||||
Raw materials | | | | $ | 1,512,651 | | | | | $ | 1,611,134 | | |
Work in process | | | | | 653,412 | | | | | | 888,643 | | |
Finished goods | | | | | 2,760,031 | | | | | | 2,725,505 | | |
Inventory | | | | $ | 4,926,094 | | | | | $ | 5,225,282 | | |
| | | March 31, | | |||||||||
| | | 2023 | | | 2022 | | ||||||
Convertible notes | | | | | — | | | | | | 51,648 | | |
Series A convertible preferred stock | | | | | 108 | | | | | | — | | |
Common stock warrants | | | | | 5,943,626 | | | | | | 9,145 | | |
Stock options | | | | | 38,951 | | | | | | 38,951 | | |
Total potentially dilutive shares | | | | | 5,982,685 | | | | | | 99,744 | | |
| | | Three Months Ended March 31, 2022 | | |||
Net revenues | | | | $ | 8,606,548 | | |
Net loss | | | | $ | (8,292,427) | | |
Net loss per common share | | | | $ | (62.65) | | |
| | | March 31, 2023 | | | December 31, 2022 | | ||||||
Outstanding receivables: | | | | | | | | | | | | | |
Without recourse | | | | $ | 1,065,335 | | | | | $ | 1,680,042 | | |
With recourse | | | | | 76,956 | | | | | | 65,411 | | |
Matured funds and deposits | | | | | 108,147 | | | | | | 81,055 | | |
Advances | | | | | (415,201) | | | | | | (632,826) | | |
Credits due customers | | | | | (244,984) | | | | | | (354,282) | | |
| | | | $ | 590,253 | | | | | $ | 839,400 | | |
| | | March 31, 2023 | | | December 31 2022 | | ||||||
Bailey | | | | $ | 3,158,123 | | | | | $ | 3,158,123 | | |
Harper & Jones | | | | | 1,130,311 | | | | | | 1,130,311 | | |
Stateside | | | | | 2,104,056 | | | | | | 2,104,056 | | |
Sundry | | | | | 3,711,322 | | | | | | 3,711,322 | | |
| | | | $ | 10,103,812 | | | | | $ | 10,103,812 | | |
| | | Gross Amount | | | Accumulated Amortization | | | Carrying Value | | |||||||||
Amortized: | | | | | | | | | | | | | | | | | | | |
Customer relationships | | | | $ | 11,452,230 | | | | | $ | (4,554,959) | | | | | $ | 6,897,271 | | |
| | | | $ | 11,452,230 | | | | | $ | (4,554,959) | | | | | $ | 6,897,271 | | |
Indefinite-lived: | | | | | | | | | | | | | | | | | | | |
Brand name | | | | $ | 6,575,880 | | | | | | — | | | | | | 6,575,880 | | |
| | | | $ | 18,028,110 | | | | | $ | (4,554,959) | | | | | $ | 13,473,151 | | |
| | | March 31, 2023 | | | December 31, 2022 | | ||||||
Accrued expenses | | | | $ | 602,053 | | | | | $ | 705,135 | | |
Reserve for returns | | | | | 294,147 | | | | | | 307,725 | | |
Payroll related liabilities | | | | | 3,586,356 | | | | | | 2,974,362 | | |
Sales tax liability | | | | | 267,419 | | | | | | 339,843 | | |
Other liabilities | | | | | 171,995 | | | | | | 130,050 | | |
| | | | $ | 4,921,970 | | | | | $ | 4,457,115 | | |
| | | Principal | | | Unamortized Debt Discount | | | Convertible Note Payable, Net | | |||||||||
Balance, December 31, 2022 | | | | $ | 4,100,000 | | | | | $ | (1,378,200) | | | | | $ | 2,721,800 | | |
Repayments of notes | | | | | (4,000,000) | | | | | | — | | | | | | (4,000,000) | | |
Amortization of debt discount | | | | | — | | | | | | 689,100 | | | | | | 689,100 | | |
Loss on extinguishment of debt | | | | | — | | | | | | 689,100 | | | | | | 689,100 | | |
Balance, March 31, 2023 | | | | $ | 100,000 | | | | | $ | — | | | | | $ | 100,000 | | |
| | | March 31, 2023 | | | December 31, 2022 | | ||||||
Bailey Note | | | | $ | 3,500,000 | | | | | $ | 3,500,000 | | |
Sundry Note | | | | | 5,500,000 | | | | | | 5,500,000 | | |
March 2023 Notes – principal | | | | | 2,458,750 | | | | | | — | | |
March 2023 Notes – unamortized debt discount | | | | | (543,919) | | | | | | — | | |
Promissory note payable, net | | | | $ | 10,914,831 | | | | | $ | 9,000,000 | | |
| | | Common Stock Warrants | | | Weighted Average Exercise Price | | ||||||
Outstanding – December 31, 2022 | | | | | 4,418,320 | | | | | $ | 8.37 | | |
Granted | | | | | 2,327,446 | | | | | | 3.98 | | |
Exercised | | | | | (802,140) | | | | | | 3.92 | | |
Forfeited | | | | | — | | | | | | — | | |
Outstanding – March 31, 2023 | | | | | 5,943,626 | | | | | $ | 7.75 | | |
Exercisable at December 31, 2022 | | | | | 4,281,956 | | | | | $ | 8.42 | | |
Exercisable at March 31, 2023 | | | | | 5,807,262 | | | | | $ | 7.78 | | |
/s/ dbbmckennon (Firm No. 3501) Newport Beach, California April 17, 2023 |
| | December 31, | | | December 31, | | ||||||||||||||||||||
| | 2020 | | 2019 | | | 2022 | | 2021 | | ||||||||||||||||
ASSETS | | | | | | | | | | | | | | | | | | | | | | | ||||
Current assets: | | | | | | | | | | | | | | | | | | | | | | | ||||
Cash and cash equivalents | | | $ | 575,986 | | | | $ | 40,469 | | | | | $ | 1,283,282 | | | | $ | 528,394 | | | ||||
Accounts receivable, net | | | | 35,532 | | | | | — | | | | | | 628,386 | | | | | 89,394 | | | ||||
Due from factor, net | | | | 210,033 | | | | | — | | | | | | 839,400 | | | | | 985,288 | | | ||||
Inventory | | | | 1,163,279 | | | | | 1,061,969 | | | | | | 5,225,282 | | | | | 2,755,358 | | | ||||
Prepaid expenses | | | | 23,826 | | | | | 63,516 | | | |||||||||||||||
Prepaid expenses and other current assets | | | | 853,044 | | | | | 417,900 | | | |||||||||||||||
Total current assets | | | | 2,008,656 | | | | | 1,165,954 | | | | | | 8,829,394 | | | | | 4,776,334 | | | ||||
Deferred offering costs | | | | 214,647 | | | | | | | | | | | — | | | | | 367,696 | | | ||||
Property, equipment and software, net | | | | 62,313 | | | | | 72,593 | | | | | | 76,657 | | | | | 97,265 | | | ||||
Goodwill | | | | 6,479,218 | | | | | — | | | | | | 10,103,812 | | | | | 18,264,822 | | | ||||
Intangible assets, net | | | | 7,494,667 | | | | | — | | | | | | 14,427,503 | | | | | 12,841,313 | | | ||||
Deposits | | | | 92,668 | | | | | 43,510 | | | | | | 198,341 | | | | | 137,794 | | | ||||
Right of use asset, net | | | | 102,349 | | | | | — | | | |||||||||||||||
Total assets | | | $ | 16,352,169 | | | | $ | 1,282,057 | | | | | $ | 33,738,056 | | | | $ | 36,485,224 | | | ||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | | | | | | | | | | | | | | | | | | | | | | | ||||
Current liabilities: | | | | | | | | | | | | | | | | | | | | | | | ||||
Accounts payable | | | $ | 5,668,703 | | | | $ | 1,597,770 | | | | | $ | 8,098,165 | | | | $ | 6,562,690 | | | ||||
Accrued expenses and other liabilities | | | | 1,245,646 | | | | | 1,121,317 | | | | | | 4,457,115 | | | | | 2,237,145 | | | ||||
Deferred revenue | | | | 1,667 | | | | | 15,231 | | | | | | 202,129 | | | | | 276,397 | | | ||||
Due to related parties | | | | 441,453 | | | | | 263,427 | | | | | | 556,225 | | | | | 277,635 | | | ||||
Convertible notes, current | | | | 700,000 | | | | | — | | | |||||||||||||||
Contingent consideration liability | | | | 12,098,475 | | | | | 12,179,476 | | | |||||||||||||||
Convertible note payable, net | | | | 2,721,800 | | | | | 100,000 | | | |||||||||||||||
Accrued interest payable | | | | 737,039 | | | | | 129,982 | | | | | | 1,561,795 | | | | | 1,110,679 | | | ||||
Note payable – related party | | | | 137,856 | | | | | 115,000 | | | | | | 129,489 | | | | | 299,489 | | | ||||
Venture debt, net of discount | | | | 5,854,326 | | | | | 4,382,549 | | | | | | — | | | | | 6,001,755 | | | ||||
Loan payable, current | | | | 992,000 | | | | | — | | | | | | 1,966,250 | | | | | 2,502,000 | | | ||||
Promissory note payable | | | | 4,500,000 | | | | | — | | | | | | 9,000,000 | | | | | 3,500,000 | | | ||||
Right of use liability, current portion | | | | 102,349 | | | | | — | | | |||||||||||||||
Total current liabilities | | | | 20,278,690 | | | | | 7,625,276 | | | | | | 40,893,792 | | | | | 35,047,266 | | | ||||
Convertible notes | | | | 1,215,815 | | | | | 799,280 | | | |||||||||||||||
Convertible note payable, net | | | | — | | | | | 5,501,614 | | | |||||||||||||||
Loan payable | | | | 709,044 | | | | | — | | | | | | 297,438 | | | | | 713,182 | | | ||||
Derivative liability | | | | — | | | | | 2,294,720 | | | |||||||||||||||
Warrant liability | | | | 6,265 | | | | | 7,700 | | | | | | — | | | | | 18,223 | | | ||||
Total liabilities | | | | 22,209,814 | | | | | 8,432,256 | | | | | | 41,191,230 | | | | | 43,575,005 | | | ||||
Commitments and contingencies (Note 13) | | | | | | | | | | | | |||||||||||||||
Commitments and contingencies | | | | | | | | | | | | |||||||||||||||
Stockholders’ deficit: | | | | | | | | | | | | | | | | | | | | | | | ||||
Series Seed convertible preferred stock, $0.0001 par, 20,714,518 shares authorized, 20,714,518 shares issued and outstanding at both December 31, 2020 and 2019. Convertible into one share of common stock. Liquidation preference of $5,633,855 as of both December 31, 2020 and 2019 | | | | 2,071 | | | | | 2,071 | | | |||||||||||||||
Undesignated preferred stock, $0.0001 par, 10,000,000 shares authorized, 0 shares issued and outstanding as of both December 31, 2022 and 2021 | | | | — | | | | | — | | | |||||||||||||||
Series A preferred stock, $0.0001 par, 1 share authorized, no shares issued and outstanding as of December 31, 2022 or 2021 | | | | — | | | | | — | | | |||||||||||||||
Series A convertible preferred stock, $0.0001 par, 6,800 shares designated, 6,300 shares issued and outstanding as of December 31, 2022, none authorized or outstanding as of December 31, 2021 | | | | 1 | | | | | — | | | |||||||||||||||
Common stock, $0.0001 par, 1,000,000,000 shares authorized, 4,468,939 and 130,018 shares issued and outstanding as of December 31, 2022 and 2021, respectively | | | | 447 | | | | | 13 | | | |||||||||||||||
Additional paid-in capital | | | | 96,293,694 | | | | | 58,614,160 | | | |||||||||||||||
Accumulated deficit | | | | (103,747,316) | | | | | (65,703,954) | | | |||||||||||||||
Total stockholders’ deficit | | | | (7,453,174) | | | | | (7,089,781) | | | |||||||||||||||
Total liabilities and stockholders’ deficit | | | $ | 33,738,056 | | | | $ | 36,485,224 | | |
| | | December 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Series A convertible preferred stock, $0.0001 par, 14,481,413 shares authorized, 5,654,072 shares issued and outstanding at both December 31, 2020 and 2019. Convertible into one share of common stock. Liquidation preference of $2,713,955 as of both December 31, 2020 and 2019 | | | | | 565 | | | | | | 565 | | |
Series A-2 convertible preferred stock, $0.0001 par, 20,000,000 shares authorized, 5,932,742 shares issued and outstanding at both December 31, 2020 and 2019. Convertible into one share of common stock. Liquidation preference of $2,966,371 as of both December 31, 2020 and 2019 | | | | | 593 | | | | | | 593 | | |
Series A-3 convertible preferred stock, $0.0001 par, 18,867,925 shares authorized, 9,032,330 and 8,223,036 shares issued and outstanding at December 31, 2020 and 2019, respectively. Convertible into one share of common stock. Liquidation preference of $4,787,135 and $4,358,209 as of December 31, 2020 and 2019, respectively | | | | | 904 | | | | | | 823 | | |
Series CF convertible preferred stock, $0.0001 par, 2,000,000 shares authorized, 836,331 and 126,641 shares issued and outstanding at December 31, 2020 and 2019, respectively. Convertible into one share of common stock. Liquidation preference of $434,890 and $65,863 as of December 31, 2020 and 2019, respectively | | | | | 83 | | | | | | 12 | | |
Series B convertible preferred stock, $0.0001 par, 20,754,717 shares authorized, 20,754,717 and no shares issued and outstanding at December 31, 2020 and 2019, respectively. Convertible into one share of common stock. Liquidation preference of $11,000,000 and $0 as of December 31, 2020 and 2019, respectively | | | | | 2,075 | | | | | | — | | |
Undesignated preferred stock, $0.0001 par, 936,144 shares authorized, 0 and 0 shares issued and outstanding as of December 31, 2020 and 2019, respectively | | | | ||||||||||
Common stock, $0.0001 par, 200,000,000 shares authorized, 10,377,615 and 10,377,615 shares issued and outstanding as of both December 31, 2020 and 2019 | | | | | 1,038 | | | | | | 1,038 | | |
Additional paid-in capital | | | | | 27,481,023 | | | | | | 15,485,078 | | |
Subscription receivable | | | | | — | | | | | | (22,677) | | |
Accumulated deficit | | | | | (33,345,997) | | | | | | (22,617,702) | | |
Total stockholders’ deficit | | | | | (5,857,645) | | | | | | (7,150,199) | | |
Total liabilities and stockholders’ deficit | | | | $ | 16,352,169 | | | | | $ | 1,282,057 | | |
|
| | | Year Ended December 31, | | |||||||||
| | | 2022 | | | 2021 | | ||||||
| | | | | | | | | As Restated | | |||
Net revenues | | | | $ | 13,971,178 | | | | | $ | 7,584,859 | | |
Cost of net revenues | | | | | 8,030,908 | | | | | | 5,716,587 | | |
Gross profit | | | | | 5,940,270 | | | | | | 1,868,272 | | |
Operating expenses: | | | | | | | | | | | | | |
General and administrative | | | | | 16,371,536 | | | | | | 16,752,516 | | |
Sales and marketing | | | | | 4,950,635 | | | | | | 3,810,583 | | |
Distribution | | | | | 611,569 | | | | | | 489,371 | | |
Impairment | | | | | 15,539,332 | | | | | | 3,400,000 | | |
Change in fair value of contingent consideration | | | | | 564,303 | | | | | | 8,764,460 | | |
Total operating expenses | | | | | 38,037,375 | | | | | | 33,216,930 | | |
Loss from operations | | | | | (32,097,105) | | | | | | (31,348,658) | | |
Other income (expense): | | | | | | | | | | | | | |
Interest expense | | | | | (9,014,337) | | | | | | (3,663,921) | | |
Other non-operating income (expenses) | | | | | 3,068,080 | | | | | | 1,554,502 | | |
Total other income (expense), net | | | | | (5,946,257) | | | | | | (2,109,419) | | |
Income tax benefit (provision) | | | | | — | | | | | | 1,100,120 | | |
Net loss | | | | $ | (38,043,362) | | | | | $ | (32,357,957) | | |
Weighted average common shares outstanding – basic and diluted | | | | | 771,297 | | | | | | 76,289 | | |
Net loss per common share – basic and diluted | | | | $ | (49.32) | | | | | $ | (424.15) | | |
| | | Years Ended December 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Net revenues | | | | $ | 5,239,437 | | | | | $ | 3,034,216 | | |
Cost of net revenues | | | | | 4,685,755 | | | | | | 1,626,505 | | |
Gross profit | | | | | 553,682 | | | | | | 1,407,711 | | |
Operating expenses: | | | | | | | | | | | | | |
General and administrative | | | | | 7,149,210 | | | | | | 4,584,010 | | |
Sales and marketing | | | | | 576,469 | | | | | | 869,285 | | |
Distribution | | | | | 342,466 | | | | | | 801,885 | | |
Loss on disposal of property and equipment | | | | | 848,927 | | | | | | — | | |
Impairment of intangible assets | | | | | 784,500 | | | | | | — | | |
Total operating expenses | | | | | 9,701,572 | | | | | | 6,255,180 | | |
Loss from operations | | | | | (9,147,890) | | | | | | (4,847,469) | | |
Other income (expense): | | | | | | | | | | | | | |
Interest expense | | | | | (1,599,518) | | | | | | (772,592) | | |
Other non-operating income (expenses) | | | | | 32,754 | | | | | | (33,112) | | |
Total other income (expense), net | | | | | (1,566,764) | | | | | | (805,704) | | |
Provision for income taxes | | | | | 13,641 | | | | | | 800 | | |
Net loss | | | | $ | (10,728,295) | | | | | $ | (5,653,973) | | |
Weighted average vested common shares outstanding – basic and diluted | | | | | 10,377,615 | | | | | | 10,377,615 | | |
Net loss per common share – basic and diluted | | | | $ | (1.03) | | | | | $ | (0.54) | | |
| | | Series Seed Preferred Stock | | | Series A Preferred Stock | | | Series A-2 Preferred Stock | | | Series A-3 Preferred Stock | | | Series CF Preferred Stock | | | Series B Preferred Stock | | | Series A Convertible Preferred Stock | | | Common Stock | | | Additional Paid-in Capital | | | Accumulated Deficit | | | Total Stockholders’ Deficit | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances at December 31, 2020 | | | | | 20,714,518 | | | | | $ | 2,071 | | | | | | 5,654,072 | | | | | $ | 565 | | | | | | 5,932,742 | | | | | $ | 593 | | | | | | 9,032,330 | | | | | $ | 904 | | | | | | 836,331 | | | | | $ | 83 | | | | | | 20,754,717 | | | | | $ | 2,075 | | | | | | — | | | | | $ | — | | | | | | 6,642 | | | | | $ | 1 | | | | | $ | 27,482,060 | | | | | $ | (33,345,997) | | | | | $ | (5,857,645) | | |
Conversion of preferred stock into common stock | | | | | (20,714,518) | | | | | | (2,071) | | | | | | (5,654,072) | | | | | | (565) | | | | | | (5,932,742) | | | | | | (593) | | | | | | (9,032,330) | | | | | | (904) | | | | | | (836,331) | | | | | | (83) | | | | | | (20,754,717) | | | | | | (2,075) | | | | | | — | | | | | | — | | | | | | 40,272 | | | | | | 4 | | | | | | 6,287 | | | | | | — | | | | | | — | | |
Issuance of common stock in public offering | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 24,096 | | | | | | 2 | | | | | | 10,000,000 | | | | | | — | | | | | | 10,000,002 | | |
Offering costs | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (2,116,957) | | | | | | — | | | | | | (2,116,957) | | |
Exercise of over-allotment option, net of offering costs | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,614 | | | | | | — | | | | | | 1,364,997 | | | | | | — | | | | | | 1,364,997 | | |
Conversion of debt into common stock | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 11,352 | | | | | | 1 | | | | | | 2,680,288 | | | | | | — | | | | | | 2,680,289 | | |
Conversion of related party notes and payables into common stock | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,524 | | | | | | — | | | | | | 257,515 | | | | | | — | | | | | | 257,515 | | |
Common stock issued in connection with business combination | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 32,943 | | | | | | 3 | | | | | | 11,428,735 | | | | | | — | | | | | | 11,428,738 | | |
Exercise of warrants | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,869 | | | | | | — | | | | | | 1,768,046 | | | | | | — | | | | | | 1,768,046 | | |
Common stock issued pursuant to consulting agreement | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,415 | | | | | | — | | | | | | 595,500 | | | | | | — | | | | | | 595,500 | | |
Issuance of common stock pursuant to equity line of credit | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,264 | | | | | | — | | | | | | 367,696 | | | | | | — | | | | | | 367,696 | | |
Common stock and warrants issued in connection with notes | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,300 | | | | | | — | | | | | | 501,658 | | | | | | — | | | | | | 501,658 | | |
Stock-based compensation | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 727 | | | | | | — | | | | | | 4,278,337 | | | | | | — | | | | | | 4,278,337 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (32,357,957) | | | | | | (32,357,957) | | |
Balances at December 31, 2021 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 130,018 | | | | | | 13 | | | | | | 58,614,160 | | | | | | (65,703,954) | | | | | | (7,089,781) | | |
Issuance of common stock in public offering | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 373,898 | | | | | | 37 | | | | | | 9,347,413 | | | | | | — | | | | | | 9,347,450 | | |
Issuance of common stock and exercise of pre-funded warrants in public offering | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,818,181 | | | | | | 182 | | | | | | 9,999,814 | | | | | | — | | | | | | 9,999,996 | | |
Offering costs | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (2,921,646) | | | | | | — | | | | | | (2,921,646) | | |
Common stock issued in connection with business combination | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 90,909 | | | | | | 9 | | | | | | 999,991 | | | | | | — | | | | | | 1,000,000 | | |
Common stock issued pursuant to consulting agreement | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 750 | | | | | | — | | | | | | 123,000 | | | | | | — | | | | | | 123,000 | | |
Warrant and common shares issued with notes | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 60,000 | | | | | | 6 | | | | | | 1,368,735 | | | | | | — | | | | | | 1,368,741 | | |
Conversion of notes and derivative liability into common stock | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,995,183 | | | | | | 200 | | | | | | 11,983,189 | | | | | | — | | | | | | 11,983,389 | | |
Conversion of venture debt into Series A convertible preferred stock | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,300 | | | | | | 1 | | | | | | — | | | | | | — | | | | | | 6,299,999 | | | | | | — | | | | | | 6,300,000 | | |
Stock-based compensation | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 479,038 | | | | | | — | | | | | | 479,038 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (38,043,362) | | | | | | (38,043,362) | | |
Balances at December 31, 2022 | | | | | — | | | | | $ | — | | | | | | — | | | | | $ | — | | | | | | — | | | | | $ | — | | | | | | — | | | | | $ | — | | | | | | — | | | | | $ | — | | | | | | — | | | | | $ | — | | | | | | 6,300 | | | | | $ | 1 | | | | | | 4,468,939 | | | | | $ | 447 | | | | | $ | 96,293,694 | | | | | $ | (103,747,316) | | | | | $ | (7,453,174) | | |
| | | Series Seed Preferred Stock | | | Series A Preferred Stock | | | Series A-2 Preferred Stock | | | Series A-3 Preferred Stock | | | Series CF Preferred Stock | | | Series B Preferred Stock | | | Common Stock | | | Additional Paid-in Capital | | | Subscription Receivable | | | Accumulated Deficit | | | Total Stockholders’ Deficit | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances at December 31, 2018 | | | | | 20,714,518 | | | | | $ | 2,071 | | | | | | 5,650,903 | | | | | $ | 565 | | | | | | 5,932,742 | | | | | $ | 593 | | | | | | 3,447,608 | | | | | $ | 345 | | | | | | 124,204 | | | | | $ | 12 | | | | | | — | | | | | $ | — | | | | | | 10,377,615 | | | | | $ | 1,038 | | | | | $ | 13,241,211 | | | | | $ | (8,283) | | | | | $ | (16,963,729) | | | | | $ | (3,726,177) | | |
Stock-based compensation | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 172,491 | | | | | | — | | | | | | — | | | | | | 172,491 | | |
Issuance of Series CF preferred stock | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,437 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 8,283 | | | | | | — | | | | | | 8,283 | | |
Shares issued to holders in prior offerings | | | | | — | | | | | | — | | | | | | 3,169 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Issuance of Series A-3 preferred stock | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 4,775,428 | | | | | | 478 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,530,499 | | | | | | (22,677) | | | | | | — | | | | | | 2,508,300 | | |
Offering costs | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (509,051) | | | | | | — | | | | | | — | | | | | | (509,051) | | |
Fair value of warrant issuances – venture debt | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 49,928 | | | | | | — | | | | | | — | | | | | | 49,928 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | ��� | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (5,653,973) | | | | | | (5,653,973) | | |
Balances at December 31, 2019 | | | | | 20,714,518 | | | | | $ | 2,071 | | | | | | 5,654,072 | | | | | $ | 565 | | | | | | 5,932,742 | | | | | $ | 593 | | | | | | 8,223,036 | | | | | $ | 823 | | | | | | 126,641 | | | | | $ | 12 | | | | | | — | | | | | $ | — | | | | | | 10,377,615 | | | | | $ | 1,038 | | | | | $ | 15,485,078 | | | | | $ | (22,677) | | | | | $ | (22,617,702) | | | | | $ | (7,150,199) | | |
Stock-based compensation | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 144,775 | | | | | | — | | | | | | — | | | | | | 144,775 | | |
Issuance of Series CF preferred stock | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 709,690 | | | | | | 71 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 309,679 | | | | | | — | | | | | | — | | | | | | 309,750 | | |
Issuance of Series A-3 preferred stock | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 809,294 | | | | | | 81 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 428,845 | | | | | | 22,677 | | | | | | — | | | | | | 451,603 | | |
Issuance of Series B preferred stock | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 20,754,717 | | | | | | 2,075 | | | | | | — | | | | | | — | | | | | | 10,997,925 | | | | | | — | | | | | | — | | | | | | 11,000,000 | | |
Offering costs | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (69,470) | | | | | | — | | | | | | — | | | | | | (69,470) | | |
Fair value of warrant issuances – venture debt | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 184,191 | | | | | | — | | | | | | — | | | | | | 184,191 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (10,728,295) | | | | | | (10,728,295) | | |
Balances at December 31, 2020 | | | | | 20,714,518 | | | | | $ | 2,071 | | | | | | 5,654,072 | | | | | $ | 565 | | | | | | 5,932,742 | | | | | $ | 593 | | | | | | 9,032,330 | | | | | $ | 904 | | | | | | 836,331 | | | | | $ | 83 | | | | | | 20,754,717 | | | | | $ | 2,075 | | | | | | 10,377,615 | | | | | $ | 1,038 | | | | | $ | 27,481,023 | | | | | $ | — | | | | | $ | (33,345,997) | | | | | $ | (5,857,645) | | |
| | | Year Ended December 31, | | |||||||||
| | | 2022 | | | 2021 | | ||||||
Cash flows from operating activities: | | | | | | | | | | | | | |
Net loss | | | | $ | (38,043,362) | | | | | $ | (32,357,957) | | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | | | |
Depreciation and amortization | | | | | 2,226,376 | | | | | | 1,220,736 | | |
Amortization of loan discount and fees | | | | | 6,506,384 | | | | | | 1,382,222 | | |
Stock-based compensation | | | | | 602,038 | | | | | | 4,800,337 | | |
Fees incurred in connection with debt financings | | | | | 568,149 | | | | | | 560,309 | | |
Change in fair value of warrant liability | | | | | (18,223) | | | | | | 11,958 | | |
Change in fair value of derivative liability | | | | | (1,354,434) | | | | | | (910,204) | | |
Change in fair value of contingent consideration | | | | | 564,303 | | | | | | 8,764,460 | | |
Impairment of goodwill and intangible assets | | | | | 15,539,332 | | | | | | 3,400,000 | | |
Forgiveness of Payroll Protection Program | | | | | (1,760,755) | | | | | | (407,994) | | |
Change in credit reserve | | | | | (118,840) | | | | | | 36,893 | | |
Deferred offering costs | | | | | 367,696 | | | | | | — | | |
Deferred income tax benefit | | | | | — | | | | | | (1,100,120) | | |
Changes in operating assets and liabilities: | | | | | | | | | | | | | |
Accounts receivable, net | | | | | (475,036) | | | | | | 150,288 | | |
Due from factor, net | | | | | 655,708 | | | | | | (399,701) | | |
Inventory | | | | | 471,831 | | | | | | (911,293) | | |
Prepaid expenses and other current assets | | | | | (402,515) | | | | | | (151,917) | | |
Accounts payable | | | | | 919,131 | | | | | | 456,690 | | |
Accrued expenses and other liabilities | | | | | 1,992,649 | | | | | | 834,489 | | |
Deferred revenue | | | | | (74,268) | | | | | | 4,882 | | |
Due to related parties | | | | | 278,590 | | | | | | (63,550) | | |
Accrued interest | | | | | 984,358 | | | | | | 461,113 | | |
Net cash used in operating activities | | | | | (10,570,889) | | | | | | (14,218,359) | | |
Cash flows from investing activities: | | | | | | | | | | | | | |
Cash acquired (consideration) pursuant to business combination | | | | | (7,247,303) | | | | | | (5,936,757) | | |
Purchase of property, equipment and software | | | | | (5,533) | | | | | | (43,179) | | |
Deposits | | | | | (60,548) | | | | | | (31,117) | | |
Net cash used in investing activities | | | | | (7,313,384) | | | | | | (6,011,053) | | |
Cash flows from financing activities: | | | | | | | | | | | | | |
Repayments of related party notes | | | | | (170,000) | | | | | | — | | |
Advances (repayments) from factor | | | | | (3,096) | | | | | | (41,200) | | |
Repayment of contingent consideration | | | | | (645,304) | | | | | | — | | |
Proceeds from venture debt | | | | | 237,500 | | | | | | — | | |
Issuance of loans payable | | | | | 3,280,360 | | | | | | 2,779,910 | | |
Repayments of convertible and promissory notes | | | | | (7,437,349) | | | | | | (2,006,628) | | |
Issuance of convertible notes payable | | | | | 6,951,250 | | | | | | 8,433,650 | | |
Proceeds from public offering | | | | | 19,347,446 | | | | | | 10,000,002 | | |
Exercise of over-allotment option with public offering, net | | | | | — | | | | | | 1,364,997 | | |
Exercise of warrants | | | | | — | | | | | | 1,768,046 | | |
Offering costs | | | | | (2,921,646) | | | | | | (2,116,957) | | |
Net cash provided by financing activities | | | | | 18,639,161 | | | | | | 20,181,820 | | |
Net change in cash and cash equivalents | | | | | 754,888 | | | | | | (47,592) | | |
Cash and cash equivalents at beginning of period | | | | | 528,394 | | | | | | 575,986 | | |
Cash and cash equivalents at end of period | | | | $ | 1,283,282 | | | | | $ | 528,394 | | |
Supplemental disclosure of cash flow information: | | | | | | | | | | | | | |
Cash paid for income taxes | | | | $ | — | | | | | $ | — | | |
Cash paid for interest | | | | $ | 734,869 | | | | | $ | 902,089 | | |
Supplemental disclosure of non-cash investing and financing activities: | | | | | | | | | | | | | |
Conversion of notes, warrants and derivatives into common stock | | | | $ | 11,983,389 | | | | | $ | 2,680,289 | | |
Right of use asset | | | | $ | 102,349 | | | | | $ | — | | |
Warrant and common shares issued with notes | | | | $ | 1,368,741 | | | | | $ | — | | |
Derivative liability in connection with convertible note | | | | $ | 559,957 | | | | | $ | 3,204,924 | | |
Conversion of venture debt into preferred stock | | | | $ | 6,300,000 | | | | | $ | — | | |
Conversion of related party notes and payables into preferred and common stock | | | | $ | — | | | | | $ | 257,515 | | |
Conversion of preferred stock into common stock | | | | $ | — | | | | | $ | 6,291 | | |
Conversion of contingent consideration into common stock | | | | $ | — | | | | | $ | 73,500 | | |
Common shares issued pursuant to equity line of credit | | | | $ | — | | | | | $ | 367,696 | | |
| | | Year Ended December 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Cash flows from operating activities: | | | | | | | | | | | | | |
Net loss | | | | $ | (10,728,295) | | | | | $ | (5,653,973) | | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | | | |
Depreciation and amortization | | | | | 603,857 | | | | | | 48,885 | | |
Amortization of loan discount and fees | | | | | 241,878 | | | | | | 149,948 | | |
Stock-based compensation | | | | | 144,775 | | | | | | 172,491 | | |
Change in fair value of warrant liability | | | | | (2,353) | | | | | | — | | |
Impairment of intangible assets | | | | | 784,500 | | | | | | — | | |
Loss on disposal of property and equipment | | | | | 848,927 | | | | | | — | | |
Change in credit reserve | | | | | (207,666) | | | | | | — | | |
Changes in operating assets and liabilities: | | | | | | | | | | | | | |
Accounts receivable, net | | | | | 1,947 | | | | | | — | | |
Due from factor, net | | | | | 1,616,939 | | | | | | — | | |
Inventory | | | | | 3,202,350 | | | | | | 146,673 | | |
Other current assets | | | | | 168,589 | | | | | | 114,898 | | |
Accounts payable | | | | | 673,263 | | | | | | 610,216 | | |
Accrued expenses and other liabilities | | | | | (591,028) | | | | | | 602,384 | | |
Deferred revenue | | | | | (13,564) | | | | | | (259,728) | | |
Accrued compensation – related party | | | | | 178,026 | | | | | | 68,859 | | |
Accrued interest | | | | | 1,016,268 | | | | | | 129,982 | | |
Net cash used in operating activities | | | | | (2,061,587) | | | | | | (3,869,365) | | |
Cash flows from investing activities: | | | | | | | | | | | | | |
Cash acquired in business combination | | | | | 106,913 | | | | | | — | | |
Purchases of property and equipment | | | | | (864) | | | | | | (7,848) | | |
Deposits | | | | | 98,835 | | | | | | 14,490 | | |
Net cash provided by investing activities | | | | | 204,884 | | | | | | 6,642 | | |
Cash flows from financing activities: | | | | | | | | | | | | | |
Proceeds (repayment) – related party advances, net | | | | | 22,856 | | | | | | (105,812) | | |
Repayments to factor | | | | | (1,931,369) | | | | | | — | | |
Proceeds from venture debt | | | | | 1,050,000 | | | | | | 508,249 | | |
Proceeds from loans payable | | | | | 1,701,044 | | | | | | — | | |
Proceeds from convertible notes payable | | | | | 1,250,308 | | | | | | 799,280 | | |
Proceeds from sale of Series A-3 preferred stock | | | | | 428,926 | | | | | | 2,508,300 | | |
Subscription receivable from Series A-3 preferred stock | | | | | 22,677 | | | | | | — | | |
Proceeds from sale of Series CF preferred stock, net of fees | | | | | 309,750 | | | | | | 8,283 | | |
Offering costs | | | | | (461,972) | | | | | | (399,589) | | |
Net cash provided by financing activities | | | | | 2,392,220 | | | | | | 3,318,711 | | |
Net increase (decrease) in cash and cash equivalents | | | | | 535,517 | | | | | | (544,012) | | |
| | | Year Ended December 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Cash and cash equivalents at beginning of year | | | | | 40,469 | | | | | | 584,481 | | |
Cash and cash equivalents at end of year | | | | $ | 575,986 | | | | | $ | 40,469 | | |
Supplemental disclosure of cash flow information: | | | | | | | | | | | | | |
Cash paid for income taxes | | | | $ | — | | | | | $ | — | | |
Cash paid for interest | | | | $ | 264,177 | | | | | $ | 90,000 | | |
Supplemental disclosure of non-cash investing and financing activities: | | | | | | | | | | | | | |
Warrants issued for offering costs | | | | $ | 918 | | | | | $ | 6,600 | | |
Warrants issued with venture debt | | | | $ | 184,191 | | | | | $ | 49,928 | | |
Venture debt issued in exchange of forgiveness of accrued interest | | | | $ | 409,211 | | | | | $ | — | | |
Issuance of promissory note payable in acquisition | | | | $ | 4,500,000 | | | | | $ | — | | |
Issuance of Series B preferred stock in acquisition | | | | $ | 11,000,000 | | | | | $ | — | | |
| | | Fair Value Measurements as of December 31, 2022 Using: | | |||||||||||||||||||||
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | | ||||||||||||
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Warrant liability | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Contingent consideration | | | | | — | | | | | | — | | | | | | 12,098,475 | | | | | | 12,098,475 | | |
Derivative liability | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | $ | — | | | | | $ | — | | | �� | | $ | 12,098,475 | | | | | $ | 12,098,475 | | |
| | | Fair Value Measurements as of December 31, 2021 Using: | | |||||||||||||||||||||
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | | ||||||||||||
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Warrant liability | | | | $ | — | | | | | $ | 18,223 | | | | | $ | — | | | | | $ | 18,223 | | |
Contingent consideration | | | | | — | | | | | | — | | | | | | 12,179,476 | | | | | | 12,179,476 | | |
Derivative liability | | | | | — | | | | | | — | | | | | | 2,294,720 | | | | | | 2,294,720 | | |
| | | | $ | — | | | | | $ | 18,223 | | | | | $ | 14,474,196 | | | | | $ | 14,492,419 | | |
| | | Warrant Liability | | |||
Oustanding as of December 31, 2018 | | | | $ | — | | |
Warrants granted | | | | | 7,700 | | |
Oustanding as of December 31, 2019 | | | | | 7,700 | | |
Warrants granted | | | | | 918 | | |
Change in fair value | | | | | (2,353) | | |
Oustanding as of December 31, 2020 | | | | $ | 6,265 | | |
| | | Warrant Liability | | |||
Outstanding as of December 31, 2020 | | | | $ | 6,265 | | |
Change in fair value | | | | | 11,958 | | |
Outstanding as of December 31, 2021 | | | | | 18,223 | | |
Change in fair value | | | | | (18,223) | | |
Outstanding as of December 31, 2022 | | | | $ | — | | |
| | | Contingent Consideration Liability | | |||
Balance as of December 31, 2020 | | | | $ | — | | |
Initial recognition in connection with acquisition of Harper & Jones | | | | | 3,421,516 | | |
Stock price guarantee per consulting agreement | | | | | 67,000 | | |
Conversion into shares | | | | | (73,500) | | |
Change in fair value | | | | | 8,764,460 | | |
Outstanding as of December 31, 2021 | | | | | 12,179,476 | | |
Repayments to Harper & Jones seller | | | | | (645,304) | | |
Change in fair value | | | | | 564,303 | | |
Outstanding as of December 31, 2022 | | | | $ | 12,098,475 | | |
| | | December 31, | | |||||||||
| | | 2022 | | | 2021 | | ||||||
Bailey | | | | $ | 10,698,475 | | | | | | 7,935,016 | | |
Harper & Jones | | | | | 1,400,000 | | | | | | 4,244,460 | | |
| | | | $ | 12,098,475 | | | | | $ | 12,179,476 | | |
| | | Derivative Liability | | |||
Outstanding as of December 31, 2020 | | | | $ | — | | |
Initial fair value on issuance of convertible note | | | | | 3,204,924 | | |
Change in fair value | | | | | (910,204) | | |
Outstanding as of December 31, 2021 | | | | | 2,294,720 | | |
Initial fair value on issuance of convertible note | | | | | 559,957 | | |
Conversion of underlying notes into common stock | | | | | (1,500,243) | | |
Change in fair value | | | | | (1,354,434) | | |
Outstanding as of December 31, 2022 | | | | $ | — | | |
| | | December 31, | | |||||||||
| | | 2022 | | | 2021 | | ||||||
Raw materials | | | | $ | 1,611,134 | | | | | $ | 292,167 | | |
Work in process | | | | | 888,643 | | | | | | 242,673 | | |
Finished goods | | | | | 2,725,505 | | | | | | 2,220,519 | | |
Inventory | | | | $ | 5,225,282 | | | | | $ | 2,755,358 | | |
| | | December 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Computer equipment | | | | $ | 57,810 | | | | | $ | 57,004 | | |
Furniture and fixtures | | | | | 207,140 | | | | | | 70,108 | | |
Leasehold improvements | | | | | 69,274 | | | | | | 40,351 | | |
| | | | | 334,224 | | | | | | 167,463 | | |
Accumulated depreciation | | | | | (334,224) | | | | | | (97,703) | | |
Property and equipment, net | | | | $ | — | | | | | $ | 69,760 | | |
Software | | | | $ | 278,405 | | | | | $ | 56,450 | | |
Accumulated amortization | | | | | (216,092) | | | | | | (53,617) | | |
Software, net | | | | $ | 62,313 | | | | | $ | 2,833 | | |
| Customer relationships | | | 3 years | |
| | | Year Ended December 31, | | |||||||||
| | | 2022 | | | 2021 | | ||||||
Bailey brand name | | | | $ | 2,182,000 | | | | | $ | 3,400,000 | | |
Harper & Jones brand name | | | | | 1,485,000 | | | | | | — | | |
Total impairment of intangibles | | | | | 3,667,000 | | | | | | 3,400,000 | | |
Bailey goodwill | | | | | 3,321,095 | | | | | | — | | |
Harper & Jones goodwill | | | | | 8,551,237 | | | | | | — | | |
Total impairment of goodwill | | | | | 11,872,332 | | | | | | — | | |
Total impairment | | | | $ | 15,539,332 | | | | | $ | 3,400,000 | | |
| | | December 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Series Seed Preferred Stock (convertible to common stock) | | | | | 20,714,518 | | | | | | 20,714,518 | | |
Series A Preferred Stock (convertible to common stock) | | | | | 5,654,072 | | | | | | 5,654,072 | | |
Series A-2 Preferred Stock (convertible to common stock) | | | | | 5,932,742 | | | | | | 5,932,742 | | |
Series CF Preferred Stock (convertible to common stock) | | | | | 836,331 | | | | | | 126,641 | | |
Series A-3 Preferred Stock (convertible to common stock) | | | | | 9,032,330 | | | | | | 8,223,036 | | |
Series B Preferred Stock (convertible to common stock) | | | | | 20,754,717 | | | | | | — | | |
Common stock warrants | | | | | 14,289,669 | | | | | | 6,530,657 | | |
Preferred stock warrants | | | | | 806,903 | | | | | | 806,903 | | |
Stock options | | | | | 18,173,479 | | | | | | 16,940,861 | | |
Total potentially dilutive shares | | | | | 96,194,761 | | | | | | 64,929,430 | | |
| | | December 31, | | |||||||||
| | | 2022 | | | 2021 | | ||||||
Convertible notes | | | | | 947,867 | | | | | | 47,912 | | |
Series A convertible preferred stock | | | | | 108,000 | | | | | | — | | |
Common stock warrants | | | | | 4,418,320 | | | | | | 35,801 | | |
Stock options | | | | | 38,951 | | | | | | 38,951 | | |
Total potentially dilutive shares | | | | | 5,513,138 | | | | | | 122,664 | | |
| Series B preferred stock | | | $ | 11,000,000 | | | Cash | | | $ | 7,500,000 | | | ||
| Promissory note payable | | | | 4,500,000 | | | Promissory notes payable | | | | 5,500,000 | | | ||
| Purchase price consideration | | | $ | 15,500,000 | | | Common stock | | | | 1,000,000 | | | ||
| Purchase price consideration | | | $ | 14,000,000 | | |
| | | Purchase Price Allocation | | |||
Cash and cash equivalents | | | | $ | 252,697 | | |
Accounts receivable, net | | | | | 63,956 | | |
Due from factor, net | | | | | 387,884 | | |
Inventory | | | | | 2,941,755 | | |
Prepaid expenses and other current assets | | | | | 32,629 | | |
Property, equipment and software, net | | | | | 48,985 | | |
Goodwill | | | | | 3,711,322 | | |
Intangible assets | | | | | 7,403,800 | | |
Accounts payable | | | | | (615,706) | | |
Accrued expenses and other liabilities | | | | | (227,321) | | |
Purchase price consideration | | | | $ | 14,000,000 | | |
| Cash | | | | $ | 500,000 | | |
| Common stock | | | | | 8,025,542 | | |
| Contingent consideration | | | | | 3,421,516 | | |
| Purchase price consideration | | | | $ | 11,947,058 | | |
| | | Purchase Price Allocation | | |||
Cash and cash equivalents | | | | $ | 24,335 | | |
Accounts receivable, net | | | | | 49,472 | | |
Due from factor, net | | | | | — | | |
Inventory | | | | | 77,159 | | |
Prepaid expenses and other current assets | | | | | 69,715 | | |
Property, equipment and software, net | | | | | 83,986 | | |
Goodwill | | | | | 9,681,548 | | |
Intangible assets | | | | | 3,936,030 | | |
Accounts payable | | | | | (51,927) | | |
Accrued expenses and other liabilities | | | | | (107,957) | | |
Purchase price consideration | | | | $ | 11,947,058 | | |
| | | Purchase Price Allocation | | |||
Cash and cash equivalents | | | | $ | 106,913 | | |
Accounts receivable | | | | | 37,479 | | |
Due from/(to) factor | | | | | (312,063) | | |
Inventory | | | | | 3,303,660 | | |
Prepaid expenses | | | | | 165,856 | | |
Deposits | | | | | 187,493 | | |
Property, equipment and software | | | | | 1,215,748 | | |
Goodwill | | | | | 6,479,218 | | |
Intangible assets (Note 6) | | | | | 8,600,000 | | |
Accounts payable | | | | | (3,397,547) | | |
Accrued expenses and other liabilities | | | | | (886,757) | | |
Purchase price consideration | | | | $ | 15,500,000 | | |
| Cash | | | | $ | 5,000,000 | | |
| Common stock | | | | | 3,403,196 | | |
| Purchase price consideration | | | | $ | 8,403,196 | | |
| | | Purchase Price Allocation | | |||
Cash and cash equivalents | | | | | 32,700 | | |
Accounts receivable, net | | | | | 154,678 | | |
Due from factor, net | | | | | 371,247 | | |
Inventory | | | | | 603,625 | | |
Prepaid expenses and other current assets | | | | | 7,970 | | |
Deposits | | | | | 9,595 | | |
Property, equipment and software, net | | | | | — | | |
Goodwill | | | | | 2,104,056 | | |
Intangible assets | | | | | 5,939,140 | | |
Accounts payable | | | | | (374,443) | | |
Accrued expenses and other liabilities | | | | | (445,372) | | |
| | | | $ | 8,403,196 | | |
| | | Year Ended December 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Net revenues | | | | $ | 7,259,260 | | | | | $ | 30,133,934 | | |
Net loss | | | | $ | (12,786,695) | | | | | $ | (11,868,423) | | |
Net loss per common share | | | | $ | (1.23) | | | | | $ | (1.14) | | |
| | | December 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Outstanding receivables: | | | | | | | | | | | | | |
Without recourse | | | | $ | 151,158 | | | | | $ | — | | |
With recourse | | | | | 42,945 | | | | | | — | | |
Advances | | | | | 56,246 | | | | | | — | | |
Credits due customers | | | | | (40,316) | | | | | | — | | |
| | | | $ | 210,033 | | | | | $ | — | | |
| | | Gross Amount | | | Accumulated Amortization | | | Carrying Value | | |||||||||
Amortized: | | | | | | | | | | | | | | | | | | | |
Customer relationships | | | | $ | 1,100,000 | | | | | $ | (320,833) | | | | | $ | 779,167 | | |
| | | | | 1,100,000 | | | | | | (320,833) | | | | | | 779,167 | | |
Indefinite-lived: | | | | | | | | | | | | | | | | | | | |
Brand name | | | | | 6,715,500 | | | | | | — | | | | | | 6,715,500 | | |
| | | | $ | 7,815,500 | | | | | $ | (320,833) | | | | | $ | 7,494,667 | | |
| Year Ending December 31, | | | | | | | |
| 2021 | | | | | 366,667 | | |
| 2022 | | | | | 366,667 | | |
| 2023 | | | | | 45,833 | | |
| | | | | $ | 779,167 | | |
| | | December 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Accrued expenses | | | | $ | 92,074 | | | | | $ | 188,341 | | |
Reserve for returns | | | | | 5,229 | | | | | | 100,000 | | |
Payroll related liabilities | | | | | 843,704 | | | | | | 412,155 | | |
Sales tax liability | | | | | 196,410 | | | | | | 156,707 | | |
Other liabilities | | | | | 108,230 | | | | | | 264,114 | | |
| | | | $ | 1,245,646 | | | | | $ | 1,121,317 | | |
| | | Year Ended December 31, | | |||
| | | 2020 | | | 2019 | |
Risk Free Interest Rate | | | 0.59 – 1.59% | | | 1.47 – 2.49% | |
Expected Dividend Yield | | | 0.00% | | | 0.00% | |
Expected Volatility | | | 58.0 – 100% | | | 58.0 – 100% | |
Expected Life (years) | | | 10.00 | | | 5.00 | |
| | | Common Stock Warrants | | | Weighted Average Exercise Price | | ||||||
Outstanding – December 31, 2018 | | | | | 4,197,745 | | | | | $ | 0.16 | | |
Granted | | | | | 2,342,912 | | | | | | 0.21 | | |
Exercised | | | | | — | | | | | | — | | |
Forfeited | | | | | (10,000) | | | | | | — | | |
Outstanding – December 31, 2019 | | | | | 6,530,657 | | | | | $ | 0.18 | | |
Granted | | | | | 7,759,012 | | | | | | 0.16 | | |
Exercised | | | | | — | | | | | | — | | |
Forfeited | | | | | — | | | | | | — | | |
Outstanding – December 31, 2020 | | | | | 14,289,669 | | | | | $ | 0.17 | | |
Exercisable at December 31, 2020 | | | | | 14,289,669 | | | | | $ | 0.17 | | |
| | | Preferred Stock Warrants | | | Weighted Average Exercise Price | | ||||||
Outstanding – December 31, 2018 | | | | | 545,473 | | | | | $ | 0.47 | | |
Granted | | | | | 261,430 | | | | | | 0.53 | | |
Exercised | | | | | — | | | | | | — | | |
Forfeited | | | | | — | | | | | | — | | |
Outstanding – December 31, 2019 | | | | | 806,903 | | | | | $ | 0.49 | | |
| | | Preferred Stock Warrants | | | Weighted Average Exercise Price | | ||||||
Exercised | | | | | — | | | | | | — | | |
Forfeited | | | | | — | | | | | | — | | |
Outstanding – December 31, 2020 | | | | | 806,903 | | | | | $ | 0.49 | | |
Exercisable at December 31, 2020 | | | | | 806,903 | | | | | $ | 0.49 | | |
|
| | | Options | | | Weighted Average Exercise Price | | ||||||
Outstanding – December 31, 2018 | | | | | 17,751,416 | | | | | $ | 0.15 | | |
Granted | | | | | 2,633,208 | | | | | | 0.21 | | |
Exercised | | | | | — | | | | | | — | | |
Forfeited | | | | | (3,443,764) | | | | | | — | | |
Outstanding – December 31, 2019 | | | | | 16,940,860 | | | | | $ | 0.16 | | |
Granted | | | | | 1,432,619 | | | | | | 0.06 | | |
Exercised | | | | | — | | | | | | — | | |
Forfeited | | | | | (200,000) | | | | | | 0.21 | | |
Outstanding – December 31, 2020 | | | | | 18,173,479 | | | | | $ | 0.15 | | |
Exercisable at December 31, 2020 | | | | | 13,764,922 | | | | | $ | 0.15 | | |
Weighted average grant date fair value of options granted during period | | | | | | | | | | $ | 0.032 | | |
Weighted average duration (years) to expiration of outstanding options at December 31, 2020 | | | | | | | | | | | 6.02 | | |
| | | Year Ended December 31, | | |||
| | | 2020 | | | 2019 | |
Risk Free Interest Rate | | | 0.42% – 0.51% | | | 1.59% – 2.55% | |
Expected Dividend Yield | | | 0% | | | 0% | |
Expected Volatility | | | 58% | | | 58% | |
Expected Life (years) | | | 6.25 | | | 6.25 | |
Weighted Average fair value of stock options granted | | | $0.032 | | | $0.0164 | |
| | | December 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Deferred tax assets: | | | | | | | | | | | | | |
Net operating loss carryforwards | | | | $ | 9,134,447 | | | | | $ | 6,060,102 | | |
Stock-based compensation | | | | | 40,467 | | | | | | 36,829 | | |
| | | December 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Deferred tax liabilities: | | | | | | | | | | | | | |
Depreciation timing differences | | | | | (5,103) | | | | | | (5,103) | | |
Other | | | | | (41,198) | | | | | | (44,711) | | |
Valuation allowance | | | | | (9,128,614) | | | | | | (6,047,117) | | |
Net deferred tax assets | | | | $ | — | | | | | $ | — | | |
|
| | | 2019 | | | 2018 | | ||||||
Assets | | | | | | | | | |||||
Current assets: | | | | | | | | | | | | | |
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | | | | $ | 358,726 | | | | | $ | 962,313 | | |
Due from factor, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | | | | | — | | | | | | 1,312,743 | | |
Accounts receivable, net of allowance of $155,973 and $257,140 . . . . . . . . . . | | | | | 261,190 | | | | | | 456,510 | | |
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | | | | | 3,038,185 | | | | | | 3,643,298 | | |
Prepaid and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | | | | | 178,888 | | | | | | 236,746 | | |
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | | | | | 3,836,989 | | | | | | 6,611,610 | | |
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | | | | | 1,265,152 | | | | | | 1,242,158 | | |
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | | | | | 151,049 | | | | | | 240,919 | | |
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | | | | $ | 5,253,190 | | | | | $ | 8,094,687 | | |
Liabilities and members’ equity (deficit) | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | | | | $ | 3,462,200 | | | | | $ | 2,593,733 | | |
Due to factor, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | | | | | 101,251 | | | | | | — | | |
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | | | | | 595,611 | | | | | | 545,176 | | |
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | | | | | 4,159,062 | | | | | | 3,138,909 | | |
Deferred rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | | | | | 264,683 | | | | | | 184,461 | | |
Notes payable – related party member . . . . . . . . . . . . . . . . . . . . . . . . . . . . | | | | | 850,000 | | | | | | — | | |
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | | | | | 5,273,745 | | | | | | 3,323,370 | | |
Members’ equity (deficit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | | | | | (20,555) | | | | | | 4,771,317 | | |
Total liabilities and members’ equity (deficit) . . . . . . . . . . . . . . . . . . . . . . | | | | $ | 5,253,190 | | | | | $ | 8,094,687 | | |
| | | 2019 | | | 2018 | | ||||||
Net sales | | | | $ | 27,099,718 | | | | | $ | 29,037,497 | | |
Cost of sales | | | | | 12,663,514 | | | | | | 13,451,654 | | |
Gross profit | | | | | 14,436,204 | | | | | | 15,585,843 | | |
Operating expenses: | | | | | | | | | | | | | |
Design, selling, and shipping | | | | | 4,535,276 | | | | | | 4,702,589 | | |
General and administrative | | | | | 14,524,832 | | | | | | 13,054,218 | | |
Total operating expenses | | | | | 19,060,108 | | | | | | 17,756,807 | | |
Loss from operations | | | | | (4,623,904) | | | | | | (2,170,964) | | |
Other expense: | | | | | | | | | | | | | |
Loss on disposal of property and equipment | | | | | 49,558 | | | | | | 506,280 | | |
Interest expense, net | | | | | 103,520 | | | | | | 25,319 | | |
Total other expense | | | | | 153,078 | | | | | | 531,599 | | |
Loss before provision for income taxes | | | | | (4,776,982) | | | | | | (2,702,563) | | |
Income tax expense | | | | | 14,890 | | | | | | 13,390 | | |
Net Loss | | | | $ | (4,791,872) | | | | | $ | (2,715,953) | | |
| | | Members’ Equity (Deficit) | | |||
December 31, 2017 | | | | $ | 7,783,328 | | |
Distributions | | | | | (296,058) | | |
Net loss | | | | | (2,715,953) | | |
December 31, 2018 | | | | | 4,771,317 | | |
Net loss | | | | | (4,791,872) | | |
December 31, 2019 | | | | $ | (20,555) | | |
| | | 2019 | | | 2018 | | ||||||
| | | (restated) | | | | | | | | |||
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | | | | |
Net loss | | | | $ | (4,791,872) | | | | | $ | (2,715,953) | | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | | | |
Depreciation | | | | | 484,776 | | | | | | 358,526 | | |
Decrease in open credit reserve | | | | | 102,667 | | | | | | (395,488) | | |
Loss on sale of property and equipment | | | | | 49,558 | | | | | | 506,280 | | |
Changes in operating assets and liabilities: | | | | | | | | | | | | | |
Factor receivable | | | | | 321,888 | | | | | | 1,143,896 | | |
Accounts receivable | | | | | 195,320 | | | | | | (81,099) | | |
Inventory | | | | | 605,113 | | | | | | (171,393) | | |
Prepaid expenses and other current assets | | | | | 57,858 | | | | | | 212,700 | | |
Other assets | | | | | 89,870 | | | | | | (9,500) | | |
Accounts payable | | | | | 868,467 | | | | | | 685,642 | | |
Accrued liabilities | | | | | 50,435 | | | | | | (17,460) | | |
Deferred rent | | | | | 80,222 | | | | | | (139,901) | | |
Net cash used in operating activities | | | | | (1,886,298) | | | | | | (623,750) | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | | | | | |
Purchase of property and equipment | | | | | (557,328) | | | | | | (185,970) | | |
Net cash used in operating activities | | | | | (557,328) | | | | | | (185,970) | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | | | | |
Distributions to members | | | | | — | | | | | | (296,058) | | |
Proce eds – notes payable – related party member | | | | | 850,000 | | | | | | — | | |
Advances from Factor | | | | | 990,039 | | | | | | 645,572 | | |
Net cash provided by financing activities | | | | | 1,840,039 | | | | | | 349,514 | | |
Decrease in cash and cash equivalents | | | | | (603,587) | | | | | | (460,206) | | |
Cash and cash equivalents, beginning of year | | | | | 962,313 | | | | | | 1,422,519 | | |
Cash and cash equivalents, end of year | | | | $ | 358,726 | | | | | $ | 962,313 | | |
Supplemental disclosures of cash flow information: | | | | | | | | | | | | | |
Cash paid for interest | | | | $ | 91,887 | | | | | $ | 35,127 | | |
Cash paid for income taxes | | | | $ | 14,890 | | | | | $ | 13,390 | | |
| | | Year Ended December 31, | | |||||||||
| | | 2022 | | | 2021 | | ||||||
Net revenues | | | | $ | 28,519,261 | | | | | $ | 34,635,426 | | |
Net loss | | | | $ | (42,001,415) | | | | | $ | (33,171,473) | | |
Net loss per common share | | | | $ | (54.46) | | | | | $ | (434.81) | | |
Due to/from factor consist of the following at December 31, : | | | 2019 | | | 2018 | | ||||||
Outstanding receivables: | | | | | | | | | | | | | |
Without recourse | | | | $ | 2,058,298 | | | | | $ | 2,339,588 | | |
With recourse | | | | | 5,001 | | | | | | 45,599 | | |
Advances | | | | | (1,891,348) | | | | | | (901,309) | | |
Credits due customers | | | | | (273,202) | | | | | | (171,135) | | |
| | | | $ | (101,251) | | | | | $ | 1,312,743 | | |
| | | December 31, | | |||||||||
| | | 2022 | | | 2021 | | ||||||
Outstanding receivables: | | | | | | | | | | | | | |
Without recourse | | | | $ | 564,548 | | | | | $ | 579,295 | | |
With recourse | | | | | 352,379 | | | | | | 361,584 | | |
Advances | | | | | 118,521 | | | | | | 121,617 | | |
Credits due customers | | | | | (196,048) | | | | | | (77,208) | | |
| | | | $ | 839,400 | | | | | $ | 985,288 | | |
Inventories consist of the following at December 31,: | | | 2019 | | | 2018 | | ||||||
Finished goods | | | | $ | 2,327,882 | | | | | $ | 2,766,476 | | |
Work-in process | | | | | 193,873 | | | | | | 351,246 | | |
Raw materials | | | | | 516,430 | | | | | | 525,576 | | |
| | | | $ | 3,038,185 | | | | | $ | 3,643,298 | | |
Property and equipment consists of the following at December 31,: | | | 2019 | | | 2018 | | ||||||
Machinery and equipment | | | | $ | 265,618 | | | | | $ | 312,846 | | |
Furniture and fixtures | | | | | 1,064,698 | | | | | | 962,218 | | |
Leasehold improvements | | | | | 1,307,976 | | | | | | 986,392 | | |
| | | | | 2,638,292 | | | | | | 2,261,456 | | |
Less accumulated depreciation and amortization | | | | | (1,373,140) | | | | | | (1,019,298) | | |
| | | | $ | 1,265,152 | | | | | $ | 1,242,158 | | |
| | | Bailey | | | Harper & Jones | | | Stateside | | | Sundry | | | Total | | |||||||||||||||
Balances at December 31, 2020 | | | | $ | 6,479,218 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 6,479,218 | | |
Business combinations | | | | | — | | | | | | 9,681,548 | | | | | | 2,104,056 | | | | | | — | | | | | | 11,785,604 | | |
Impairment | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Balances at December 31, 2021 | | | | | 6,479,218 | | | | | | 9,681,548 | | | | | | 2,104,056 | | | | | | — | | | | | | 18,264,822 | | |
Business combination | | | | | — | | | | | | — | | | | | | — | | | | | | 3,711,322 | | | | | | 3,711,322 | | |
Impairment | | | | | (3,321,095) | | | | | | (8,551,237) | | | | | | — | | | | | | — | | | | | | (11,872,332) | | |
Balances at December 31, 2022 | | | | $ | 3,158,123 | | | | | $ | 1,130,311 | | | | | $ | 2,104,056 | | | | | $ | 3,711,322 | | | | | $ | 10,103,812 | | |
| Year Ending December 31, | | | | | | | |
| 2020 | | | | $ | 809,939 | | |
| 2021 | | | | | 795,067 | | |
| 2022 | | | | | 821,630 | | |
| 2023 | | | | | 456,202 | | |
| 2024 | | | | | 394,241 | | |
| Thereafter | | | | | 1,238,998 | | |
| | | | | $ | 4,516,077 | | |
| | | December 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
ASSETS | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash and cash equivalents | | | | $ | 51,315 | | | | | $ | 18,509 | | |
Accounts receivable, net | | | | | 38,689 | | | | | | 31,995 | | |
Inventory | | | | | 73,690 | | | | | | 42,643 | | |
Other current assets | | | | | 54,423 | | | | | | 129,162 | | |
Total current assets | | | | | 218,117 | | | | | | 222,309 | | |
Fixed assets, net | | | | | 138,040 | | | | | | 221,686 | | |
Intangible assets, net | | | | | 2,034 | | | | | | 2,206 | | |
Other assets | | | | | 4,416 | | | | | | 15,004 | | |
Total assets | | | | $ | 362,607 | | | | | $ | 461,205 | | |
LIABILITIES AND MEMBERS’ DEFICIT | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable | | | | $ | 187,516 | | | | | $ | 119,068 | | |
Accrued liabilities | | | | | 31,771 | | | | | | 21,297 | | |
Other current liabilities | | | | | 68,335 | | | | | | 66,437 | | |
Note payable, current portion | | | | | 60,941 | | | | | | 147,562 | | |
Related party notes payable, current portion | | | | | — | | | | | | 75,000 | | |
Deferred rent | | | | | 19,432 | | | | | | 23,161 | | |
Deferred revenue | | | | | 264,802 | | | | | | 286,255 | | |
Total current liabilities | | | | | 632,797 | | | | | | 738,780 | | |
Related party notes payable, net of current portion | | | | | 635,000 | | | | | | 425,000 | | |
Notes payable, net of current portion | | | | | 276,754 | | | | | | 49,441 | | |
Total liabilities | | | | | 1,544,551 | | | | | | 1,213,221 | | |
Commitments and contingencies (Note 8) | | | | | | | | | | | | | |
Members’ deficit: | | | | | | | | | | | | | |
Class A members units, $0.00001 par value, 100 authorized; 100 outstanding at both December 31, 2020 and 2019 | | | | | — | | | | | | — | | |
Class B members units, $0.00001 par value, 100 authorized; 87 and 100 outstanding at December 31, 2020 and 2019, respectively | | | | | — | | | | | | — | | |
Additional paid-in capital | | | | | 102,083 | | | | | | 112,565 | | |
Accumulated deficit | | | | | (1,284,027) | | | | | | (864,581) | | |
Total members’ deficit | | | | | (1,181,944) | | | | | | (752,016) | | |
Total liabilities and members’ deficit | | | | $ | 362,607 | | | | | $ | 461,205 | | |
| | | Year Ended December 31, | | | | |||||||||||||
| | | 2020 | | | 2019 | | | | ||||||||||
Revenues | | | | $ | 2,542,721 | | | | | $ | 3,325,762 | | | | | ||||
Cost of goods sold | | | | | 897,873 | | | | | | 1,202,819 | | | | | ||||
Gross profit | | | | | 1,644,848 | | | | | | 2,122,943 | | | | | ||||
Operating expenses: | | | | | | | | | | | | | | | | | | | |
General and administrative | | | | | 1,044,397 | | | | | | 717,901 | | | | | ||||
Sales and marketing | | | | | 1,163,124 | | | | | | 1,577,478 | | | | | ||||
Total operating expenses | | | | | 2,207,521 | | | | | | 2,295,379 | | | | | ||||
Loss from operations | | | | | (562,673) | | | | | | (172,436) | | | | | ||||
Other income (expense): | | | | | | | | | | | | | | | | | | | |
Interest expense | | | | | (92,270) | | | | | | (53,955) | | | | | ||||
Gain on forgiveness of debt | | | | | 225,388 | | | | | | — | | | | | ||||
Other income | | | | | 10,109 | | | | | | 50,000 | | | | | ||||
Total other income (expense), net | | | | | 143,227 | | | | | | (3,955) | | | | | ||||
Provision for income taxes | | | | | — | | | | | | — | | | | | ||||
Net loss | | | | $ | (419,446) | | | | | $ | (176,391) | | | | |
| | | Class A Members’ Units | | | Class B Members’ Units | | | Additional Paid-in Capital | | | Accumulated Deficit | | | Total Members’ Deficit | | |||||||||||||||||||||||||||
| | | Shares | | | Amount | | | Shares | | | Amount | | ||||||||||||||||||||||||||||||
Balances at December 31, 2018 | | | | | 100 | | | | | $ | — | | | | | | 100 | | | | | $ | — | | | | | $ | 112,565 | | | | | $ | (688,190) | | | | | $ | (575,625) | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (176,391) | | | | | | (176,391) | | |
Balances at December 31, 2019 | | | | | 100 | | | | | $ | — | | | | | | 100 | | | | | $ | — | | | | | $ | 112,565 | | | | | $ | (864,581) | | | | | $ | (752,016) | | |
Contributions | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 771 | | | | | | — | | | | | | 771 | | |
Repurchase of members’ units | | | | | — | | | | | | — | | | | | | (13) | | | | | | — | | | | | | (11,253) | | | | | | — | | | | | | (11,253) | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (419,446) | | | | | | (419,446) | | |
Balances at December 31, 2020 | | | | | 100 | | | | | $ | — | | | | | | 87 | | | | | $ | — | | | | | $ | 102,083 | | | | | $ | (1,284,027) | | | | | $ | (1,181,944) | | |
| | | Year Ended December 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Cash flows from operating activities: | | | | | | | | | | | | | |
Net loss | | | | $ | (419,446) | | | | | $ | (176,391) | | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | | | |
Depreciation and amortization | | | | | 149,568 | | | | | | 82,422 | | |
Gain on forgiveness of note payable | | | | | (225,388) | | | | | | — | | |
Bad debt expense | | | | | 42,078 | | | | | | — | | |
Changes in operating assets and liabilities: | | | | | | | | | | | | | |
Accounts receivable, net | | | | | (48,772) | | | | | | 968 | | |
Inventory | | | | | (31,047) | | | | | | (17,577) | | |
Deposits | | | | | — | | | | | | (5,438) | | |
Other assets | | | | | 85,327 | | | | | | (66,659) | | |
Accounts payable | | | | | 68,448 | | | | | | 79,266 | | |
Accrued expenses and other current liabilities | | | | | 12,372 | | | | | | (12,130) | | |
Deferrent rent | | | | | (3,729) | | | | | | 12,784 | | |
Deferred revenue | | | | | (21,453) | | | | | | 124,162 | | |
Net cash provided by (used in) operating activities | | | | | (392,042) | | | | | | 21,407 | | |
Cash flows from investing activities: | | | | | | | | | | | | | |
Purchases of property and equipment and intangibles | | | | | (65,750) | | | | | | (254,437) | | |
Net cash used in investing activities | | | | | (65,750) | | | | | | (254,437) | | |
Cash flows from financing activities: | | | | | | | | | | | | | |
Proceeds from related party notes payable | | | | | 210,000 | | | | | | 200,000 | | |
Proceeds from notes payable | | | | | 382,600 | | | | | | 200,000 | | |
Principal payments on line of credit | | | | | — | | | | | | (160,000) | | |
Proceeds from line of credit | | | | | 125,000 | | | | | | — | | |
Principal repayments of notes payable | | | | | (141,520) | | | | | | — | | |
Principal payments on related party notes payable | | | | | (75,000) | | | | | | (2,998) | | |
Member contributions | | | | | 771 | | | | | | — | | |
Repurchase of members’ units | | | | | (11,253) | | | | | | — | | |
Net cash provided by financing activities | | | | | 490,598 | | | | | | 237,002 | | |
Net increase in cash and cash equivalents | | | | | 32,806 | | | | | | 3,972 | | |
Cash and cash equivalents at beginning of year | | | | | 18,509 | | | | | | 14,537 | | |
Cash and cash equivalents at end of year | | | | $ | 51,315 | | | | | $ | 18,509 | | |
Supplemental disclosure of cash flow information: | | | | | | | | | | | | | |
Cash paid for income taxes | | | | $ | — | | | | | $ | — | | |
Cash paid for interest | | | | $ | 82,270 | | | | | $ | 53,955 | | |
Non cash investing and financing activities: | | | | ||||||||||
Conversion of line of credit to note payable | | | | $ | 125,000 | | | | | | — | | |
December 31, 2022 | | | Gross Amount | | | Accumulated Amortization | | | Carrying Value | | |||||||||
Amortized: | | | | | | | | | | | | | | | | | | | |
Customer relationships | | | | $ | 11,452,230 | | | | | | (3,600,607) | | | | | $ | 7,851,623 | | |
| | | | | 11,452,230 | | | | | | (3,600,607) | | | | | | 7,851,623 | | |
Indefinite-lived: | | | | | | | | | | | | | | | | | | | |
Brand name | | | | $ | 6,575,880 | | | | | | — | | | | | | 6,575,880 | | |
| | | | $ | 18,028,110 | | | | | $ | (3,600,607) | | | | | $ | 14,427,503 | | |
December 31, 2021 | | | Gross Amount | | | Accumulated Amortization | | | Carrying Value | | |||||||||
Amortized: | | | | | | | | | | | | | | | | | | | |
Customer relationships | | | | $ | 6,453,750 | | | | | | (1,449,357) | | | | | $ | 5,004,393 | | |
| | | | | 6,453,750 | | | | | | (1,449,357) | | | | | | 5,004,393 | | |
Indefinite-lived: | | | | | | | | | | | | | | | | | | | |
Brand name | | | | $ | 7,836,920 | | | | | | — | | | | | | 7,836,920 | | |
| | | | $ | 14,290,670 | | | | | $ | (1,449,357) | | | | | $ | 12,841,313 | | |
Year Ending December 31, | | | | | | | |
2023 | | | | | 3,496,577 | | |
2024 | | | | | 2,688,886 | | |
2025 | | | | | 1,666,160 | | |
| | | | $ | 7,851,623 | | |
| | | December 31, | | |||||||||
| | | 2022 | | | 2021 | | ||||||
Accrued expenses | | | | $ | 705,135 | | | | | $ | 213,740 | | |
Reserve for returns | | | | | 307,725 | | | | | | 33,933 | | |
Payroll related liabilities | | | | | 2,974,361 | | | | | | 1,204,665 | | |
Sales tax liability | | | | | 339,843 | | | | | | 268,723 | | |
Due to seller | | | | | — | | | | | | 396,320 | | |
Other liabilities | | | | | 130,050 | | | | | | 119,764 | | |
| | | | $ | 4,457,115 | | | | | $ | 2,237,145 | | |
| | | Principal | | | Unamortized Debt Discount | | | Convertible Note Payable, Net | | |||||||||
Balance, December 31, 2020 | | | | $ | 100,000 | | | | | $ | — | | | | | $ | 100,000 | | |
Issuance of Oasis note, net of issuance costs | | | | | 5,265,000 | | | | | | (715,000) | | | | | | 4,550,000 | | |
Issuance of FirstFire First note, net of issuance costs | | | | | 1,575,000 | | | | | | (315,000) | | | | | | 1,260,000 | | |
Issuance of Second FirstFire note, net of issuance costs | | | | | 2,625,000 | | | | | | (530,000) | | | | | | 2,095,000 | | |
Derivative liability in connection with notes | | | | | — | | | | | | (3,204,924) | | | | | | (3,204,924) | | |
Amortization of debt discount | | | | | — | | | | | | 801,538 | | | | | | 801,538 | | |
Balance, December 31, 2021 | | | | | 9,565,000 | | | | | | (3,963,386) | | | | | | 5,601,614 | | |
Proceeds from issuance of notes | | | | | 8,943,750 | | | | | | (1,992,500) | | | | | | 6,951,250 | | |
Repayments of notes | | | | | (4,943,750) | | | | | | — | | | | | | (4,943,750) | | |
Conversion of notes into common stock | | | | | (9,465,000) | | | | | | — | | | | | | (9,465,000) | | |
Warrant and common shares issued with convertible notes | | | | | — | | | | | | (1,368,741) | | | | | | (1,368,741) | | |
Derivative liability in connection with notes | | | | | — | | | | | | (559,957) | | | | | | (559,957) | | |
Amortization of debt discount | | | | | — | | | | | | 6,506,384 | | | | | | 6,506,384 | | |
Balance, December 31, 2022 | | | | $ | 4,100,000 | | | | | $ | (1,378,200) | | | | | $ | 2,721,800 | | |
| | | Common Stock Warrants | | | Weighted Average Exercise Price | | ||||||
Outstanding – December 31, 2020 | | | | | 9,146 | | | | | $ | 266 | | |
Granted | | | | | 30,120 | | | | | | 458 | | |
Conversion of preferred stock warrants upon IPO | | | | | 516 | | | | | | 766 | | |
Exercised | | | | | (3,869) | | | | | | 457 | | |
Forfeited | | | | | (112) | | | | | | 766 | | |
Outstanding – December 31, 2021 | | | | | 35,801 | | | | | $ | 412 | | |
Granted | | | | | 6,032,700 | | | | | | 5.61 | | |
Exercised | | | | | (1,650,181) | | | | | | 5.25 | | |
Forfeited | | | | | — | | | | | | — | | |
Outstanding – December 31, 2022 | | | | | 4,418,320 | | | | | $ | 8.37 | | |
Exercisable at December 31, 2021 | | | | | 35,801 | | | | | $ | 412 | | |
Exercisable at December 31, 2022 | | | | | 4,281,956 | | | | | $ | 8.42 | | |
| | | Options | | | Weighted Average Exercise Price | | ||||||
Outstanding – December 31, 2020 | | | | | 11,631 | | | | | $ | 234 | | |
Granted | | | | | 27,320 | | | | | | 415 | | |
Exercised | | | | | — | | | | | | — | | |
Forfeited | | | | | — | | | | | | — | | |
Outstanding – December 31, 2021 | | | | | 38,951 | | | | | $ | 362 | | |
Granted | | | | | — | | | | | | — | | |
Exercised | | | | | — | | | | | | — | | |
Forfeited | | | | | — | | | | | | — | | |
Outstanding – December 31, 2022 | | | | | 38,951 | | | | | $ | 362 | | |
Exercisable at December 31, 2021 | | | | | 31,646 | | | | | $ | 359 | | |
Exercisable at December 31, 2022 | | | | | 34,713 | | | | | $ | 405 | | |
Weighted average duration (years) to expiration of outstanding options at December 31, 2022 | | | | | 7.00 | | | | | | | | |
| | | Year Ended December 31, | | ||||||
| | | 2022 | | | 2021 | | |||
Risk Free Interest Rate | | | | | n/a | | | | 0.34% – 0.85% | |
Expected Dividend Yield | | | | | n/a | | | | 0.00% | |
Expected Volatility | | | | | n/a | | | | 58.00% | |
Expected Life (years) | | | | | n/a | | | | 5.18 | |
| | | December 31, | | |||||||||
| | | 2022 | | | 2021 | | ||||||
Deferred tax assets: | | | | | | | | | | | | | |
Net operating loss carryforwards | | | | $ | 16,733,582 | | | | | $ | 13,108,371 | | |
Deferred tax liabilities: | | | | | | | | | | | | | |
Depreciation timing differences | | | | | — | | | | | | (5,103) | | |
Valuation allowance | | | | | (16,733,582) | | | | | | (13,103,268) | | |
Net deferred tax assets | | | | $ | — | | | | | $ | — | | |
| | | September 30, 2022 | | | December 31, 2021 | | ||||||
ASSETS | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash | | | | $ | 762,607 | | | | | $ | 417,235 | | |
Accounts receivable, net of allowance | | | | | 238,779 | | | | | | 124,342 | | |
Due from factor | | | | | 416,226 | | | | | | 590,022 | | |
Inventory | | | | | 3,207,105 | | | | | | 4,917,128 | | |
Prepaid expenses and other current assets | | | | | 170,602 | | | | | | 219,902 | | |
Total current assets | | | | | 4,795,319 | | | | | | 6,268,628 | | |
Fixed assets, net | | | | | 112,602 | | | | | | 161,954 | | |
Deposits | | | | | 9,612 | | | | | | 19,742 | | |
Total assets | | | | $ | 4,917,533 | | | | | $ | 6,450,324 | | |
LIABILITIES AND MEMBERS’ EQUITY | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable | | | | $ | 1,345,197 | | | | | $ | 1,142,671 | | |
Accrued liabilities | | | | | 490,396 | | | | | | 773,274 | | |
Loan payable, related party | | | | | 495,000 | | | | | | — | | |
Total liabilities | | | | | 2,330,593 | | | | | | 1,915,945 | | |
Commitments and contingencies (Note 7) | | | | | | | | | | | | | |
Members’ equity | | | | | 2,586,939 | | | | | | 4,534,379 | | |
Total members’ equity | | | | | 2,586,939 | | | | | | 4,534,379 | | |
Total liabilities and members’ equity | | | | $ | 4,917,533 | | | | | $ | 6,450,324 | | |
| | | Nine Months Ended September 30, | | |||||||||
| | | 2022 | | | 2021 | | ||||||
Net revenues | | | | $ | 11,868,420 | | | | | $ | 18,151,326 | | |
Cost of goods sold | | | | | 8,026,234 | | | | | | 10,890,796 | | |
Gross profit | | | | | 3,842,186 | | | | | | 7,260,530 | | |
Operating expenses: | | | | | | | | | | | | | |
General and administrative | | | | | 2,682,642 | | | | | | 2,286,956 | | |
Distribution | | | | | 731,545 | | | | | | 863,185 | | |
Sales and marketing | | | | | 2,260,763 | | | | | | 3,168,990 | | |
Total operating expenses | | | | | 5,674,950 | | | | | | 6,319,131 | | |
Income (loss) from operations | | | | | (1,832,764) | | | | | | 941,399 | | |
Other income (expense), net | | | | | | | | | | | | | |
Other income | | | | | — | | | | | | 689,171 | | |
Interest expense | | | | | (43,876) | | | | | | (50,510) | | |
Total other income (expense), net | | | | | (43,876) | | | | | | 638,661 | | |
Provision for income taxes | | | | | 800 | | | | | | 800 | | |
Net income (loss) | | | | $ | (1,877,440) | | | | | $ | 1,579,260 | | |
| | | Members’ Equity | | |||
Balances at December 31, 2020 | | | | $ | 4,630,468 | | |
Distributions | | | | | (1,780,000) | | |
Net income | | | | | 1,579,260 | | |
Balances at September 30, 2021 | | | | $ | 4,429,728 | | |
Balances at December 31, 2021 | | | | $ | 4,534,379 | | |
Distributions | | | | | (70,000) | | |
Net loss | | | | | (1,877,440) | | |
Balances at September 30, 2022 | | | | $ | 2,586,939 | | |
| | | Nine Months Ended September 30, | | |||||||||
| | | 2022 | | | 2021 | | ||||||
Cash flows from operating activities: | | | | | | | | | | | | | |
Net income (loss) | | | | $ | (1,877,440) | | | | | $ | 1,579,260 | | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | | | | | | | | | | | |
Depreciation and amortization | | | | | 40,500 | | | | | | 43,200 | | |
Bad debt | | | | | — | | | | | | 7,068 | | |
Other income – PPP forgiveness | | | | | — | | | | | | (689,171) | | |
Changes in operating assets and liabilities: | | | | | | | | | | | | | |
Accounts receivable | | | | | (114,438) | | | | | | (140,037) | | |
Due from factor | | | | | 1,181,097 | | | | | | 721,984 | | |
Inventory | | | | | 1,710,023 | | | | | | 938,206 | | |
Prepaid expenses and other current assets | | | | | 49,300 | | | | | | (109,952) | | |
Accounts payable | | | | | 202,526 | | | | | | (690,300) | | |
Accrued liabilities | | | | | (282,878) | | | | | | (629,131) | | |
Net cash provided by operating activities | | | | | 908,690 | | | | | | 1,031,127 | | |
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 | | | | | (1,007,300) | | | | | | (185,000) | | |
Distributions | | | | | (70,000) | | | | | | (1,780,000) | | |
Net cash used in financing activities | | | | | (582,300) | | | | | | (1,334,363) | | |
Net change in cash and cash equivalents | | | | | 345,372 | | | | | | (308,236) | | |
Cash at beginning of period | | | | | 417,235 | | | | | | 733,440 | | |
Cash at end of period | | | | $ | 762,607 | | | | | $ | 425,204 | | |
Supplemental disclosure of cash flow information: | | | | | | | | | | | | | |
Cash paid for income taxes | | | | $ | 800 | | | | | $ | 800 | | |
Cash paid for interest | | | | $ | 43,876 | | | | | $ | 50,510 | | |
| | | September 30, 2022 | | | December 31, 2021 | | ||||||
Outstanding receivables | | | | | | | | | | | | | |
Without recourse | | | | $ | 702,432 | | | | | $ | 1,886,591 | | |
With recourse | | | | | 580 | | | | | | 11,000 | | |
| | | | | 703,012 | | | | | | 1,897,591 | | |
Advances | | | | | (202,000) | | | | | | (1,209,300) | | |
Credits due customers | | | | | (84,787) | | | | | | (98,269) | | |
Due from factor | | | | $ | 416,226 | | | | | $ | 590,022 | | |
| | | September 30, 2022 | | | December 31, 2021 | | ||||||
Raw materials | | | | $ | 1,139,267 | | | | | $ | 1,746,722 | | |
Work in progress | | | | | 1,272,861 | | | | | | 1,951,549 | | |
Finished goods | | | | | 794,977 | | | | | | 1,218,857 | | |
Inventory | | | | $ | 3,207,105 | | | | | $ | 4,917,128 | | |
| | | September 30, 2022 | | | December 31, 2021 | | ||||||
Leasehold improvements and showrooms | | | | $ | 198,658 | | | | | $ | 198,658 | | |
Furniture and equipment | | | | | 174,005 | | | | | | 183,005 | | |
Automobiles | | | | | 34,220 | | | | | | 34,072 | | |
| | | | | 406,883 | | | | | | 415,735 | | |
Less: accumulated depreciation and amortization | | | | | (294,281) | | | | | | (253,781) | | |
Fixed assets, net | | | | $ | 112,602 | | | | | $ | 161,954 | | |
| | | December 30, 2022 | | |||
ASSETS | | | | | | | |
Current assets: | | | | | | | |
Cash | | | | $ | 179,441 | | |
Accounts receivable, net of allowance | | | | | 63,956 | | |
Due from factor | | | | | 387,884 | | |
Inventory | | | | | 2,941,755 | | |
Prepaid expenses and other current assets | | | | | 83,120 | | |
Total current assets | | | | | 3,656,157 | | |
Fixed assets, net | | | | | 48,985 | | |
Deposits | | | | | 9,612 | | |
Total assets | | | | $ | 3,714,753 | | |
LIABILITIES AND MEMBERS’ EQUITY | | | | | | | |
Current liabilities: | | | | | | | |
Accounts payable | | | | $ | 613,595 | | |
Accrued liabilities | | | | | 633,672 | | |
Loan payable, related party | | | | | 395,000 | | |
Total liabilities | | | | | 1,642,267 | | |
Commitments and contingencies | | | | | | | |
Members’ equity | | | | | 2,072,486 | | |
Total members’ equity | | | | | 2,072,486 | | |
Total liabilities and members’ equity | | | | $ | 3,714,753 | | |
| | | Period Ended December 30, 2022 | | |||
Net revenues | | | | $ | 14,548,083 | | |
Cost of goods sold | | | | | 9,694,857 | | |
Gross profit | | | | | 4,853,226 | | |
Operating expenses: | | | | | | | |
General and administrative | | | | | 3,433,633 | | |
Distribution | | | | | 913,052 | | |
Sales and marketing | | | | | 2,736,181 | | |
Total operating expenses | | | | | 7,082,866 | | |
Income (loss) from operations | | | | | (2,229,640) | | |
Other income (expense), net | | | | | | | |
Other income | | | | | 13,878 | | |
Other expenses | | | | | (66,232) | | |
Interest expense | | | | | (9,099) | | |
Total other income (expense), net | | | | | (61,453) | | |
Provision for income taxes | | | | | 800 | | |
Net income (loss) | | | | $ | (2,291,893) | | |
| | | Members’ Equity | | |||
Balances at December 31, 2021 | | | | $ | 4,534,379 | | |
Distributions | | | | | (170,000) | | |
Net loss | | | | | (2,291,893) | | |
Balances at December 30, 2022 | | | | $ | 2,072,486 | | |
| | | Period Ended December 30, 2022 | | |||
Cash flows from operating activities: | | | | | | | |
Net loss | | | | $ | (2,291,893) | | |
Adjustments to reconcile net loss to net cash provided by operating activities: | | | | | | | |
Depreciation and amortization | | | | | 37,885 | | |
Changes in operating assets and liabilities: | | | | | | | |
Accounts receivable | | | | | 60,386 | | |
Due from factor | | | | | 473,341 | | |
Inventory | | | | | 1,975,373 | | |
Prepaid expenses and other current assets | | | | | 136,781 | | |
Accounts payable | | | | | (529,075) | | |
Accrued liabilities | | | | | (139,602) | | |
Net cash used in operating activities | | | | | (276,805) | | |
Cash flows from investing activities: | | | | | | | |
Proceeds from sale of property and equipment | | | | | 75,084 | | |
Deposits | | | | | 10,130 | | |
Net cash provided by (used in) investing activities | | | | | 85,214 | | |
Cash flows from financing activities: | | | | | | | |
Proceeds from loans payable | | | | | — | | |
Proceeds from loan payable, related party | | | | | 995,000 | | |
Repayments to loan payable, related party | | | | | (600,000) | | |
Factor advances (repayments), net | | | | | (271,203) | | |
Distributions | | | | | (170,000) | | |
Net cash used in financing activities | | | | | (46,203) | | |
Net change in cash | | | | | (237,794) | | |
Cash at beginning of period | | | | | 417,235 | | |
Cash at end of period | | | | $ | 179,441 | | |
Supplemental disclosure of cash flow information: | | | | | | | |
Cash paid for income taxes | | | | $ | 800 | | |
Cash paid for interest | | | | $ | 9,099 | | |
| | | December 30, 2022 | | |||
Outstanding receivables | | | | | | | |
Without recourse | | | | $ | 1,463,496 | | |
With recourse | | | | | 8,533 | | |
| | | | | 1,472,029 | | |
Advances | | | | | (938,097) | | |
Credits due customers | | | | | (146,048) | | |
Due from factor | | | | $ | 387,884 | | |
| | | December 30, 2022 | | |||
Raw materials | | | | $ | 1,214,778 | | |
Work in progress | | | | | 787,532 | | |
Finished goods | | | | | 939,445 | | |
Inventory | | | | $ | 2,941,755 | | |
| | | December 30, 2022 | | |||
Leasehold improvements and showrooms | | | | $ | 108,383 | | |
Furniture and equipment | | | | | 174,006 | | |
Automobiles | | | | | 34,220 | | |
| | | | | 316,608 | | |
Less: accumulated depreciation and amortization | | | | | (267,623) | | |
Fixed assets, net | | | | $ | 48,985 | | |
| | | December 31, 2021 | | |||
ASSETS | | | | | | | |
Current assets: | | | | $ | 417,235 | | |
Cash | | | | | | | |
Accounts receivable, net of allowance | | | | | 124,342 | | |
Due from factor | | | | | 590,022 | | |
Inventory | | | | | 4,917,128 | | |
Prepaid expenses and other current assets | | | | | 219,901 | | |
Total current assets | | | | | 6,268,628 | | |
Fixed assets, net | | | | | 161,954 | | |
Deposits | | | | | 19,742 | | |
Total assets | | | | $ | 6,450,324 | | |
LIABILITIES AND MEMBERS’ EQUITY | | | | | | | |
Current liabilities: | | | | | | | |
Accounts payable | | | | $ | 1,142,671 | | |
Accrued liabilities | | | | | 773,274 | | |
Loan payable, current | | | | | — | | |
Total current liabilities | | | | | 1,915,945 | | |
Loan payable, net of current portion | | | | | — | | |
Total liabilities | | | | | 1,915,945 | | |
Commitments and contingencies (Note 7) | | | | | | | |
Members’ equity | | | | | 4,534,379 | | |
Total members’ equity | | | | | 4,534,379 | | |
Total liabilities and members’ equity | | | | $ | 6,450,324 | | |
| | | Year Ended December 31, 2021 | | |||
Net revenues | | | | $ | 22,800,825 | | |
Cost of goods sold | | | | | 13,638,553 | | |
Gross profit | | | | | 9,162,272 | | |
Operating expenses: | | | | | | | |
General and administrative | | | | | 3,201,811 | | |
Distribution | | | | | 1,080,964 | | |
Sales and marketing | | | | | 4,374,667 | | |
Total operating expenses | | | | | 8,657,442 | | |
Income from operations | | | | | 504,830 | | |
Other income (expense), net Other income | | | | | 1,319,899 | | |
Interest expense | | | | | (70,018) | | |
Total other income (expense), net | | | | | 1,249,881 | | |
Provision for income taxes | | | | | 800 | | |
Net income | | | | $ | 1,753,911 | | |
| | | Members’ Equity | | |||
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 | | |||
Cash flows from operating activities: | | | | | | | |
Net income | | | | $ | 1,753,911 | | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | |
Depreciation and amortization | | | | | 53,851 | | |
Bad debt | | | | | 9,976 | | |
Other income – PPP forgiveness | | | | | (1,319,808) | | |
Changes in operating assets and liabilities: | | | | | | | |
Accounts receivable | | | | | 44,740 | | |
Due from factor | | | | | 363,083 | | |
Inventory | | | | | 830,698 | | |
Due from related party | | | | | — | | |
Prepaid expenses and other current assets | | | | | (117,777) | | |
Accounts payable | | | | | (258,122) | | |
Accrued liabilities | | | | | (440,694) | | |
Net cash provided by operating activities | | | | | 919,858 | | |
Cash flows from investing activities: | | | | | | | |
Purchase of property and equipment | | | | | — | | |
Net cash used in investing activities | | | | | — | | |
Cash flows from financing activities: | | | | | | | |
Proceeds from loans payable | | | | | 480,637 | | |
Factor advances (repayments), net | | | | | 133,300 | | |
Distributions | | | | | (1,850,000) | | |
Net cash used in financing activities | | | | | (1,236,063) | | |
Net change in cash and cash equivalents | | | | | (316,205) | | |
Cash and cash equivalents at beginning of year | | | | | 733,440 | | |
Cash and cash equivalents at end of year | | | | $ | 417,235 | | |
Supplemental disclosure of cash flow information: | | | | | | | |
Cash paid for income taxes | | | | $ | 800 | | |
Cash paid for interest | | | | $ | 70,018 | | |
| | | December 31, 2021 | | |||
Outstanding receivables | | | | | | | |
Without recourse | | | | $ | 1,886,591 | | |
With recourse | | | | | 11,000 | | |
| | | | | 1,897,591 | | |
Advances | | | | | (1,209,300) | | |
Credits due customers | | | | | (98,269) | | |
Due from factor | | | | $ | 590,022 | | |
| | | December 31, 2021 | | |||
Raw materials | | | | $ | 1,746,722 | | |
Work in progress | | | | | 1,951,549 | | |
Finished goods | | | | | 1,218,857 | | |
Inventory | | | | $ | 4,917,128 | | |
| | December 31, | | |||||||||||||||||
| | 2020 | | 2019 | | | December 31, 2021 | | ||||||||||||
Leasehold improvements and showrooms | | | $ | 375,677 | | | | $ | 309,928 | | | | | $ | 198,658 | | | |||
Accumulated amortization | | | | (237,637) | | | | | (88,242) | | | |||||||||
Fixed Assets, net | | | $ | 138,040 | | | | $ | 221,686 | | | |||||||||
Furniture and equipment | | | | 183,005 | | | ||||||||||||||
Automobiles | | | | 34,072 | | | ||||||||||||||
| | | | 415,735 | | | ||||||||||||||
Less: accumulated depreciation and amortization | | | | (253,781) | | | ||||||||||||||
Fixed assets, net | | | $ | 161,954 | | |
| | | December 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Note payable to bank, principal due November 27, 2020 bearing interest at 1.75% over prime (4.75% at December 31, 2019) | | | | $ | — | | | | | $ | 123,917 | | |
Note payable to bank, principal due December 2025, bearing interest at 5.526% | | | | | 125,000 | | | | | | — | | |
Note payable to majority owner, principal due on or before December 31, 2020, variable monthly payments, interest at 8.5% | | | | | — | | | | | | 75,000 | | |
Note payable to a bank, monthly installments of $2,279 through November 26, 2022, bearing interest at 5.85% | | | | | 55,483 | | | | | | 73,086 | | |
PPP and EIDL Loans (see below for terms) | | | | | 157,212 | | | | | | — | | |
Note payable to a company owned by the majority owner of the Company, due on or before July 10, 2022, bearing interest at 12% | | | | | 635,000 | | | | | | 425,000 | | |
| | | | $ | 972,695 | | | | | $ | 697,003 | | |
Year Ending December 31, | | | | | | | |
2021 | | | | $ | 60,941 | | |
2022 | | | | | 686.007 | | |
2023 | | | | | 28.119 | | |
2024 | | | | | 29,654 | | |
2025 | | | | | 31,171 | | |
Thereafter | | | | | 136,803 | | |
| | | | | 972,695 | | |
Less: current portion of note payable | | | | | (60,941) | | |
Notes payable, long-term | | | | $ | 911,754 | | |
| 2021 | | | $ | 95,617 | | | 2022 | | | $ | 15,516 | | | ||
| 2022 | | | | 42,996 | | | | | | $ | 15,516 | | | ||
| | | | $ | 138,613 | | |
| SEC Filing Fee | | | | $ | 565 | | |
| Placement Agent Expenses and non-accountable expense allowance | | | | $ | 664,900.00* | | |
| Legal Fees and Expenses | | | | $ | 300,000.00* | | |
| Accounting Fees and Expenses | | | | $ | 10,000.00* | | |
| Transfer Agent and Registrar Expenses | | | | $ | 5,000.00* | | |
| Miscellaneous Fees and Expenses, including FINRA filing fee | | | | $ | 19,535** | | |
| Total | | | | $ | 1,000,000.00* | | |
| Exhibit Number | | | Description | |
1.1 | | | Form of | | |
2.1 | | | | ||
2.2 | | | | ||
2.3 | | | | ||
2.4 | | | | ||
2.5 | | | | ||
2.6 | | | Membership Interest Purchase Agreement, dated January 18, 2022, by and among Moise Emquies, George Levy, Matthieu Leblan and Carol Ann Emquies, Sunnyside, LLC, and George Levy as the Sellers’ representative (incorporated by reference to Exhibit 1.1 of Digital Brands Group Inc.’s Form | | |
2.7 | | | |||
|
| | | | | | |||
| /s/ John Hilburn Davis IV John Hilburn Davis IV | | | Director, President and Chief Executive Officer | | | | |
| Reid Yeoman | | | Chief Financial Officer (Principal financial and accounting officer) | | | | |
| * Mark T. Lynn | | | Director | | | | |
| * Trevor Pettennude | | | Director | | | | |
| * Jameeka Aaron Green | | | Director | | | August 4, 2023 | |
| * Huong “Lucy” Doan | | | Director | | | August 4, 2023 | |
| * /s/ John Hilburn Davis IV John Hilburn Davis IV attorney-in-fact | | | | | August 4, 2023 | |