Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2021 | Aug. 16, 2021 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2021 | |
Entity File Number | 001-40400 | |
Entity Registrant Name | DIGITAL BRANDS GROUP, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 46-1942864 | |
Entity Address State Or Province | TX | |
Entity Address, Address Line One | 1400 Lavaca Street | |
Entity Address, City or Town | Austin | |
Entity Address, Postal Zip Code | 78701 | |
City Area Code | 209 | |
Local Phone Number | 651-0172 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 11,399,594 | |
Entity Central Index Key | 0001668010 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 4,075,921 | $ 575,986 |
Accounts receivable, net | 346,390 | 35,532 |
Due from factor, net | 6,859 | 210,033 |
Inventory | 1,165,152 | 1,163,279 |
Prepaid expenses | 849,434 | 23,826 |
Total current assets | 6,443,756 | 2,008,656 |
Deferred offering costs | 214,647 | |
Property, equipment and software, net | 119,817 | 62,313 |
Goodwill | 16,160,766 | 6,479,218 |
Intangible assets, net | 11,175,794 | 7,494,667 |
Deposits | 116,199 | 92,668 |
Total assets | 34,016,332 | 16,352,169 |
Current liabilities: | ||
Accounts payable | 6,307,071 | 5,668,703 |
Accrued expenses and other liabilities | 1,615,622 | 1,245,646 |
Deferred revenue | 172,470 | 1,667 |
Due to related parties | 252,635 | 441,453 |
Contingent consideration liability | 6,539,417 | |
Convertible notes, current | 100,000 | 700,000 |
Accrued interest payable | 801,031 | 737,039 |
Note payable - related party | 299,489 | 137,856 |
Venture debt, current | 300,000 | 5,854,326 |
Loan payable, current | 1,712,000 | 992,000 |
Promissory note payable | 3,500,000 | 4,500,000 |
Total current liabilities | 21,599,735 | 20,278,690 |
Convertible notes | 1,215,815 | |
Loan payable | 1,762,639 | 709,044 |
Venture debt, net of discount | 5,701,755 | |
Warrant liability | 78,710 | 6,265 |
Total liabilities | 29,142,839 | 22,209,814 |
Commitments and contingencies (Note 12) | ||
Stockholders' deficit: | ||
Common stock $0.0001 par, 200,000,000 and 110,000,000 shares authorized, 11,044,594 and 664,167 shares issued and outstanding as of both June 30, 2021 and December 31, 2020, respectively | 1,104 | 66 |
Additional paid-in capital | 51,939,819 | 27,481,995 |
Accumulated deficit | (47,067,430) | (33,345,997) |
Total stockholders' equity (deficit) | 4,873,493 | (5,857,645) |
Total liabilities and stockholders' equity (deficit) | $ 34,016,332 | 16,352,169 |
Series Seed Preferred Stock | ||
Stockholders' deficit: | ||
Convertible preferred stock | 2,071 | |
Total stockholders' equity (deficit) | 2,071 | |
Series A convertible preferred stock | ||
Stockholders' deficit: | ||
Convertible preferred stock | 565 | |
Total stockholders' equity (deficit) | 565 | |
Series A-2 convertible preferred stock | ||
Stockholders' deficit: | ||
Convertible preferred stock | 593 | |
Total stockholders' equity (deficit) | 593 | |
Series A-3 convertible preferred stock | ||
Stockholders' deficit: | ||
Convertible preferred stock | 904 | |
Total stockholders' equity (deficit) | 904 | |
Series CF convertible preferred stock | ||
Stockholders' deficit: | ||
Convertible preferred stock | 83 | |
Total stockholders' equity (deficit) | 83 | |
Series B Convertible Preferred Stock | ||
Stockholders' deficit: | ||
Convertible preferred stock | $ 2,075 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) - $ / shares | 6 Months Ended | |
Jun. 30, 2021 | Dec. 31, 2020 | |
Preferred Stock, Shares Authorized | 20,714,518 | |
Conversion of Stock, Shares Converted | 25,080 | |
Series Seed Preferred Stock | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 0 | 20,714,518 |
Preferred Stock, Shares Issued | 0 | 20,714,518 |
Preferred Stock, Shares Outstanding | 0 | 20,714,518 |
Series A convertible preferred stock | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 0 | 14,481,413 |
Preferred Stock, Shares Issued | 0 | 5,654,072 |
Preferred Stock, Shares Outstanding | 0 | 5,654,072 |
Series A-2 convertible preferred stock | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 0 | 20,000,000 |
Preferred Stock, Shares Issued | 0 | 5,932,742 |
Preferred Stock, Shares Outstanding | 0 | 5,932,742 |
Series A-3 convertible preferred stock | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 0 | 18,867,925 |
Preferred Stock, Shares Issued | 0 | 9,032,330 |
Preferred Stock, Shares Outstanding | 0 | 9,032,330 |
Series CF convertible preferred stock | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 0 | 2,000,000 |
Preferred Stock, Shares Issued | 0 | 836,331 |
Preferred Stock, Shares Outstanding | 0 | 836,331 |
Series B Convertible Preferred Stock | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 0 | 20,714,517 |
Preferred Stock, Shares Issued | 0 | 20,714,517 |
Preferred Stock, Shares Outstanding | 20,714,517 | |
Undesignated Preferred Stock [Member] | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 10,000,000 | 936,144 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common Stock | ||
Common Stock, Par or Stated Value Per Share | $ 0.0001 | |
Common Stock, Shares Authorized | 200,000,000 | 110,000,000 |
Common Stock, Shares, Issued | 11,044,594 | 11,044,594 |
Common Stock, Shares, Outstanding | 664,167 | 664,167 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Income Statement [Abstract] | ||||
Net revenues | $ 1,003,529 | $ 664,017 | $ 1,411,934 | $ 3,240,702 |
Cost of net revenues | 608,944 | 932,362 | 1,224,886 | 2,155,155 |
Gross profit (loss) | 394,585 | (268,345) | 187,048 | 1,085,547 |
Operating expenses: | ||||
General and administrative | 7,192,460 | 1,426,388 | 9,099,978 | 3,901,431 |
Sales and marketing | 923,283 | 124,370 | 1,094,103 | 442,246 |
Distribution | 69,864 | 75,246 | 133,442 | 213,681 |
Change in fair value of contingent consideration | 3,050,901 | 3,050,901 | ||
Total operating expenses | 11,236,508 | 1,626,004 | 13,378,424 | 4,557,358 |
Loss from operations | (10,841,923) | (1,894,349) | (13,191,376) | (3,471,811) |
Other income (expense): | ||||
Interest expense | (897,920) | (373,957) | (1,572,964) | (688,932) |
Other non-operating income (expenses) | (57,775) | (57,213) | ||
Total other income (expense), net | (955,695) | (373,957) | (1,630,177) | (688,932) |
Provision for income taxes | (1,100,120) | (709) | (1,100,120) | 13,381 |
Net loss | $ (10,697,498) | $ (2,267,597) | $ (13,721,433) | $ (4,174,124) |
Weighted average common shares outstanding - basic and diluted | 5,435,023 | 664,167 | 3,062,774 | 664,167 |
Net loss per common share - basic and diluted | $ (1.97) | $ (3.41) | $ (4.48) | $ (6.28) |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - USD ($) | Common Stock | Additional Paid-in Capital | Subscription Receivable | Accumulated Deficit | Series Seed Preferred Stock | Series A convertible preferred stock | Series A-2 convertible preferred stock | Series A-3 convertible preferred stock | Series CF convertible preferred stock | Series B convertible preferred stock | Total |
Beginning balance (in share) at Dec. 31, 2019 | 664,167 | 20,714,518 | 5,654,072 | 5,932,742 | 8,223,036 | 126,641 | |||||
Beginning balance at Dec. 31, 2019 | $ 66 | $ 15,486,050 | $ (22,677) | $ (22,617,702) | $ 2,071 | $ 565 | $ 593 | $ 823 | $ 12 | $ (7,150,199) | |
Issuance of Series A-3 preferred stock (in shares) | 809,294 | ||||||||||
Issuance of Series A-3 preferred stock | 428,845 | (117,614) | $ 81 | 311,312 | |||||||
Issuance of Series B preferred stock (in shares) | 20,754,717 | ||||||||||
Issuance of Series B preferred stock | 10,997,925 | $ 2,075 | 11,000,000 | ||||||||
Offering costs | (31,690) | (31,690) | |||||||||
Fair value of warrant issuances - venture debt | 58,421 | 58,421 | |||||||||
Stock-based compensation | 49,932 | 49,932 | |||||||||
Net loss | (1,906,527) | (1,906,527) | |||||||||
Ending balance at Mar. 31, 2020 | $ 66 | 26,989,483 | (140,291) | (24,524,229) | $ 2,071 | $ 565 | $ 593 | $ 904 | $ 12 | $ 2,075 | 2,331,249 |
Ending balance (in share) at Mar. 31, 2020 | 664,167 | 20,714,518 | 5,654,072 | 5,932,742 | 9,032,330 | 126,641 | 20,754,717 | ||||
Beginning balance (in share) at Dec. 31, 2019 | 664,167 | 20,714,518 | 5,654,072 | 5,932,742 | 8,223,036 | 126,641 | |||||
Beginning balance at Dec. 31, 2019 | $ 66 | 15,486,050 | (22,677) | (22,617,702) | $ 2,071 | $ 565 | $ 593 | $ 823 | $ 12 | (7,150,199) | |
Net loss | (4,174,124) | ||||||||||
Ending balance at Jun. 30, 2020 | $ 66 | 27,325,862 | (13,454) | (26,791,826) | $ 2,071 | $ 565 | $ 593 | $ 904 | $ 83 | $ 2,075 | 526,939 |
Ending balance (in share) at Jun. 30, 2020 | 664,167 | 20,714,518 | 5,654,072 | 5,932,742 | 9,032,330 | 836,331 | 20,754,717 | ||||
Beginning balance (in share) at Mar. 31, 2020 | 664,167 | 20,714,518 | 5,654,072 | 5,932,742 | 9,032,330 | 126,641 | 20,754,717 | ||||
Beginning balance at Mar. 31, 2020 | $ 66 | 26,989,483 | (140,291) | (24,524,229) | $ 2,071 | $ 565 | $ 593 | $ 904 | $ 12 | $ 2,075 | 2,331,249 |
Issuance of Series CF preferred stock (in shares) | 709,690 | ||||||||||
Issuance of Series CF preferred stock | 286,447 | $ 71 | 286,518 | ||||||||
Issuance of Series A-3 preferred stock | 126,837 | 126,837 | |||||||||
Stock-based compensation | 49,932 | 49,932 | |||||||||
Net loss | (2,267,597) | (2,267,597) | |||||||||
Ending balance at Jun. 30, 2020 | $ 66 | 27,325,862 | $ (13,454) | (26,791,826) | $ 2,071 | $ 565 | $ 593 | $ 904 | $ 83 | $ 2,075 | 526,939 |
Ending balance (in share) at Jun. 30, 2020 | 664,167 | 20,714,518 | 5,654,072 | 5,932,742 | 9,032,330 | 836,331 | 20,754,717 | ||||
Beginning balance (in share) at Dec. 31, 2020 | 664,167 | 20,714,518 | 5,654,072 | 5,932,742 | 9,032,330 | 836,331 | 20,754,717 | ||||
Beginning balance at Dec. 31, 2020 | $ 66 | 27,481,995 | (33,345,997) | $ 2,071 | $ 565 | $ 593 | $ 904 | $ 83 | $ 2,075 | (5,857,645) | |
Stock-based compensation | 36,976 | 36,976 | |||||||||
Net loss | (3,023,935) | (3,023,935) | |||||||||
Ending balance at Mar. 31, 2021 | $ 66 | 27,518,971 | (36,369,932) | $ 2,071 | $ 565 | $ 593 | $ 904 | $ 83 | $ 2,075 | (8,844,604) | |
Ending balance (in share) at Mar. 31, 2021 | 664,167 | 20,714,518 | 5,654,072 | 5,932,742 | 9,032,330 | 836,331 | 20,754,717 | ||||
Beginning balance (in share) at Dec. 31, 2020 | 664,167 | 20,714,518 | 5,654,072 | 5,932,742 | 9,032,330 | 836,331 | 20,754,717 | ||||
Beginning balance at Dec. 31, 2020 | $ 66 | 27,481,995 | (33,345,997) | $ 2,071 | $ 565 | $ 593 | $ 904 | $ 83 | $ 2,075 | (5,857,645) | |
Issuance of Series A-3 preferred stock (in shares) | 809,294 | 709,690 | |||||||||
Conversion of preferred stock into common stock | 6,293 | ||||||||||
Conversion of debt into common stock | 2,680,289 | ||||||||||
Conversion of related party notes and payables into common stock | 257,515 | ||||||||||
Net loss | (13,721,433) | ||||||||||
Ending balance at Jun. 30, 2021 | $ 1,104 | 51,939,819 | (47,067,430) | 4,873,493 | |||||||
Ending balance (in share) at Jun. 30, 2021 | 11,044,594 | ||||||||||
Beginning balance (in share) at Mar. 31, 2021 | 664,167 | 20,714,518 | 5,654,072 | 5,932,742 | 9,032,330 | 836,331 | 20,754,717 | ||||
Beginning balance at Mar. 31, 2021 | $ 66 | 27,518,971 | (36,369,932) | $ 2,071 | $ 565 | $ 593 | $ 904 | $ 83 | $ 2,075 | (8,844,604) | |
Conversion of preferred stock into common stock | $ 403 | 5,888 | $ (2,071) | $ (565) | $ (593) | $ (904) | $ (83) | $ (2,075) | |||
Conversion of preferred stock into common stock (shares) | 4,027,181 | (20,714,518) | (5,654,072) | (5,932,742) | (9,032,330) | (836,331) | (20,754,717) | ||||
Issuance of common stock in public offering | $ 241 | 9,999,761 | 10,000,002 | ||||||||
Issuance of common stock in public offering (in shares) | 2,409,639 | ||||||||||
Offering costs | (2,116,957) | (2,116,957) | |||||||||
Exercise of over-allotment option | $ 36 | 1,364,961 | 1,364,997 | ||||||||
Exercise of over-allotment option (in shares) | 361,445 | ||||||||||
Conversion of debt into common stock | $ 114 | 2,680,175 | 2,680,289 | ||||||||
Conversion of debt into common stock (in shares) | 1,135,153 | ||||||||||
Conversion of related party notes and payables into common stock | $ 15 | 257,500 | 257,515 | ||||||||
Conversion of related party notes and payables into common stock (in shares) | 152,357 | ||||||||||
Common stock and warrants issued in connection with note | $ 2 | 73,956 | 73,958 | ||||||||
Common stock and warrants issued in connection with note (in shares) | 20,000 | ||||||||||
Common stock issued in connection with business combination | $ 219 | 8,025,323 | 8,025,542 | ||||||||
Common stock issued in connection with business combination (in shares) | 2,192,771 | ||||||||||
Exercise of warrants | $ 3 | 145,693 | 145,696 | ||||||||
Exercise of warrants (in shares) | 31,881 | ||||||||||
Common stock issued pursuant to consulting agreement | $ 5 | 182,995 | 183,000 | ||||||||
Common stock issued pursuant to consulting agreement (in shares) | 50,000 | ||||||||||
Stock-based compensation | 3,801,553 | 3,801,553 | |||||||||
Net loss | (10,697,498) | (10,697,498) | |||||||||
Ending balance at Jun. 30, 2021 | $ 1,104 | $ 51,939,819 | $ (47,067,430) | $ 4,873,493 | |||||||
Ending balance (in share) at Jun. 30, 2021 | 11,044,594 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Cash flows from operating activities: | ||||
Net loss | $ (13,721,433) | $ (4,174,124) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Depreciation and amortization | 291,661 | 318,057 | ||
Amortization of loan discount and fees | 580,684 | 69,710 | ||
Stock-based compensation | 4,021,529 | 99,864 | ||
Fees incurred in connection with debt financings | 132,609 | |||
Change in fair value of warrant liability | 72,445 | |||
Change in fair value of contingent consideration | $ 3,050,901 | 3,050,901 | ||
Deferred Income Tax Benefit | (1,100,120) | |||
Change in credit reserve | 9,748 | (58,132) | ||
Changes in operating assets and liabilities: | ||||
Accounts receivable, net | (261,386) | 12,399 | ||
Due from factor, net | 139,629 | (67,361) | ||
Inventory | 75,287 | 639,006 | ||
Prepaid expenses | (688,893) | (40,165) | ||
Accounts payable | 575,513 | 1,410,476 | ||
Accrued expenses and other liabilities | 262,019 | (770,907) | ||
Deferred revenue | (99,045) | (15,231) | ||
Accrued compensation - related party | (88,550) | (28,807) | ||
Accrued interest | 151,465 | 446,854 | ||
Net cash (used in) provided by operating activities | (6,595,937) | (2,158,361) | ||
Cash flows from investing activities: | ||||
Cash acquired (consideration) pursuant to business combination | (475,665) | 106,913 | ||
Issuance of related party receivable | (20,000) | |||
Purchase of property, equipment and software | (10,276) | |||
Deposits | (19,115) | 43,510 | ||
Net cash provided by investing activities | (505,056) | 130,423 | ||
Cash flows from financing activities: | ||||
Proceeds from related party advances | 22,856 | |||
Advances from factor | 53,795 | 180,552 | ||
Proceeds from venture debt | 250,000 | |||
Issuance of loans payable | 2,626,050 | 1,701,044 | ||
Repayments of promissory notes and loans payable | (2,001,305) | |||
Issuance of convertible notes payable | 528,650 | |||
Proceeds from Issuance of Convertible Preferred Stock | 10,000,002 | |||
Exercise of warrants | 145,696 | |||
Proceeds from sale of Series A-3 preferred stock | 428,845 | |||
Subscription receivable from Series A-3 preferred stock | 1,364,997 | 9,223 | ||
Proceeds from sale of Series CF preferred stock | 286,518 | |||
Offering costs | (2,116,957) | (30,772) | ||
Net cash provided by (used in) financing activities | 10,600,928 | 2,848,266 | ||
Net increase (decrease) in cash and cash equivalents | 3,499,935 | 820,328 | ||
Cash and cash equivalents at beginning of period | 575,986 | 40,469 | $ 40,469 | |
Cash and cash equivalents at end of period | 4,075,921 | 4,075,921 | 860,797 | $ 575,986 |
Supplemental disclosure of cash flow information: | ||||
Cash paid for interest | 460,179 | |||
Supplemental disclosure of non-cash investing and financing activities: | ||||
Conversion of preferred stock into common stock | 6,293 | |||
Conversion of related party notes and payables into common stock | 257,515 | 257,515 | ||
Conversion of debt into common stock | $ 2,680,289 | $ 2,680,289 | ||
Venture debt issued in exchange of forgiveness of accrued interest | 209,211 | |||
Warrants issued for offering costs | 918 | |||
Warrants issued with venture debt | 58,421 | |||
Issuance of promisosry note payable in acquisition | 4,500,000 | |||
Issuance of Series B preferred stock in acquisition | $ 11,000,000 |
NATURE OF OPERATIONS
NATURE OF OPERATIONS | 6 Months Ended |
Jun. 30, 2021 | |
NATURE OF OPERATIONS | |
NATURE OF OPERATIONS | NOTE 1: NATURE OF OPERATIONS Digital Brands Group, Inc. (formerly Denim.LA, Inc.) (the “Company” or “DBG”), was organized on September 17, 2012 under the laws of Delaware as a limited liability company under the name Denim.LA LLC. The Company converted to a Delaware corporation on January 30, 2013 and changed its name to Denim.LA, Inc. Effective December 31, 2020, the Company changed its name to Digital Brands Group, Inc. (DBG). On February 12, 2020, Denim.LA, Inc. entered into an Agreement and Plan of Merger with Bailey 44, LLC (“Bailey”), a Delaware limited liability company. On the acquisition date, Bailey 44 , LLC became a wholly owned subsidiary of the Company. See Note 4. On May 18, 2021, the Company closed its acquisition of Harper & Jones, LLC (“H&J”) pursuant to its Membership Interest Stock Purchase Agreement with D. Jones Tailored Collection, Ltd. to purchase 100% of the issued and outstanding equity of Harper & Jones, LLC. On the acquisition date, H&J became a wholly owned subsidiary of the Company. See Note 4. In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (“COVID-19”) a pandemic. As the global spread of COVID-19 continues, DBG remains first and foremost focused on a people-first approach that prioritizes the health and well-being of its employees, customers, trade partners and consumers. To help mitigate the spread of COVID-19, DBG has modified its business practices in accordance with legislation, executive orders and guidance from government entities and healthcare authorities (collectively, “COVID-19 Directives”). These directives include the temporary closing of offices and retail stores, instituting travel bans and restrictions and implementing health and safety measures including social distancing and quarantines. The full extent of the future impact of the COVID-19 pandemic on the Company’s operational and financial performance is currently uncertain and will depend on many factors outside the Company’s control, including, without limitation, the timing, extent, trajectory and duration of the pandemic, the development and availability of effective treatments and vaccines, and the imposition of protective public safety measures. Reverse Stock Split On May 12, 2021, the Board of Directors approved a one Initial Public Offering On May 13, 2021, the Company’s registration statement on Form S-1 relating to its initial public offering of its common stock (the “IPO”) was declared effective by the Securities and Exchange Commission (“SEC”). Further to the IPO, which closed on May 18, 2021, the Company issued and sold 2,409,639 shares of common stock at a public offering price of $4.15 per share. Additionally, the Company issued warrants to purchase 2,771,084 shares, which includes 361,445 warrants sold upon the partial exercise of the over-allotment option. The aggregate net proceeds to the Company from the IPO, were $8.6 million after deducting underwriting discounts and commissions of $0.8 million and direct offering expenses of $0.6 million. Concurrent with this offering, the Company acquired H&J (see Note 4). The Company incurred an additional $0.6 million in offering costs related to the IPO that were not paid directly out of the proceeds from the offering. |
GOING CONCERN
GOING CONCERN | 6 Months Ended |
Jun. 30, 2021 | |
GOING CONCERN | |
GOING CONCERN | NOTE 2: GOING CONCERN The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has not generated profits since inception, has sustained net losses of $13,721,433 and $4,174,124 for the six months ended June 30, 2021 and 2020, respectively, and has incurred negative cash flows from operations for the six months ended June 30, 2021 and 2020. The Company has historically lacked liquidity to satisfy obligations as they come due and as of June 30, 2021, and the Company had a working capital deficit of $15,155,979. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company expects to continue to generate operating losses for the foreseeable future. Management Plans As of August 16, 2021, the date of issuance of these unaudited interim condensed consolidated financial statements, the Company expects that its cash and cash equivalents of $4.1 million as of June 30, 2021, together with the measures described below, will be sufficient to fund its operating expenses, debt obligations and capital expenditure requirements for at least one year from the date these consolidated financial statements are issued. Throughout the next twelve months, the Company intends to fund its operations from the funds raised through the IPO, increased revenues as new designs and collections will be deployed in the second half of 2021, through settlement or renegotiation of aged payables and outstanding debt, and continuing its cost cutting measures. The Company also plans to continue to fund its capital funding needs through a combination of public or private equity offerings, debt financings or other sources. There can be no assurance as to the availability or terms upon which such financing and capital might be available in the future. If the Company is unable to secure additional funding, it may be forced to curtail or suspend its business plans. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“GAAP”). Unaudited Interim Financial Information The accompanying unaudited condensed consolidated balance sheet as of June 30, 2021, the unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2021 and 2020 and of cash flows for the six months ended June 30, 2021 and 2020 have been prepared by the Company, pursuant to the rules and regulations of the SEC for the interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. The unaudited interim consolidated financial statements have been prepared on a basis consistent with the audited consolidated financial statements and in the opinion of management, reflect all adjustments, consisting of only normal recurring adjustments, necessary for the fair presentation of the results for the interim periods presented and of the financial condition as of the date of the interim consolidated balance sheet. The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2020 included in the Company’s prospectus that forms a part of the Company’s Registration Statement on Form S-1 ( File No. 333-255193). The prospectus was filed with the SEC pursuant to Rule 424(b)(4) on May 17, 2021. Principles of Consolidation These condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries Bailey and H&J. All inter-company transactions and balances have been eliminated on consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Equivalents and Concentration of Credit Risk The Company considers all highly liquid securities with an original maturity of less than three months to be cash equivalents. As of June 30, 2021 and December 31, 2020, the Company did not hold any cash equivalents. The Company’s cash and cash equivalents in bank deposit accounts, at times, may exceed federally insured limits of $250,000. Fair Value of Financial Instruments FASB guidance specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows: Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities. Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (e.g., quoted prices of similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active). Level 3 — Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when their fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable. The Company’s financial instruments consist of cash and cash equivalents, prepaid expenses, accounts payable, accrued expenses, due to related parties, related party note payable, and convertible debt. The carrying value of these assets and liabilities is representative of their fair market value, due to the short maturity of these instruments. The following tables present information about the Company's financial assets and liabilities measured at fair value on a recurring basis and indicates the level of the fair value hierarchy used to determine such fair values: Fair Value Measurements as of June 30, 2021 Using: Level 1 Level 2 Level 3 Total Liabilities: Warrant liability $ — $ 78,710 $ — $ 78,710 Contingent consideration — — 6,539,417 6,539,417 $ — $ 78,710 $ 6,539,417 $ 6,618,127 Fair Value Measurements as of December 31, 2020 Using: Level 1 Level 2 Level 3 Total Liabilities: Warrant liability $ — $ — $ 6,265 $ 6,265 $ — $ — $ 6,265 $ 6,265 Warrant Liability Certain of the Company’s common stock warrants are carried at fair value. As of December 31, 2020, the fair value of the Company’s common stock warrant liabilities was measured under the Level 3 hierarchy using the Black-Scholes pricing model as the Company’s underlying common stock had no observable market price (see Note 10). The warrant liability was valued using a market approach. Upon the IPO, the warrant liabilities were valued using quoted prices of identical assets in active markets, and was reclassified under the Level 2 hierarchy. Changes in common stock warrant liability during the six months ended June 30, 2021 are as follows: Warrant Liability Outstanding as of December 31, 2020 $ 6,265 Change in fair value 72,445 Outstanding as of June 30, 2021 $ 78,710 Contingent Consideration The Company records contingent consideration liabilities relating to stock price guarantees included in its acquisition and consulting agreements. The estimated fair value of the contingent consideration is recorded using significant unobservable measures and other fair value inputs and is therefore classified as a Level 3 financial instrument. The fair value of the contingent consideration liability related to the Company's business combinations is valued using the Monte Carlo simulation model. The Monte Carlo simulation inputs include the stock price, volatility of common stock, timing of settlement and resale restrictions and limits. The fair value of the contingent consideration is then calculated based on guaranteed equity values at settlement as defined in the acquisition agreements. Changes in contingent consideration liability during the six months ended June 30, 2021 are as follows: 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 Change in fair value 3,050,901 Balance as of June 30, 2021 $ 6,539,417 Inventory Inventory is stated at the lower of cost or net realizable value and accounted for using the weighted average cost method and first-in, first-out method for Bailey. The inventory balances as of June 30, 2021 and December 31, 2020 consist substantially of finished good products purchased or produced for resale, as well as any materials the Company purchased to modify the products. Property, Equipment, and Software Property, equipment, and software are recorded at cost. Depreciation/amortization is recorded for property, equipment, and software using the straight-line method over the estimated useful lives of assets. The Company reviews the recoverability of all long-lived assets, including the related useful lives, whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset might not be recoverable. The balances at June 30, 2021 and December 31, 2020 consist of software with three (3) year lives, property and equipment with 3-10 year lives, and leasehold improvements which are depreciated over the shorter of the lease life or expected life. Depreciation and amortization charges on property, equipment, and software are included in general and administrative expenses and amounted to $27,738 and $115,509 for the three months ended June 30, 2021 and 2020, and $36,758 and $180,557 for the six months ended June 30, 2021 and 2020, respectively. Capital assets as of June 30, 2021 and December 31, 2020 are as follows: June 30, December 31, 2021 2020 Computer equipment $ 6,339 $ 57,810 Furniture and fixtures 184,701 207,140 Leasehold improvements and showrooms 444,951 69,274 635,991 334,224 Accumulated depreciation (574,362) (334,224) Property and equipment, net $ 61,629 $ — Software $ 233,737 $ 278,405 Accumulated amortization (175,549) (216,092) Software, net $ 58,188 $ 62,313 Business Combinations The Company accounts for acquisitions in which it obtains control of one or more businesses as a business combination. The purchase price of the acquired businesses is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the purchase price over those fair values is recognized as goodwill. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments, in the period in which they are determined, to the assets acquired and liabilities assumed with the corresponding offset to goodwill. If the assets acquired are not a business, the Company accounts for the transaction or other event as an asset acquisition. Under both methods, the Company recognizes the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity. In addition, for transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase. Goodwill represents the excess of the purchase price of an acquired entity over the fair value of identifiable tangible and intangible assets acquired and liabilities assumed in a business combination. Intangible assets are established with business combinations and consist of brand names and customer relationships. Intangible assets with finite lives are recorded at their estimated fair value at the date of acquisition and are amortized over their estimated useful lives using the straight-line method. The estimated useful lives of amortizable intangible assets are as follows: Customer relationships 3 years Contingent Consideration The Company estimates and records the acquisition date fair value of contingent consideration as part of purchase price consideration for acquisitions. Additionally, each reporting period, the Company estimates changes in the fair value of contingent consideration and recognizes any change in fair in the consolidated statement of operations. The estimate of the fair value of contingent consideration requires very subjective assumptions to be made of future operating results, discount rates and probabilities assigned to various potential operating result scenarios. Future revisions to these assumptions could materially change the estimate of the fair value of contingent consideration and, therefore, materially affect the Company’s future financial results. The contingent consideration liability is to be settled with the issuance of shares of common stock once contingent provisions set forth in respective acquisition agreements have been achieved. Upon achievement of contingent provisions, respective liabilities are relieved and offset by increases to common stock and additional paid in capital in the stockholders’ equity section of the Company’s consolidated balance sheets. Impairment of Long-Lived Assets The Company reviews its long-lived assets (property and equipment and amortizable intangible assets) for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum of the expected cash flows, undiscounted, is less than the carrying amount of the asset, an impairment loss is recognized as the amount by which the carrying amount of the asset exceeds its fair value. Goodwill Goodwill and identifiable intangible assets that have indefinite useful lives are not amortized, but instead are tested annually for impairment and upon the occurrence of certain events or substantive changes in circumstances. The annual goodwill impairment test allows for the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. An entity may choose to perform the qualitative assessment on none, some or all of its reporting units or an entity may bypass the qualitative assessment for any reporting unit and proceed directly to step one of the quantitative impairment test. If it is determined, on the basis of qualitative factors, that the fair value of a reporting unit is, more likely than not, less than its carrying value, the quantitative impairment test is required. The quantitative impairment test calculates any goodwill impairment as the difference between the carrying amount of a reporting unit and its fair value, but not to exceed the carrying amount of goodwill. It is our practice, at a minimum, to perform a qualitative or quantitative goodwill impairment test in the first quarter every year. In the first quarter of 2021, management performed its annual qualitative impairment test. The Company determined no factors existed to conclude that it is more likely than not that the fair value of the reporting unit was less than its carrying amount. As such, no goodwill impairment was recognized as of June 30, 2021. Indefinite-Lived Intangible Assets Indefinite-lived intangible assets established in connection with business combinations consist of the brand name. The impairment test for identifiable indefinite-lived intangible assets consists of a comparison of the estimated fair value of the intangible asset with its carrying value. If the carrying value exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. Convertible Instruments U.S. GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule is when the host instrument is deemed to be conventional as that term is described under applicable U.S. GAAP. When the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption. The Company also records, when necessary, deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the preferred shares. Accounting for Preferred Stock ASC 480, Distinguishing Liabilities from Equity, includes standards for how an issuer of equity (including equity shares issued by consolidated entities) classifies and measures on its balance sheet certain financial instruments with characteristics of both liabilities and equity. Management is required to determine the presentation for the preferred stock as a result of the redemption and conversion provisions, among other provisions in the agreement. Specifically, management is required to determine whether the embedded conversion feature in the preferred stock is clearly and closely related to the host instrument, and whether the bifurcation of the conversion feature is required and whether the conversion feature should be accounted for as a derivative instrument. If the host instrument and conversion feature are determined to be clearly and closely related (both more akin to equity), derivative liability accounting under ASC 815, Derivatives and Hedging, is not required. Management determined that the host contract of the preferred stock is more akin to equity, and accordingly, liability accounting is not required by the Company. The Company has presented preferred stock within stockholders’ equity. Costs incurred directly for the issuance of the preferred stock are recorded as a reduction of gross proceeds received by the Company, resulting in a discount to the preferred stock. The discount is not amortized. Revenue Recognition Revenues are recognized when performance obligations are satisfied through the transfer of promised goods to the Company’s customers. Control transfers upon shipment of product and when the title has been passed to the customers. This includes the transfer of legal title, physical possession, the risks and rewards of ownership, and customer acceptance. The Company provides the customer the right of return on the product and revenue is adjusted based on an estimate of the expected returns based on historical rates. The Company considers the sale of products as a single performance obligation. Sales tax collected from customers and remitted to taxing authorities is excluded from revenue and is included in accrued expenses. Revenue is deferred for orders received for which associated shipments have not occurred. The reserve for returns totaled $22,214 and $5,229 as of June 30 , 2021 and December 31, 2020, respectively, and is included in accrued expenses and other liabilities in the accompanying consolidated balance sheets. Cost of Revenues Cost of revenues consists primarily of inventory sold and related freight-in. Shipping and Handling The Company recognizes shipping and handling billed to customers as a component of net revenues, and the cost of shipping and handling as a component of sales and marketing. Total shipping and handling billed to customers as a component of net revenues was approximately $0 and $3,800 for the three and six months ended June 30, 2021 and 2020, respectively. Total shipping and handling costs included in distribution costs were approximately $59,000 and $104,000 for the three months ended June 30, 2021 and 2020, and $119,000 and $161,000 for the six months ended June 30, 2021 and 2020, respectively. Advertising and Promotion Advertising and promotional costs are expensed as incurred. Advertising and promotional expense for the three months ended June 30, 2021 and 2020 amounted to approximately $0 and $78,000, and $3,800 and $139,000 for the six months ended June 30, 2021 and 2020,respectively. The amounts are included in sales and marketing expense. Common Stock Purchase Warrants and Other Derivative Financial Instruments The Company accounts for derivative instruments in accordance with ASC 815, which establishes accounting and reporting standards for derivative instruments and hedging activities, including certain derivative instruments embedded in other financial instruments or contracts and requires recognition of all derivatives on the balance sheet at fair value, regardless of hedging relationship designation. Accounting for changes in fair value of the derivative instruments depends on whether the derivatives qualify as hedging relationships and the types of relationships designated are based on the exposures hedged. At June 30, 2021 and December 31, 2020, the Company did not have any derivative instruments that were designated as hedges. Stock Option and Warrant Valuation Stock option and warrant valuation models require the input of highly subjective assumptions. The fair value of stock-based payment awards was estimated using the Black-Scholes option model with a volatility figure derived from an index of historical stock prices for comparable entities. For warrants and stock options issued to non- employees, the Company accounts for the expected life based on the contractual life of the warrants and stock options. For employees, the Company accounts for the expected life of options in accordance with the “simplified” method, which is used for “plain-vanilla” options, as defined in the accounting standards codification. The risk-free interest rate was determined from the implied yields of U.S. Treasury zero-coupon bonds with a remaining life consistent with the expected term of the options. Stock-Based Compensation The Company accounts for stock-based compensation costs under the provisions of ASC 718, Compensation — Stock Compensation, which requires the measurement and recognition of compensation expense related to the fair value of stock-based compensation awards that are ultimately expected to vest. Stock based compensation expense recognized includes the compensation cost for all stock-based payments granted to employees, officers, and directors based on the grant date fair value estimated in accordance with the provisions of ASC 718. ASC 718 is also applied to awards modified, repurchased, or cancelled during the periods reported. Stock-based compensation is recognized as expense over the employee’s requisite vesting period and over the nonemployee’s period of providing goods or services. Deferred Offering Costs The Company complies with the requirements of ASC 340, Other Assets and Deferred Costs, with regards to offering costs. Prior to the completion of an offering, offering costs are capitalized. The deferred offering costs are charged to additional paid-in capital or as a discount to debt, as applicable, upon the completion of an offering or to expense if the offering is not completed. As of December 31, 2020, the Company had capitalized $214,647 in deferred offering costs. Upon completion of the IPO in May 2021, all capitalized deferred offering costs were charged to additional paid-in capital. Segment Information In accordance with ASC 280, Segment Reporting (“ASC 280”), we identify our operating segments according to how our business activities are managed and evaluated. As of June 30, 2021 our operating segments included: DSTLD, Bailey and H&J. Each operating segment currently reports to the Chief Executive Officer. Each of our brands serve or are expected to serve customers through our wholesale, in store and online channels, allowing us to execute on our omni-channel strategy. We have determined that each of our operating segments share similar economic and other qualitative characteristics, and therefore the results of our operating segments are aggregated into one reportable segment. All of the operating segments have met the aggregation criteria and have been aggregated and are presented as one reportable segment, as permitted by ASC 280. We continually monitor and review our segment reporting structure in accordance with authoritative guidance to determine whether any changes have occurred that would impact our reportable segments. Income Taxes The Company uses the liability method of accounting for income taxes as set forth in ASC 740, Income Taxes. Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. A valuation allowance is recorded when it is unlikely that the deferred tax assets will not be realized. We assess our income tax positions and record tax benefits for all years subject to examination based upon our evaluation of the facts, circumstances and information available at the reporting date. In accordance with ASC 740-10, for those tax positions where there is a greater than 50% likelihood that a tax benefit will be sustained, our policy will be to record the largest amount of tax benefit that is more likely than not to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where there is less than 50% likelihood that a tax benefit will be sustained, no tax benefit will be recognized in the financial statements. Net Loss per Share Net earnings or loss per share is computed by dividing net income or loss by the weighted-average number of common shares outstanding during the period, excluding shares subject to redemption or forfeiture. The Company presents basic and diluted net earnings or loss per share. Diluted net earnings or loss per share reflect the actual weighted average of common shares issued and outstanding during the period, adjusted for potentially dilutive securities outstanding. Potentially dilutive securities are excluded from the computation of the diluted net loss per share if their inclusion would be anti-dilutive. As all potentially dilutive securities are anti-dilutive as of June 30, 2021 and 2020, diluted net loss per share is the same as basic net loss per share for each year. Potentially dilutive items outstanding as of June 30, 2021 and 2020 are as follows: June 30, 2021 2020 Series Seed Preferred Stock (convertible to common stock) — 20,714,518 Series A Preferred Stock (convertible to common stock) — 5,654,072 Series A-2 Preferred Stock (convertible to common stock) — 5,932,742 Series CF Preferred Stock (convertible to common stock) — 836,331 Series A-3 Preferred Stock (convertible to common stock) — 9,032,330 Series B Preferred Stock (convertible to common stock) — 20,754,717 Common stock warrants 3,946,348 572,845 Preferred stock warrants — 806,903 Stock options 3,875,103 1,084,215 Total potentially dilutive shares 7,821,451 65,388,673 All shares of preferred stock were convertible into shares of common stock at a ratio of 15.625:1 per share. Upon the closing of the IPO, all 62,924,710 shares of preferred stock converted into an aggregate of 4,027,181 shares of common stock according to their respective terms. Additionally, all preferred stock warrants converted into 51,642 common stock warrants at the same ratio as the underlying preferred stock conversion. Concentrations The Company utilized four vendors that made up 62% of all inventory purchases during the six months ended June 30, 2021 and three vendors that made up 23% of all inventory purchases during the six months ended June 30, 2020. The loss of one of these vendors, may have a negative short-term impact on the Company’s operations; however, we believe there are acceptable substitute vendors that can be utilized longer-term. Recent Accounting Pronouncements In August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06, which simplifies the guidance on the issuer’s accounting for convertible debt instruments by removing the separation models for convertible debt with a cash conversion feature and convertible instruments with a beneficial conversion feature. As a result, entities will not separately present in equity an embedded conversion feature in such debt and will account for a convertible debt instrument wholly as debt, unless certain other conditions are met. The elimination of these models will reduce reported interest expense and increase reported net income for entities that have issued a convertible instrument that is within the scope of ASU 2020-06. ASU 2020-06 is applicable for fiscal years beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. The Company has elected to early adopt this ASU and the adoption of this ASU did not have a material impact on the Company’s consolidated financial statements and related disclosures. In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02: Leases (Topic 842). The new guidance generally requires an entity to recognize on its balance sheet operating and financing lease liabilities and corresponding right-of-use assets. The standard will be effective for the first interim period within annual reporting periods beginning after December 15, 2018 and early adoption is permitted. The new standard requires a modified retrospective transition for existing leases to each prior reporting period presented. The Company has elected to utilize the extended adoption period available to the Company as an emerging growth company and has not currently adopted this standard. This standard will be effective for the first interim period within annual reporting periods beginning after December 15, 2021. The Company is currently evaluating the impact of the adoption of ASU 2016-02 on its financial position, results of operations and cash flows once adopted. Management does not believe that any other recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances. |
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS | 6 Months Ended |
Jun. 30, 2021 | |
BUSINESS COMBINATIONS | |
BUSINESS COMBINATIONS | NOTE 4: BUSINESS COMBINATIONS Bailey 44 On February 12, 2020, the Company acquired 100% of the membership interests of Bailey. The purchase price consideration included (i) an aggregate of 20,754,717 shares of Series B Preferred Stock of the Company (the “Parent Stock”) and (ii) a promissory note in the principal amount of $4,500,000. Of the shares of Parent Stock issued in connection with the Merger, 16,603,773 shares were delivered on the effective date of the Merger (the “Initial Shares”) and four million one hundred fifty thousand nine hundred forty four (4,150,944) shares were held back solely, and only to the extent necessary, to satisfy any indemnification obligations of Bailey or the Holders pursuant to the terms of the Merger Agreement (the “Holdback Shares”). DBG agreed that if at that date which is one year from the closing date of the IPO, the product of the number of shares of Parent Stock issued under the Merger multiplied by the sum of the closing price per share of the common stock of the Company on such date, plus Sold Parent Stock Gross Proceeds (as that term is defined in the Merger Agreement), does not exceed the sum of $11,000,000 less the value of any Holdback Shares cancelled further to the indemnification provisions of the Merger Agreement, then the Company shall issue to the Holders pro rata an additional aggregate number of shares of common stock of the Company equal to the valuation shortfall at a per share price equal to the then closing price per share of the common stock of the Company. Series B preferred stock $ 11,000,000 Promissory note payable 4,500,000 Purchase price consideration $ 15,500,000 Purchase Price Allocation Cash and cash equivalents $ 106,913 Accounts receivable, net 37,479 Due (to) from factor, net (312,063) Inventory 3,303,660 Prepaid expenses 165,856 Deposits 187,493 Property, equipment and software, net 1,215,748 Goodwill 6,479,218 Intangible assets 8,600,000 Accounts payable (3,397,547) Accrued expenses and other liabilities (886,757) Purchase price consideration $ 15,500,000 As of June 30, 2021, the Company has a contingent consideration liability of $4,736,270 based on the valuation shortfall as noted above. See Note 3. Harper & Jones On May 18, 2021, the Company closed its acquisition of H&J pursuant to its previously disclosed Membership Interest Stock Purchase Agreement (as amended, the “Purchase Agreement”) with D. Jones Tailored Collection, Ltd. (the “Seller”), to purchase 100% of the issued and outstanding equity of Harper & Jones LLC. The purchase price consideration included (i) an aggregate of 2,192,771 shares of the Company’s common stock and (ii) $500,000 financed from the proceeds of the IPO. Pursuant to the H&J Purchase Agreement, the Seller, as the holder of all of the outstanding membership interests of H&J, will exchange all of such membership interests for a number of common stock of the Company equal to the lesser of (i) $9.1 million at a per share price equal to the initial public offering price of the Company’s shares offered pursuant to its initial public offering or (ii) the number of Subject Acquisition Shares; “Subject Acquisition Shares” means the percentage of the aggregate number of shares of the Company’s common stock issued pursuant to the Agreement, which is the percentage that Subject Seller Dollar Value is in relation to Total Dollar Value. “Subject Seller Dollar Value” means $9.1 million. If, at the one year anniversary of the closing date of the Company’s IPO, the product of the number of shares of the Company’s common stock issued at the closing of the acquisition multiplied by the average closing price per share of the shares of the Company’s common stock as quoted on the NasdaqCM for the thirty (30) day trading period immediately preceding such date does not exceed the sum of $9.1 million less the value of any shares of the Company’s common stock cancelled further to any indemnification claims made against the Seller then the Company shall issue to Seller an additional aggregate number of shares of the Company’s common stock equal to the valuation shortfall at a per share price equal to the then closing price per share of the Company’s common stock as quoted on the NasdaqCM. The Company evaluated the acquisition of H&J pursuant to ASC 805 and ASU 2017-01, Topic 805, Business Combinations. The acquisition method of accounting requires, among other things, that the assets acquired and liabilities assumed in a business combination be measured at their estimated respective fair values as of the closing date of the acquisition. Goodwill recognized in connection with this transaction represents primarily the potential economic benefits that the Company believes may arise from the acquisition. Total fair value of the purchase price consideration was determined as follows: Cash $ 500,000 Common stock 8,025,542 Contingent consideration 3,421,516 Purchase price consideration $ 11,947,058 The Company has made an allocation of the purchase price in regard to the acquisition related to the assets acquired and the liabilities assumed as of the purchase date. The following table summarizes the purchase price allocation: Purchase Price Allocation Cash and cash equivalents $ 24,335 Accounts receivable, net 49,472 Inventory 77,159 Prepaid expenses 69,715 Deposits 4,415 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) Deferred revenue (269,848) Due to related parties (1,361) Loan payable (148,900) Note payable - related party (299,489) Deferred tax liability (1,100,120) Purchase price consideration $ 11,947,058 The customer relationships and will be amortized on a straight-line basis over their estimated useful lives of three years. The brand name is indefinite-lived. The Company used the reilief of royalty approach to estimate the fair value of intangible assets acquired. Goodwill is primarily attributable to the go-to-market synergies that are expected to arise as a result of the acquisition and other intangible assets that do not qualify for separate recognition. The goodwill is not deductible for tax purposes. The Company recorded an initial contingent consideration liability at a fair value of $3,421,516 based on the valuation shortfall noted above. As of June 30, 2021, the H&J contingent consideration was valued at $1,736,147. See Note 3. The results of H&J have been included in the consolidated financial statements since the date of acquisition. H&J’s net revenue and net income included in the consolidated financial statements since the acquisition date were approximately $379,000 and $158,000, respectively. Unaudited Pro Forma Financial Information The following unaudited pro forma financial information presents the Company’s financial results as if the Bailey and H&J acquisitions had occurred as of January 1, 2020. The unaudited pro forma financial information is not necessarily indicative of what the financial results actually would have been had the acquisitions been completed on this date. In addition, the unaudited pro forma financial information is not indicative of, nor does it purport to project, the Company’s future financial results. The following unaudited pro forma financial information includes incremental property and equipment depreciation and intangible asset amortization as a result of the acquisitions. The pro forma information does not give effect to any estimated and potential cost savings or other operating efficiencies that could result from the acquisition: Six Months Ended June 30, 2021 2020 Net revenues $ 2,392,195 $ 6,683,132 Net loss $ (14,099,782) $ (6,686,352) Net loss per common share $ (4.60) $ (10.07) |
DUE FROM FACTOR
DUE FROM FACTOR | 6 Months Ended |
Jun. 30, 2021 | |
DUE FROM FACTOR | |
DUE FROM FACTOR | NOTE 5: DUE FROM FACTOR The Company, via its subsidiary, Bailey, assigns a portion of its trade accounts receivable to a third- party factoring company, who assumes the credit risk with respect to the collection of non-recourse accounts receivable. The Company may request advances on the net sales factored at any time before their maturity date, and up to 50% of eligible finished goods inventories. The factor charges a commission on the net sales factored for credit and collection services. Interest on advances is charged as of the last day of each month at a rate equal to the LIBOR rate plus 2.5%. Advances are collateralized by a security interest in substantially all of Bailley’s assets. Due to/from factor consist of the following: June 30, December 31, 2021 2020 Outstanding receivables: Without recourse $ 54,474 $ 151,158 With recourse — 42,945 Advances 2,449 56,246 Credits due customers (50,064) (40,316) $ 6,859 $ 210,033 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 6 Months Ended |
Jun. 30, 2021 | |
GOODWILL AND INTANGIBLE ASSETS | |
GOODWILL AND INTANGIBLE ASSETS | NOTE 6: GOODWILL AND INTANGIBLE ASSETS The Company recorded $6,479,218 in goodwill from the Bailey business combination in February 2020, and $9,681,548 in goodwill from the H&J business combination in May 2021. The following table summarizes information relating to the Company’s identifiable intangible assets as of June 30, 2021: Gross Accumulated Carrying Amount Amortization Value Amortized: Customer relationships $ 2,817,670 $ (575,736) $ 2,241,934 2,817,670 (575,736) 2,241,934 Indefinite-lived: Brand name $ 8,933,860 — 8,933,860 $ 11,751,530 $ (575,736) $ 11,175,794 The Company recorded amortization expense of $163,236 and $91,656 during the three months ended June 30, 2021 and 2020, and $254,903 and $137,500 during the six months ended June 30, 2021 and 2020, respectively, which is included in general and administrative expenses in the consolidated statements of operations. |
LIABILITIES AND DEBT
LIABILITIES AND DEBT | 6 Months Ended |
Jun. 30, 2021 | |
LIABILITIES AND DEBT | |
LIABILITIES AND DEBT | NOTE 7: LIABILITIES AND DEBT Accrued Expenses and Other Liabilities The Company accrued expenses and other liabilities line in the consolidated balance sheets is comprised of the following as of June 30, 2021 and December 31, 2020: June 30, December 31, 2021 2020 Accrued expenses $ 285,387 $ 92,074 Reserve for returns 22,214 5,229 Payroll related liabilities 973,099 843,704 Sales tax liability 206,092 196,410 Other liabilities 128,830 108,230 $ 1,615,622 $ 1,245,646 Certain liabilities including sales tax and payroll related liabilities maybe be subject to interest in penalties. As of June 30, 2021 and December 31, 2020, payroll related labilities included approximately $265,000 and $152,000 in estimated penalties associated with accrued payroll taxes. Venture Debt In March 2017, the Company entered into a senior credit agreement with an outside lender for up to $4,000,000, dependent upon the achievement of certain milestones. Through various amendments to the agreement, the credit agreement has been increased to approximately $6,000,000. The loan bears interest at 12.5% per annum, compounded monthly, plus fees currently at $5,000 per month. In March 2021, the Company and the lender agreed to extend the maturity date of the credit agreement to December 31, 2022, with certain payments due as follows. If the Company consummates a follow on public offering on or before July 31, 2021, the Company is required to make a $3,000,000 payment on the loan within five five While the Company does not currently have a registration statement on file with the SEC to conduct a follow-on offering prior to July 31, 2021 and September 30, 2021, the Company may effect such an offering if market conditions are favorable for such an offering and should the representative agree to waive the standstill provision set forth herein. There is no assurance that even if market conditions are favorable that the representative will waive the standstill provision. In such a case the Company anticipates to make any required payments under its senior credit facility from cash generated from operations. As of June 30, 2021 and December 31, 2020, the gross loan balance was $6,001,755. The lender was also granted warrants to purchase common stock representing 1% of the fully diluted capitalization of the Company for each $1,000,000 of principal loaned under the agreement, which was increased to 1.358% during 2019. The relative fair value of the warrants is initially recorded as a discount to the note, which is amortized over its term. See Note 10 for further detail. For the six months ended June 30, 2021 and 2020, $147,389 and $69,830 of these loan fees and discounts from warrants were amortized to interest expense, leaving unamortized balances of $0 and $147,389 as of June 30, 2021 and December 31, 2020, respectively. Interest expense for the three months ended June 30, 2021 and 2020 was $202,041 and $170,877, and $402,027 $334,923, respectively. Effective interest rate on the loan for the six months ended June 30, 2021 and 2020 was 13.4% and 14.0%, respectively. Convertible Debt 2020 Regulation CF Offering During the year ended December 31, 2020, the Company received gross proceeds of $450,308 from a Regulation CF convertible debt offering. In 2021, the Company received additional gross proceeds of $473,650. Interest was 6% per annum and the debt was due October 30, 2022. Upon closing of the IPO, the outstanding principal and accrued and unpaid interest of $16,942 was converted into 319,661 shares of common stock based on the terms of the notes. Total issuances costs were $69,627, which was recognized as a debt discount and was amortized in 2021 through the date of IPO when such debt converted. During the six months ended June 30, 2021, $27,894 of the debt discount was amortized to interest expense. 2020 Regulation D Offering Concurrently with the offering above, in 2021 and 2020 the Company received gross proceeds of $55,000 and $800,000, respectively, from a Regulation D convertible debt offering. The debt accrued interest at a rate of 14% per annum with a maturity date of nine months from the date of issuance. The debt was contingently convertible and contains both automatic and optional conversions. The debt converted automatically upon an initial public offering of at least $10,000,000 in gross proceeds at a price per share equal to 50% of the IPO price. Issuance costs on the aggregate funds totaled $100,000. In addition, the Company issued 512 warrants to purchase common stock in connection with the notes. The issuance costs and warrants are recognized as a debt discount and were amortized in 2021 through the date of IPO when such debt converted. The fair value of the warrants was determined to be negligible. Upon closing of the IPO, $755,000 in outstanding principal and approximately $185,000 of the accrued and unpaid interest was converted into 453,437 shares of common stock. As of June 30, 2021, there was $100,000 remaining in outstanding principal that was not converted into equity. During the three and six months ended June 30, 2021, $32,331 and $100,000 of debt discount was amortized to interest expense. The Company recorded an additional $132,609 in default interest expense upon conversion of these notes. 2019 Regulation D Offering For the year ended December 31, 2019, the Company received gross proceeds of $799,280 from a Regulation D convertible debt offering. The debt accrued interest at a rate of 12% per annum with a maturity date of thirty-six months from the date of issuance. The debt was contingently convertible and contained both automatic and optional conversions. The debt converts automatically upon an initial public offering at $2.19 per share. If, prior to maturity there is a change in control event, the holders of a majority of the debt can vote to convert two times the value of the principle, with accrued interest being eliminated, at 1) the fair market value of the company’s common stock at the time of such conversion, 2) $2.19 per share, 3) dividing the valuation cap ($9,000,000) by the pre-money fully diluted capitalization. Upon closing of the IPO, the outstanding principal was converted into 362,055 shares of common stock. Loan Payable — PPP and SBA Loan In April 2020, the Company and Bailey each entered into a loan with a lender in an aggregate principal amount of $203,994 and $1,347,050, respectively, pursuant to the Paycheck Protection Program (“PPP”) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. In February 2021, Bailey entered into an 2nd Round PPP Loan for a principal amount of $1,347,050. In May 2021, the Company entered into an 2 nd The CARES Act additionally extended COVID relief funding for qualified small businesses under the Economic Injury Disaster Loan (EIDL) assistance program. On June 25, 2020 the Company was notified that their EIDL application was approved by the Small Business Association (SBA). Per the terms of the EIDL agreement, the Company received total proceeds of $150,000. The Loan matures in thirty years from the effective date of the Loan and has a fixed interest rate of 3.75% per annum. As of June 30, 2021, Harper & Jones had an outstanding loan under the EIDL program of $148,900. Loan Payable In May 2021, H&J entered into a line of credit with a bank and received proceeds of $75,000. The line bears interest at 7.76% and matures in December 2025. As of June 30, 2021, the outstanding balance was $73,695. Note Payable – Related Party As of June 30, 2021, H&J had an outstanding note payable of $299,489 owned by the H&J Seller. The note matures on July 10, 2022 and bears interest at 12% per annum. Promissory Note Payable As noted in Note 4, the Company issued a promissory note in the principal amount of $4,500,000 to the Bailey Holders pursuant to the Bailey acquisition. In February 2021, the maturity note of the agreement was extended from December 31, 2020 to July 31, 2021. The note incurs interest at 12% per annum. Upon the IPO closing, the Company repaid $1,000,000 of the outstanding principal on this note in May 2021. As of June 30, 3021, $3,500,000 remained outstanding. Interest expense was $120,000 and $135,000 for the three months ended June 30, 2021 and 2020, and $284,000 and $202,500 for the six months ended June 30, 2021 and 2020, respectively, all of which was accrued and unpaid as of June 30, 2021. In April 2021, the Company entered into a promissory note in the principal amount of $1,000,000. The Company received $810,000 in proceeds, net of issuance costs and original issue discount. Additionally, the Company issued 120,482 warrants to the lender and 20,000 shares of common stock to the underwriter, both of which was recorded as a debt discount at the time of the loan. The fair value of the warrants and shares recorded as a debt discount was $73,958. Upon the closing of the IPO, the note was repaid in full. The entire debt discount of $263,958 was amortized to interest expense upon repayment of the note. |
STOCKHOLDERS' EQUITY (DEFICIT)
STOCKHOLDERS' EQUITY (DEFICIT) | 6 Months Ended |
Jun. 30, 2021 | |
STOCKHOLDERS' EQUITY (DEFICIT) | |
STOCKHOLDERS' EQUITY (DEFICIT) | NOTE 8: STOCKHOLDERS’ EQUITY (DEFICIT) Amended and Restated Certificate of Incorporation On May 18, 2021, the Company filed a Sixth Amended and Restated Certificate of Incorporation (the “Restated Certificate”) with the Secretary of State of the State of Delaware in connection with the Company’s IPO. The Company’s board of directors and stockholders previously approved the Restated Certificate to be effective immediately prior to the closing of the IPO. The Restated Certificate amends and restates the Company’s amended and restated certificate of incorporation, as amended, in its entirety to, among other things: (i) increase the authorized number of shares of common stock to 200,000,000 shares; (ii) authorize 10,000,000 shares of preferred stock that may be issued from time to time by the Company’s board of directors in one or more series; (iii) provide that directors may be removed from office only for cause by the affirmative vote of the holders of at least 66 2/3% The Restated Certificate also effected a 1-for-15.625 reverse stock split approved by the Company’s Board of Directors as described above. Convertible Preferred Stock During the six months ended June 30, 2020, the Company issued 809,294 shares of Series A-3 Preferred Stock at a price of $0.53 and 709,690 shares of Series CF Preferred Stock at price per share of $0.52. During six months ended June 30, 2020, the Company issued 20,754,717 shares of Series B Preferred Stock to the Bailey Holders pursuant to the Bailey acquisition at a price per share of $0.53 for a total fair value of $11,000,000. See Note 4. Upon the closing of the Company’s IPO on May 18, 2021, all then-outstanding shares of Preferred Stock converted into an aggregate of 4,027,181 shares of common stock according to their terms. Common Stock The Company had 200,000,000 shares of common stock authorized with a par value of $0.0001 as of June 30, 2021. Common stockholders have voting rights of one vote per share. The voting, dividend, and liquidation rights of the holders of common stock are subject to and qualified by the rights, powers, and preferences of preferred stockholders. 2021 Transactions On May 13, 2021, the Company’s registration statement on Form S-1 relating to the IPO was declared effective by the SEC. In the IPO, which closed on May 18, 2021, the Company issued and sold 2,409,639 shares of common stock at a public offering price of $4.15 per share. Additionally, the Company issued warrants to purchase 2,771,084 shares, which includes 361,445 warrants sold upon the partial exercise of the over-allotment option. The aggregate net proceeds to the Company from the were $8.6 million after deducting underwriting discounts and commissions of $0.8 million and direct offering expenses of $0.6 million. Upon the closing of the Company’s IPO on May 18, 2021, all then-outstanding shares of Preferred Stock converted into an aggregate of 4,027,181 shares of common stock according to their terms. Upon closing of the Company’s IPO, the Company converted outstanding principal totaling $2,680,289 and certain accrued and unpaid interest of the Company’s convertible debt into an aggregate of 1,135,153 shares of common stock. See Note 7. Upon closing of the Company’s IPO, certain officers and directors converted balances due totaling $257,515 into 152,357 shares of common stock and recorded $233,184 in compensation expense for the shares issued in excess of accrued balances owed. See Note 9. In connection with the H&J acquisition, the Company issued 2,192,771 shares of common stock to the seller. See Note 4. The Company issued 20,000 shares to the underwriter in connection with its April 2021 note financing. Pursuant to a consulting agreement, the Company issued 50,000 shares of common stock with a guaranteed equity value of $250,000. In connection with the agreement, the Company recorded a contingent consideration liability of $67,000. See Note 3. In May 2021, an aggregate of 31,881 warrants were exercised for shares of common stock for proceeds of $145,696. On June 28, 2021, the Company’s underwriters purchased 361,445 shares of common stock at a public offering price of $4.15 per share pursuant to the exercise of the remaining portion of their over-allotment option. The Company received net proceeds of approximately $1.4 million after deducting underwriting discounts and commissions of $0.1 million. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2021 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 9: RELATED PARTY TRANSACTIONS Employee Backpay, Loans Receivable and Loans Payable As of June 30, 2021 and December 31, 2020, due to related parties includes advances from the former officer, Mark Lynn, who also serves as a director, totaling $124,568 and $194,568 respectively, and accrued salary and expense reimbursements of $126,706 and $246,885 respectively, to current officers. Upon closing of the IPO, 25,080 shares of common stock were issued to directors as conversion of balances owed. The current CEO, Hil Davis, previously advanced funds to the Company for working capital. These prior advances were converted to a note payable totaling $115,000. Upon closing of the IPO, 127,278 shares of common stock were issued to the CEO as conversion of the outstanding note payable and related accrued interest, accrued compensation and other consideration. As of a result of the transaction, the Company recorded an additional $233,184 in stock compensation expense, which is included in general and administrative expenses in the condensed consolidated statements of operations. As of June 30, 2021, H&J had an outstanding note payable of $299,489 owned by the H&J Seller. The note matures on July 10, 2022 and bears interest at 12% per annum. |
SHARE-BASED PAYMENTS
SHARE-BASED PAYMENTS | 6 Months Ended |
Jun. 30, 2021 | |
SHARE-BASED PAYMENTS | |
SHARE-BASED PAYMENTS | NOTE 10: SHARE-BASED PAYMENTS Common Stock Warrants During the six months ended June 30, 2020, the Company granted 152,280 common stock warrants to the venture debt lender with an exercise price of $2.50 per share. The warrants were valued at $58,421 using the below range of inputs using the Black-Scholes model. During the Company’s Series A-3 Preferred Stock raise, the Company granted 2,603 common stock warrants Six Months Ended June 30, 2020 Risk Free Interest Rate 1.54 - 1.59 % Expected Dividend Yield 0.00 % Expected Volatility 58.0 % Expected Life (years) 10.00 In connection with the IPO, the Company issued 2,409,639 warrants and an additional 361,445 warrants to purchase common stock per the over-allotment option. Each warrant will have an exercise price of $4.57 per share (equal to 110% of the offering price of the common stock), will be exercisable upon issuance and will expire five years from issuance. On May 13, 2021, pursuant to the IPO Underwriting Agreement, the Company issued warrants to the underwriters to purchase up to an aggregate of 120,482 shares of common stock with an exercise price of $5.19 per share. The warrants may be exercised beginning on November 13, 2021 and will expire five years from issuance. In connection with the Company’s April 2021 note financing, the Company issued warrants to the lender to purchase up to 120,482 shares of common stock. The warrants have an exercise price of $4.15 per share and are exercisable immediately after issuance. In May 2021, an aggregate of 31,881 warrants were exercised for shares of common stock for proceeds of $145,696. A summary of information related to common stock warrants for the six months ended June 30, 2021 is as follows: Common Weighted Stock Average Warrants Exercise Price Outstanding - December 31, 2020 914,539 $ 2.66 Granted 3,012,048 4.58 Converison of preferred stock warrants upon IPO 51,642 7.66 Exercised (31,881) 4.57 Forfeited — — Outstanding - June 30, 2021 3,946,348 $ 4.17 Exercisable at June 30, 2021 3,825,866 $ 4.14 Preferred Stock Warrants A summary of information related to preferred stock warrants for the six months ended June 30, 2021 is as follows: Preferred Weighted Stock Average Warrants Exercise Price Outstanding - December 31, 2020 806,903 $ 0.49 Converted to common stock warrants upon IPO (806,903) 0.49 Exercised — — Forfeited — — Outstanding - June 30, 2021 — $ — Exercisable at June 30, 2021 — $ — Upon the IPO, all outstanding preferred stock warrants converted into common stock warrants at a ratio of 15.625:1. Stock Options 2020 Incentive Stock Plan The Company has adopted a 2020 Omnibus Incentive Stock Plan (the “2020 Plan”). An aggregate of 3,300,000 shares of the Company’s common stock is reserved for issuance and available for awards under the 2020 Plan, including incentive stock options granted under the 2020 Plan. The 2020 Plan administrator may grant awards to any employee, director, consultant or other person providing services to us or our affiliates. Upon the IPO, 2,712,000 options were granted to executives and directors at an exercise price of $4.15 per share. As of June 30, 2021, 588,000 options were available for future issuance. A summary of information related to stock options under our 2013 and 2020 Stock Plan for the six months ended June 30, 2021 is as follows: Weighted Average Options Exercise Price Outstanding - December 31, 2020 1,163,103 $ 2.34 Granted 2,712,000 4.15 Exercised — — Forfeited — — Outstanding - June 30, 2021 3,875,103 $ 3.62 Exercisable at June 30, 2021 2,996,861 $ 3.60 Weighted average duration (years) to expiration of outstanding options at June 30, 2021 8.53 Stock-based compensation expense of $3,568,370 and $49,932 was recognized for the three months ended June 30, 2021 and 2021, and $3,605,346 and $99,864 was recognized for the six months ended June 30, 2021 and 2020, respectively. During the six months ended June 30, 2021, $523,151 was recorded to sales and marketing expense, and all other stock compensation was included in general and administrative expense in the condensed consolidated statements of operations. Total unrecognized compensation cost related to non-vested stock option awards as of June 30, 2021 amounted to $1,298,335 and will be recognized over a weighted average period of 2.74 years. |
LEASE OBLIGATIONS
LEASE OBLIGATIONS | 6 Months Ended |
Jun. 30, 2021 | |
LEASE OBLIGATIONS | |
LEASE OBLIGATIONS | NOTE 11: LEASE OBLIGATIONS In April 2021, the Company entered into a lease agreement for operating space. The lease expires in June 2023 and has monthly base rent payments of $17,257. The lease required a $19,500 deposit. Bailey leases facilities under operating leases with unrelated parties that expire at various dates through February 2029, however in July 2020 Bailey negotiated the early termination of the leases on two of its retail locations. The third lease was vacated and no additional liability is expected. H&J leases office and showroom facilities in Dallas and Houston, Texas, and New Orleans, Louisiana. The leases expire at various dates through June 2022 with base rents ranging from $3,400 to $6,500. Total rent expense for the three months ended June 30, 2021 and 2020 was $173,052 and $181,152, and $305,841 and $463,349 for the six months ended June 30, 2021 and 2020, respectively. |
CONTINGENCIES
CONTINGENCIES | 6 Months Ended |
Jun. 30, 2021 | |
CONTINGENCIES | |
CONTINGENCIES | NOTE 12: CONTINGENCIES On February 28, 2020, a Company vendor filed a lawsuit against the Company’s non-payment of trade payables totaling $123,000. Such amounts, including expected interest, are included in accounts payable in the accompanying consolidated balance sheets and the Company does not believe it is probable that losses in excess of such trade payables will be incurred. The Company is actively working to resolve this matter. On March 25, 2020, a Bailey’s product vendor filed a lawsuit against Bailey for non-payment of trade payables totaling $492,390. Approximately the same amount is held in accounts payable for this vendor in the accompanying consolidated balance sheets and the Company does not believe it is probable that losses in excess of such trade payables will be incurred. The Company and product vendor have entered into a settlement, which will require the Company make ten monthly payments of approximately $37,000, starting in May 2021. Upon completion of the payment schedule, any remaining amounts will be forgiven. If the Company fails to meet its obligations based on the prescribed time frame, the full amount will be due with interest, less payments made. On December 21, 2020, a Company investor filed a lawsuit against DBG for reimbursement of their investment totaling $100,000. Claimed amounts are included in short-term convertible note payable in the accompanying consolidated balance sheets and the Company does not believe it is probable that losses in excess of such short-term note payable will be incurred. The Company is actively working to resolve this matter. In August 2020 and March 2021, two lawsuits were filed against Bailey’s by third-party’s related to prior services rendered. The claims (including fines, fees, and legal expenses) total an aggregate of $96,900. Both cases are in the preliminary stages and the Company believes the claims to be without merit. At this time, the Company is unable to determine potential outcomes but does not believe risk of loss is probable. On September 24, 2020 a Bailey’s product vendor filed a lawsuit against Bailey’s non-payment of trade payables totaling approximately $481,000 and additional damages of approximately $296,000. Claimed amounts for trade payables are included in accounts payable in the accompanying consolidated balance sheets, net of payments made. The Company does not believe it will be liable for additional damages and therefore the Company does not believe additional accrual is needed over what is included in accounts payable at this time. The Company plans to contest any such damages vigorously. Except as may be set forth above the Company is not a party to any legal proceedings, and the Company is not aware of any claims or actions pending or threatened against us. In the future, the Company might from time to time become involved in litigation relating to claims arising from its ordinary course of business, the resolution of which the Company does not anticipate would have a material adverse impact on our financial position, results of operations or cash flows. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2021 | |
INCOME TAXES | |
INCOME TAXES | NOTE 13: INCOME TAXES The Company recorded a tax benefit of $1,100,200 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2021 | |
SUBSEQUENT EVENTS. | |
SUBSEQUENT EVENTS | NOTE 14: SUBSEQUENT EVENTS Management’s Evaluation In July 2021, warrant holders exercised 355,000 warrants for proceeds of $1,622,350. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“GAAP”). |
Unaudited Interim Financial Information | Unaudited Interim Financial Information The accompanying unaudited condensed consolidated balance sheet as of June 30, 2021, the unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2021 and 2020 and of cash flows for the six months ended June 30, 2021 and 2020 have been prepared by the Company, pursuant to the rules and regulations of the SEC for the interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. The unaudited interim consolidated financial statements have been prepared on a basis consistent with the audited consolidated financial statements and in the opinion of management, reflect all adjustments, consisting of only normal recurring adjustments, necessary for the fair presentation of the results for the interim periods presented and of the financial condition as of the date of the interim consolidated balance sheet. The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2020 included in the Company’s prospectus that forms a part of the Company’s Registration Statement on Form S-1 ( File No. 333-255193). The prospectus was filed with the SEC pursuant to Rule 424(b)(4) on May 17, 2021. |
Principles of Consolidation | Principles of Consolidation These condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries Bailey and H&J. All inter-company transactions and balances have been eliminated on consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Cash and Equivalents and Concentration of Credit Risk | Cash and Equivalents and Concentration of Credit Risk The Company considers all highly liquid securities with an original maturity of less than three months to be cash equivalents. As of June 30, 2021 and December 31, 2020, the Company did not hold any cash equivalents. The Company’s cash and cash equivalents in bank deposit accounts, at times, may exceed federally insured limits of $250,000. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments FASB guidance specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows: Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities. Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (e.g., quoted prices of similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active). Level 3 — Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when their fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable. The Company’s financial instruments consist of cash and cash equivalents, prepaid expenses, accounts payable, accrued expenses, due to related parties, related party note payable, and convertible debt. The carrying value of these assets and liabilities is representative of their fair market value, due to the short maturity of these instruments. The following tables present information about the Company's financial assets and liabilities measured at fair value on a recurring basis and indicates the level of the fair value hierarchy used to determine such fair values: Fair Value Measurements as of June 30, 2021 Using: Level 1 Level 2 Level 3 Total Liabilities: Warrant liability $ — $ 78,710 $ — $ 78,710 Contingent consideration — — 6,539,417 6,539,417 $ — $ 78,710 $ 6,539,417 $ 6,618,127 Fair Value Measurements as of December 31, 2020 Using: Level 1 Level 2 Level 3 Total Liabilities: Warrant liability $ — $ — $ 6,265 $ 6,265 $ — $ — $ 6,265 $ 6,265 Warrant Liability Certain of the Company’s common stock warrants are carried at fair value. As of December 31, 2020, the fair value of the Company’s common stock warrant liabilities was measured under the Level 3 hierarchy using the Black-Scholes pricing model as the Company’s underlying common stock had no observable market price (see Note 10). The warrant liability was valued using a market approach. Upon the IPO, the warrant liabilities were valued using quoted prices of identical assets in active markets, and was reclassified under the Level 2 hierarchy. Changes in common stock warrant liability during the six months ended June 30, 2021 are as follows: Warrant Liability Outstanding as of December 31, 2020 $ 6,265 Change in fair value 72,445 Outstanding as of June 30, 2021 $ 78,710 Contingent Consideration The Company records contingent consideration liabilities relating to stock price guarantees included in its acquisition and consulting agreements. The estimated fair value of the contingent consideration is recorded using significant unobservable measures and other fair value inputs and is therefore classified as a Level 3 financial instrument. The fair value of the contingent consideration liability related to the Company's business combinations is valued using the Monte Carlo simulation model. The Monte Carlo simulation inputs include the stock price, volatility of common stock, timing of settlement and resale restrictions and limits. The fair value of the contingent consideration is then calculated based on guaranteed equity values at settlement as defined in the acquisition agreements. Changes in contingent consideration liability during the six months ended June 30, 2021 are as follows: 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 Change in fair value 3,050,901 Balance as of June 30, 2021 $ 6,539,417 |
Inventory | Inventory Inventory is stated at the lower of cost or net realizable value and accounted for using the weighted average cost method and first-in, first-out method for Bailey. The inventory balances as of June 30, 2021 and December 31, 2020 consist substantially of finished good products purchased or produced for resale, as well as any materials the Company purchased to modify the products. |
Property, Equipment, and Software | Property, Equipment, and Software Property, equipment, and software are recorded at cost. Depreciation/amortization is recorded for property, equipment, and software using the straight-line method over the estimated useful lives of assets. The Company reviews the recoverability of all long-lived assets, including the related useful lives, whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset might not be recoverable. The balances at June 30, 2021 and December 31, 2020 consist of software with three (3) year lives, property and equipment with 3-10 year lives, and leasehold improvements which are depreciated over the shorter of the lease life or expected life. Depreciation and amortization charges on property, equipment, and software are included in general and administrative expenses and amounted to $27,738 and $115,509 for the three months ended June 30, 2021 and 2020, and $36,758 and $180,557 for the six months ended June 30, 2021 and 2020, respectively. Capital assets as of June 30, 2021 and December 31, 2020 are as follows: June 30, December 31, 2021 2020 Computer equipment $ 6,339 $ 57,810 Furniture and fixtures 184,701 207,140 Leasehold improvements and showrooms 444,951 69,274 635,991 334,224 Accumulated depreciation (574,362) (334,224) Property and equipment, net $ 61,629 $ — Software $ 233,737 $ 278,405 Accumulated amortization (175,549) (216,092) Software, net $ 58,188 $ 62,313 |
Business Combinations | Business Combinations The Company accounts for acquisitions in which it obtains control of one or more businesses as a business combination. The purchase price of the acquired businesses is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the purchase price over those fair values is recognized as goodwill. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments, in the period in which they are determined, to the assets acquired and liabilities assumed with the corresponding offset to goodwill. If the assets acquired are not a business, the Company accounts for the transaction or other event as an asset acquisition. Under both methods, the Company recognizes the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity. In addition, for transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase. Goodwill represents the excess of the purchase price of an acquired entity over the fair value of identifiable tangible and intangible assets acquired and liabilities assumed in a business combination. Intangible assets are established with business combinations and consist of brand names and customer relationships. Intangible assets with finite lives are recorded at their estimated fair value at the date of acquisition and are amortized over their estimated useful lives using the straight-line method. The estimated useful lives of amortizable intangible assets are as follows: Customer relationships 3 years Contingent Consideration The Company estimates and records the acquisition date fair value of contingent consideration as part of purchase price consideration for acquisitions. Additionally, each reporting period, the Company estimates changes in the fair value of contingent consideration and recognizes any change in fair in the consolidated statement of operations. The estimate of the fair value of contingent consideration requires very subjective assumptions to be made of future operating results, discount rates and probabilities assigned to various potential operating result scenarios. Future revisions to these assumptions could materially change the estimate of the fair value of contingent consideration and, therefore, materially affect the Company’s future financial results. The contingent consideration liability is to be settled with the issuance of shares of common stock once contingent provisions set forth in respective acquisition agreements have been achieved. Upon achievement of contingent provisions, respective liabilities are relieved and offset by increases to common stock and additional paid in capital in the stockholders’ equity section of the Company’s consolidated balance sheets. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company reviews its long-lived assets (property and equipment and amortizable intangible assets) for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum of the expected cash flows, undiscounted, is less than the carrying amount of the asset, an impairment loss is recognized as the amount by which the carrying amount of the asset exceeds its fair value. |
Goodwill | Goodwill Goodwill and identifiable intangible assets that have indefinite useful lives are not amortized, but instead are tested annually for impairment and upon the occurrence of certain events or substantive changes in circumstances. The annual goodwill impairment test allows for the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. An entity may choose to perform the qualitative assessment on none, some or all of its reporting units or an entity may bypass the qualitative assessment for any reporting unit and proceed directly to step one of the quantitative impairment test. If it is determined, on the basis of qualitative factors, that the fair value of a reporting unit is, more likely than not, less than its carrying value, the quantitative impairment test is required. The quantitative impairment test calculates any goodwill impairment as the difference between the carrying amount of a reporting unit and its fair value, but not to exceed the carrying amount of goodwill. It is our practice, at a minimum, to perform a qualitative or quantitative goodwill impairment test in the first quarter every year. In the first quarter of 2021, management performed its annual qualitative impairment test. The Company determined no factors existed to conclude that it is more likely than not that the fair value of the reporting unit was less than its carrying amount. As such, no goodwill impairment was recognized as of June 30, 2021. |
Indefinite-Lived Intangible Assets | Indefinite-Lived Intangible Assets Indefinite-lived intangible assets established in connection with business combinations consist of the brand name. The impairment test for identifiable indefinite-lived intangible assets consists of a comparison of the estimated fair value of the intangible asset with its carrying value. If the carrying value exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. |
Convertible Instruments | Convertible Instruments U.S. GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule is when the host instrument is deemed to be conventional as that term is described under applicable U.S. GAAP. When the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption. The Company also records, when necessary, deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the preferred shares. |
Accounting for Preferred Stock | Accounting for Preferred Stock ASC 480, Distinguishing Liabilities from Equity, includes standards for how an issuer of equity (including equity shares issued by consolidated entities) classifies and measures on its balance sheet certain financial instruments with characteristics of both liabilities and equity. Management is required to determine the presentation for the preferred stock as a result of the redemption and conversion provisions, among other provisions in the agreement. Specifically, management is required to determine whether the embedded conversion feature in the preferred stock is clearly and closely related to the host instrument, and whether the bifurcation of the conversion feature is required and whether the conversion feature should be accounted for as a derivative instrument. If the host instrument and conversion feature are determined to be clearly and closely related (both more akin to equity), derivative liability accounting under ASC 815, Derivatives and Hedging, is not required. Management determined that the host contract of the preferred stock is more akin to equity, and accordingly, liability accounting is not required by the Company. The Company has presented preferred stock within stockholders’ equity. Costs incurred directly for the issuance of the preferred stock are recorded as a reduction of gross proceeds received by the Company, resulting in a discount to the preferred stock. The discount is not amortized. |
Revenue Recognition | Revenue Recognition Revenues are recognized when performance obligations are satisfied through the transfer of promised goods to the Company’s customers. Control transfers upon shipment of product and when the title has been passed to the customers. This includes the transfer of legal title, physical possession, the risks and rewards of ownership, and customer acceptance. The Company provides the customer the right of return on the product and revenue is adjusted based on an estimate of the expected returns based on historical rates. The Company considers the sale of products as a single performance obligation. Sales tax collected from customers and remitted to taxing authorities is excluded from revenue and is included in accrued expenses. Revenue is deferred for orders received for which associated shipments have not occurred. The reserve for returns totaled $22,214 and $5,229 as of June 30 , 2021 and December 31, 2020, respectively, and is included in accrued expenses and other liabilities in the accompanying consolidated balance sheets. |
Cost of Revenues | Cost of Revenues Cost of revenues consists primarily of inventory sold and related freight-in. |
Shipping and Handling | Shipping and Handling The Company recognizes shipping and handling billed to customers as a component of net revenues, and the cost of shipping and handling as a component of sales and marketing. Total shipping and handling billed to customers as a component of net revenues was approximately $0 and $3,800 for the three and six months ended June 30, 2021 and 2020, respectively. Total shipping and handling costs included in distribution costs were approximately $59,000 and $104,000 for the three months ended June 30, 2021 and 2020, and $119,000 and $161,000 for the six months ended June 30, 2021 and 2020, respectively. |
Advertising and Promotion | Advertising and Promotion Advertising and promotional costs are expensed as incurred. Advertising and promotional expense for the three months ended June 30, 2021 and 2020 amounted to approximately $0 and $78,000, and $3,800 and $139,000 for the six months ended June 30, 2021 and 2020,respectively. The amounts are included in sales and marketing expense. |
Common Stock Purchase Warrants and Other Derivative Financial Instruments | Common Stock Purchase Warrants and Other Derivative Financial Instruments The Company accounts for derivative instruments in accordance with ASC 815, which establishes accounting and reporting standards for derivative instruments and hedging activities, including certain derivative instruments embedded in other financial instruments or contracts and requires recognition of all derivatives on the balance sheet at fair value, regardless of hedging relationship designation. Accounting for changes in fair value of the derivative instruments depends on whether the derivatives qualify as hedging relationships and the types of relationships designated are based on the exposures hedged. At June 30, 2021 and December 31, 2020, the Company did not have any derivative instruments that were designated as hedges. |
Stock Option and Warrant Valuation | Stock Option and Warrant Valuation Stock option and warrant valuation models require the input of highly subjective assumptions. The fair value of stock-based payment awards was estimated using the Black-Scholes option model with a volatility figure derived from an index of historical stock prices for comparable entities. For warrants and stock options issued to non- employees, the Company accounts for the expected life based on the contractual life of the warrants and stock options. For employees, the Company accounts for the expected life of options in accordance with the “simplified” method, which is used for “plain-vanilla” options, as defined in the accounting standards codification. The risk-free interest rate was determined from the implied yields of U.S. Treasury zero-coupon bonds with a remaining life consistent with the expected term of the options. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation costs under the provisions of ASC 718, Compensation — Stock Compensation, which requires the measurement and recognition of compensation expense related to the fair value of stock-based compensation awards that are ultimately expected to vest. Stock based compensation expense recognized includes the compensation cost for all stock-based payments granted to employees, officers, and directors based on the grant date fair value estimated in accordance with the provisions of ASC 718. ASC 718 is also applied to awards modified, repurchased, or cancelled during the periods reported. Stock-based compensation is recognized as expense over the employee’s requisite vesting period and over the nonemployee’s period of providing goods or services. |
Deferred Offering Costs | Deferred Offering Costs The Company complies with the requirements of ASC 340, Other Assets and Deferred Costs, with regards to offering costs. Prior to the completion of an offering, offering costs are capitalized. The deferred offering costs are charged to additional paid-in capital or as a discount to debt, as applicable, upon the completion of an offering or to expense if the offering is not completed. As of December 31, 2020, the Company had capitalized $214,647 in deferred offering costs. Upon completion of the IPO in May 2021, all capitalized deferred offering costs were charged to additional paid-in capital. |
Segment Information | Segment Information In accordance with ASC 280, Segment Reporting (“ASC 280”), we identify our operating segments according to how our business activities are managed and evaluated. As of June 30, 2021 our operating segments included: DSTLD, Bailey and H&J. Each operating segment currently reports to the Chief Executive Officer. Each of our brands serve or are expected to serve customers through our wholesale, in store and online channels, allowing us to execute on our omni-channel strategy. We have determined that each of our operating segments share similar economic and other qualitative characteristics, and therefore the results of our operating segments are aggregated into one reportable segment. All of the operating segments have met the aggregation criteria and have been aggregated and are presented as one reportable segment, as permitted by ASC 280. We continually monitor and review our segment reporting structure in accordance with authoritative guidance to determine whether any changes have occurred that would impact our reportable segments. |
Income Taxes | Income Taxes The Company uses the liability method of accounting for income taxes as set forth in ASC 740, Income Taxes. Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. A valuation allowance is recorded when it is unlikely that the deferred tax assets will not be realized. We assess our income tax positions and record tax benefits for all years subject to examination based upon our evaluation of the facts, circumstances and information available at the reporting date. In accordance with ASC 740-10, for those tax positions where there is a greater than 50% likelihood that a tax benefit will be sustained, our policy will be to record the largest amount of tax benefit that is more likely than not to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where there is less than 50% likelihood that a tax benefit will be sustained, no tax benefit will be recognized in the financial statements. |
Net Loss per Share | Net Loss per Share Net earnings or loss per share is computed by dividing net income or loss by the weighted-average number of common shares outstanding during the period, excluding shares subject to redemption or forfeiture. The Company presents basic and diluted net earnings or loss per share. Diluted net earnings or loss per share reflect the actual weighted average of common shares issued and outstanding during the period, adjusted for potentially dilutive securities outstanding. Potentially dilutive securities are excluded from the computation of the diluted net loss per share if their inclusion would be anti-dilutive. As all potentially dilutive securities are anti-dilutive as of June 30, 2021 and 2020, diluted net loss per share is the same as basic net loss per share for each year. Potentially dilutive items outstanding as of June 30, 2021 and 2020 are as follows: June 30, 2021 2020 Series Seed Preferred Stock (convertible to common stock) — 20,714,518 Series A Preferred Stock (convertible to common stock) — 5,654,072 Series A-2 Preferred Stock (convertible to common stock) — 5,932,742 Series CF Preferred Stock (convertible to common stock) — 836,331 Series A-3 Preferred Stock (convertible to common stock) — 9,032,330 Series B Preferred Stock (convertible to common stock) — 20,754,717 Common stock warrants 3,946,348 572,845 Preferred stock warrants — 806,903 Stock options 3,875,103 1,084,215 Total potentially dilutive shares 7,821,451 65,388,673 All shares of preferred stock were convertible into shares of common stock at a ratio of 15.625:1 per share. Upon the closing of the IPO, all 62,924,710 shares of preferred stock converted into an aggregate of 4,027,181 shares of common stock according to their respective terms. Additionally, all preferred stock warrants converted into 51,642 common stock warrants at the same ratio as the underlying preferred stock conversion. |
Concentrations | Concentrations The Company utilized four vendors that made up 62% of all inventory purchases during the six months ended June 30, 2021 and three vendors that made up 23% of all inventory purchases during the six months ended June 30, 2020. The loss of one of these vendors, may have a negative short-term impact on the Company’s operations; however, we believe there are acceptable substitute vendors that can be utilized longer-term. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06, which simplifies the guidance on the issuer’s accounting for convertible debt instruments by removing the separation models for convertible debt with a cash conversion feature and convertible instruments with a beneficial conversion feature. As a result, entities will not separately present in equity an embedded conversion feature in such debt and will account for a convertible debt instrument wholly as debt, unless certain other conditions are met. The elimination of these models will reduce reported interest expense and increase reported net income for entities that have issued a convertible instrument that is within the scope of ASU 2020-06. ASU 2020-06 is applicable for fiscal years beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. The Company has elected to early adopt this ASU and the adoption of this ASU did not have a material impact on the Company’s consolidated financial statements and related disclosures. In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02: Leases (Topic 842). The new guidance generally requires an entity to recognize on its balance sheet operating and financing lease liabilities and corresponding right-of-use assets. The standard will be effective for the first interim period within annual reporting periods beginning after December 15, 2018 and early adoption is permitted. The new standard requires a modified retrospective transition for existing leases to each prior reporting period presented. The Company has elected to utilize the extended adoption period available to the Company as an emerging growth company and has not currently adopted this standard. This standard will be effective for the first interim period within annual reporting periods beginning after December 15, 2021. The Company is currently evaluating the impact of the adoption of ASU 2016-02 on its financial position, results of operations and cash flows once adopted. Management does not believe that any other recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of financial assets and liabilities measured at fair value on recurring basis | Fair Value Measurements as of June 30, 2021 Using: Level 1 Level 2 Level 3 Total Liabilities: Warrant liability $ — $ 78,710 $ — $ 78,710 Contingent consideration — — 6,539,417 6,539,417 $ — $ 78,710 $ 6,539,417 $ 6,618,127 Fair Value Measurements as of December 31, 2020 Using: Level 1 Level 2 Level 3 Total Liabilities: Warrant liability $ — $ — $ 6,265 $ 6,265 $ — $ — $ 6,265 $ 6,265 |
Schedule of changes in common stock warrant liability | Warrant Liability Outstanding as of December 31, 2020 $ 6,265 Change in fair value 72,445 Outstanding as of June 30, 2021 $ 78,710 |
Schedule of changes in contingent consideration | 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 Change in fair value 3,050,901 Balance as of June 30, 2021 $ 6,539,417 |
Schedule of property, equipment, and software | June 30, December 31, 2021 2020 Computer equipment $ 6,339 $ 57,810 Furniture and fixtures 184,701 207,140 Leasehold improvements and showrooms 444,951 69,274 635,991 334,224 Accumulated depreciation (574,362) (334,224) Property and equipment, net $ 61,629 $ — Software $ 233,737 $ 278,405 Accumulated amortization (175,549) (216,092) Software, net $ 58,188 $ 62,313 |
Schedule of estimated useful lives of amortizable intangible assets | Customer relationships 3 years |
Schedule of potentially dilutive items outstanding | June 30, 2021 2020 Series Seed Preferred Stock (convertible to common stock) — 20,714,518 Series A Preferred Stock (convertible to common stock) — 5,654,072 Series A-2 Preferred Stock (convertible to common stock) — 5,932,742 Series CF Preferred Stock (convertible to common stock) — 836,331 Series A-3 Preferred Stock (convertible to common stock) — 9,032,330 Series B Preferred Stock (convertible to common stock) — 20,754,717 Common stock warrants 3,946,348 572,845 Preferred stock warrants — 806,903 Stock options 3,875,103 1,084,215 Total potentially dilutive shares 7,821,451 65,388,673 |
BUSINESS COMBINATION (Tables)
BUSINESS COMBINATION (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
BUSINESS COMBINATIONS | |
Schedule of components of purchase price consideration | Series B preferred stock $ 11,000,000 Promissory note payable 4,500,000 Purchase price consideration $ 15,500,000 |
Schedule of assets and liabilities acquired in business combination | Purchase Price Allocation Cash and cash equivalents $ 106,913 Accounts receivable, net 37,479 Due (to) from factor, net (312,063) Inventory 3,303,660 Prepaid expenses 165,856 Deposits 187,493 Property, equipment and software, net 1,215,748 Goodwill 6,479,218 Intangible assets 8,600,000 Accounts payable (3,397,547) Accrued expenses and other liabilities (886,757) Purchase price consideration $ 15,500,000 |
Schedule of fair value of purchase price consideration | Cash $ 500,000 Common stock 8,025,542 Contingent consideration 3,421,516 Purchase price consideration $ 11,947,058 |
Schedule of allocation of purchase price in regard to acquisition | Purchase Price Allocation Cash and cash equivalents $ 24,335 Accounts receivable, net 49,472 Inventory 77,159 Prepaid expenses 69,715 Deposits 4,415 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) Deferred revenue (269,848) Due to related parties (1,361) Loan payable (148,900) Note payable - related party (299,489) Deferred tax liability (1,100,120) Purchase price consideration $ 11,947,058 |
Business acquisition Pro Forma information | Six Months Ended June 30, 2021 2020 Net revenues $ 2,392,195 $ 6,683,132 Net loss $ (14,099,782) $ (6,686,352) Net loss per common share $ (4.60) $ (10.07) |
DUE FROM FACTOR (Tables)
DUE FROM FACTOR (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
DUE FROM FACTOR | |
Schedule of due from factor | Due to/from factor consist of the following: June 30, December 31, 2021 2020 Outstanding receivables: Without recourse $ 54,474 $ 151,158 With recourse — 42,945 Advances 2,449 56,246 Credits due customers (50,064) (40,316) $ 6,859 $ 210,033 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
GOODWILL AND INTANGIBLE ASSETS | |
Summary of amortized and indefinite-lived intangible assets | Gross Accumulated Carrying Amount Amortization Value Amortized: Customer relationships $ 2,817,670 $ (575,736) $ 2,241,934 2,817,670 (575,736) 2,241,934 Indefinite-lived: Brand name $ 8,933,860 — 8,933,860 $ 11,751,530 $ (575,736) $ 11,175,794 |
LIABILITIES AND DEBT (Tables)
LIABILITIES AND DEBT (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
LIABILITIES AND DEBT | |
Schedule of accrued exepenses and other liabilities | June 30, December 31, 2021 2020 Accrued expenses $ 285,387 $ 92,074 Reserve for returns 22,214 5,229 Payroll related liabilities 973,099 843,704 Sales tax liability 206,092 196,410 Other liabilities 128,830 108,230 $ 1,615,622 $ 1,245,646 |
SHARE-BASED PAYMENTS (Tables)
SHARE-BASED PAYMENTS (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
SHARE-BASED PAYMENTS | |
Schedule of fair value measurement inputs and valuation techniques | Six Months Ended June 30, 2020 Risk Free Interest Rate 1.54 - 1.59 % Expected Dividend Yield 0.00 % Expected Volatility 58.0 % Expected Life (years) 10.00 |
Summary of information related to common stock and preferred stock warrants | Common Weighted Stock Average Warrants Exercise Price Outstanding - December 31, 2020 914,539 $ 2.66 Granted 3,012,048 4.58 Converison of preferred stock warrants upon IPO 51,642 7.66 Exercised (31,881) 4.57 Forfeited — — Outstanding - June 30, 2021 3,946,348 $ 4.17 Exercisable at June 30, 2021 3,825,866 $ 4.14 Preferred Weighted Stock Average Warrants Exercise Price Outstanding - December 31, 2020 806,903 $ 0.49 Converted to common stock warrants upon IPO (806,903) 0.49 Exercised — — Forfeited — — Outstanding - June 30, 2021 — $ — Exercisable at June 30, 2021 — $ — |
Summary of information related to stock options under stock plan | Weighted Average Options Exercise Price Outstanding - December 31, 2020 1,163,103 $ 2.34 Granted 2,712,000 4.15 Exercised — — Forfeited — — Outstanding - June 30, 2021 3,875,103 $ 3.62 Exercisable at June 30, 2021 2,996,861 $ 3.60 Weighted average duration (years) to expiration of outstanding options at June 30, 2021 8.53 |
NATURE OF OPERATIONS (Details)
NATURE OF OPERATIONS (Details) $ / shares in Units, $ in Millions | May 13, 2021USD ($)$ / sharesshares | May 12, 2021 | May 18, 2021 |
Subsidiary, Sale of Stock [Line Items] | |||
Reverse stock split ratio | 0.064 | ||
Harper & Jones LLC | |||
Subsidiary, Sale of Stock [Line Items] | |||
Business Acquisition, Percentage of Voting Interests Acquired | 100.00% | ||
Initial Public Offering | |||
Subsidiary, Sale of Stock [Line Items] | |||
Number of shares issued | shares | 2,409,639 | ||
Share issue price | $ / shares | $ 4.15 | ||
Warrants issued | shares | 2,771,084 | ||
Aggregate net proceeds from the IPO, inclusive of the proceeds from the over-allotment exercise | $ 8.6 | ||
Underwriting discounts and commissions | 0.8 | ||
Estimated offering expenses | 0.6 | ||
Additional offering costs | $ 0.6 | ||
Over-allotment option | |||
Subsidiary, Sale of Stock [Line Items] | |||
Warrants issued | shares | 361,445 |
GOING CONCERN (Details)
GOING CONCERN (Details) - USD ($) | May 13, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 |
Net loss | $ (13,721,433) | $ (4,174,124) | ||
Working capital deficit | 15,155,979 | |||
Cash and cash equivalents | $ 4,075,921 | $ 575,986 | ||
Initial Public Offering | ||||
Net proceeds from IPO and Over allottment exercise | $ 8,600,000 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Cash and Equivalents and Concentration of Credit Risk (Details) | Jun. 30, 2021USD ($) |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Cash and cash equivalents in bank deposit | $ 250,000 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fair Value of Financial Instruments (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2021 | Dec. 31, 2020 | |
Liabilities, Fair Value Disclosure [Abstract] | ||
Warrant liability | $ 78,710 | $ 6,265 |
Contingent consideration | 6,539,417 | |
Total | 6,618,127 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Initial recognition in connection with acquisition of Harper & Jones | 3,421,516 | |
Stock price guarantee per consulting agreement | 67,000 | |
Change in fair value | 3,050,901 | |
Balance as of June 30, 2021 | 6,539,417 | |
Warrant Liability | ||
Outstanding as of December 31, 2020 | 6,265 | |
Change in fair value | 72,445 | |
Outstanding as of March 31, 2021 | 78,710 | |
Level 2 | ||
Liabilities, Fair Value Disclosure [Abstract] | ||
Warrant liability | 78,710 | |
Total | 78,710 | |
Level 3 | ||
Liabilities, Fair Value Disclosure [Abstract] | ||
Warrant liability | $ 6,265 | |
Contingent consideration | 6,539,417 | |
Total | $ 6,539,417 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Equipment, and Software (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Property, Plant and Equipment [Line Items] | |||||
General and administrative expenses | $ 27,738 | $ 115,509 | $ 36,758 | $ 180,557 | |
Capital assets | |||||
Property and equipment, net | 119,817 | 119,817 | $ 62,313 | ||
Software | 233,737 | 233,737 | 278,405 | ||
Accumulated amortization | (175,549) | (175,549) | (216,092) | ||
Software, net | 58,188 | 58,188 | 62,313 | ||
Computer equipment | |||||
Capital assets | |||||
Property and equipment, gross | 6,339 | 6,339 | 57,810 | ||
Furniture and fixtures | |||||
Capital assets | |||||
Property and equipment, gross | 184,701 | 184,701 | 207,140 | ||
Leasehold improvements | |||||
Capital assets | |||||
Property and equipment, gross | 444,951 | 444,951 | 69,274 | ||
Property and equipment | |||||
Capital assets | |||||
Property and equipment, gross | 635,991 | 635,991 | 334,224 | ||
Accumulated depreciation | (574,362) | (574,362) | $ (334,224) | ||
Property and equipment, net | $ 61,629 | $ 61,629 | |||
Property and equipment | Minimum | |||||
Property, Plant and Equipment [Line Items] | |||||
Lease life or expected life | 3 years | 3 years | |||
Property and equipment | Maximum | |||||
Property, Plant and Equipment [Line Items] | |||||
Lease life or expected life | 10 years | 10 years | |||
Software | |||||
Property, Plant and Equipment [Line Items] | |||||
Lease life or expected life | 3 years | 3 years |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Business Combinations (Details) | 6 Months Ended |
Jun. 30, 2021 | |
Customer relationships | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives | 3 years |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Reserve for returns | $ 22,214 | $ 5,229 |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Shipping and Handling (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
Total shipping and handling | $ 0 | $ 3,800 | $ 0 | $ 3,800 |
Total shipping and handling costs included in distribution costs | $ 59,000 | $ 104,000 | $ 119,000 | $ 161,000 |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Advertising and Promotion (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
Advertising and promotional expense | $ 0 | $ 78,000 | $ 3,800 | $ 139,000 |
SUMMARY OF SIGNIFICANT ACCOU_11
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Deferred Offering Costs (Details) | Dec. 31, 2020USD ($) |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Deferred offering costs | $ 214,647 |
SUMMARY OF SIGNIFICANT ACCOU_12
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Net Loss per Share (Details) | 6 Months Ended | |
Jun. 30, 2021shares | Jun. 30, 2020shares | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive shares | 7,821,451 | 65,388,673 |
Convertible ratio | 15.625 | |
Preferred stock convertible into shares of common stock | 62,924,710 | |
Shares of common stock | 4,027,181 | |
Common stock warrants | 51,642 | |
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive shares | 3,875,103 | 1,084,215 |
Series Seed Preferred Stock (convertible to common stock) | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive shares | 20,714,518 | |
Series A Preferred Stock (convertible to common stock) | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive shares | 5,654,072 | |
Series A-2 Preferred Stock (convertible to common stock) | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive shares | 5,932,742 | |
Series CF Preferred Stock (convertible to common stock) | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive shares | 836,331 | |
Series A-3 Preferred Stock (convertible to common stock) | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive shares | 9,032,330 | |
Series B Preferred Stock (convertible to common stock) | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive shares | 20,754,717 | |
Common stock warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive shares | 3,946,348 | 572,845 |
Preferred stock warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive shares | 806,903 |
SUMMARY OF SIGNIFICANT ACCOU_13
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Concentrations (Details) - item | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Number of vendors | 4 | 3 |
Inventory, percentage | 62.00% | 23.00% |
SUMMARY OF SIGNIFICANT ACCOU_14
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Goodwill (Details) | 6 Months Ended |
Jun. 30, 2021USD ($) | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Goodwill, Impairment Loss | $ 0 |
BUSINESS COMBINATIONS (Details)
BUSINESS COMBINATIONS (Details) - USD ($) | May 18, 2021 | Feb. 12, 2020 |
Business Acquisition [Line Items] | ||
Trading day immediately preceding period | 30 days | |
Gross proceeds from common stock indemnification claims | $ 9,100,000 | |
Bailey 44, LLC | ||
Business Acquisition [Line Items] | ||
Business acquisition interest acquired | 100.00% | |
Number of shares connection with merger | 16,603,773 | |
Number of shares held back solely | 4,150,944 | |
Business combination indemnification provisions | $ 11,000,000 | |
Bailey 44, LLC | Series B convertible preferred stock | ||
Business Acquisition [Line Items] | ||
Business acquisition aggregate shares issuable | 20,754,717 | |
Business acquisition issuable amount | $ 4,500,000 | |
Harper & Jones LLC | ||
Business Acquisition [Line Items] | ||
Business acquisition interest acquired | 100.00% | |
Number of shares connection with merger | 2,192,771 | |
Harper & Jones LLC | Initial Public Offering | ||
Business Acquisition [Line Items] | ||
Business acquisition issuable amount | $ 9,100,000 | |
Cash payments | $ 500,000 |
BUSINESS COMBINATIONS - Purchas
BUSINESS COMBINATIONS - Purchase price consideration (Details) - USD ($) | May 18, 2021 | Feb. 12, 2020 |
Harper & Jones LLC | ||
Business Acquisition [Line Items] | ||
Purchase price consideration | $ 11,947,058 | |
Cash | 500,000 | |
Common stock | 8,025,542 | |
Contingent consideration | 3,421,516 | |
Purchase price consideration | $ 11,947,058 | |
Bailey 44, LLC | ||
Business Acquisition [Line Items] | ||
Purchase price consideration | $ 15,500,000 | |
Purchase price consideration | 15,500,000 | |
Series B convertible preferred stock | Bailey 44, LLC | ||
Business Acquisition [Line Items] | ||
Purchase price consideration | 11,000,000 | |
Purchase price consideration | 11,000,000 | |
Promissory note payable | Bailey 44, LLC | ||
Business Acquisition [Line Items] | ||
Purchase price consideration | 4,500,000 | |
Purchase price consideration | $ 4,500,000 |
BUSINESS COMBINATIONS - Assets
BUSINESS COMBINATIONS - Assets acquired and Liabilties assumed (Details) - USD ($) | May 18, 2021 | Feb. 12, 2020 | Jun. 30, 2021 | Dec. 31, 2020 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 16,160,766 | $ 6,479,218 | ||
Bailey 44, LLC | ||||
Business Acquisition [Line Items] | ||||
Cash and cash equivalents | $ 106,913 | |||
Accounts receivable, net | 37,479 | |||
Due from factor, net | (312,063) | |||
Inventory | 3,303,660 | |||
Prepaid expenses | 165,856 | |||
Deposits | 187,493 | |||
Property, equipment and software, net | 1,215,748 | |||
Goodwill | 6,479,218 | |||
Intangible assets | 8,600,000 | |||
Accounts payable | (3,397,547) | |||
Accrued expenses and other liabilities | (886,757) | |||
Purchase price consideration | $ 15,500,000 | |||
Harper & Jones LLC | ||||
Business Acquisition [Line Items] | ||||
Cash and cash equivalents | $ 24,335 | |||
Accounts receivable, net | 49,472 | |||
Inventory | 77,159 | |||
Prepaid expenses | 69,715 | |||
Deposits | 4,415 | |||
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) | |||
Deferred revenue | (269,848) | |||
Due to related parties | (1,361) | |||
Loan payable | (148,900) | |||
Note Payable related party | (299,489) | |||
Deferred Tax Liability | (1,100,120) | |||
Purchase price consideration | $ 11,947,058 |
BUSINESS COMBINATIONS - Unaudit
BUSINESS COMBINATIONS - Unaudited Pro Forma Financial Information (Details) - USD ($) | May 18, 2021 | Jun. 30, 2021 | Jun. 30, 2020 |
Business Acquisition [Line Items] | |||
Contingent consideration liability | $ 6,539,417 | ||
Contingent consideration liability | 4,736,270 | ||
Net revenues | 2,392,195 | $ 6,683,132 | |
Net income (loss) | $ (14,099,782) | $ (6,686,352) | |
Net loss per common share | $ (4.60) | $ (10.07) | |
Harper & Jones LLC | |||
Business Acquisition [Line Items] | |||
Contingent consideration liability | $ 3,421,516 | $ 1,736,147 | |
Net revenues | 379,000 | ||
Net income (loss) | $ 158,000 | ||
Customer relationships | |||
Business Acquisition [Line Items] | |||
Estimated useful lives | 3 years | ||
Customer relationships | Harper & Jones LLC | |||
Business Acquisition [Line Items] | |||
Estimated useful lives | 3 years |
DUE FROM FACTOR (Details)
DUE FROM FACTOR (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2021 | Dec. 31, 2020 | |
Debt Instrument [Line Items] | ||
Outstanding receivables, Without recourse | $ 54,474 | $ 151,158 |
Outstanding receivables, With recourse | 42,945 | |
Advances | 2,449 | 56,246 |
Credits due customers | (50,064) | (40,316) |
Due from factor | $ 6,859 | $ 210,033 |
Maximum advances on net sales can be requested, percentage | 50.00% | |
LIBOR | ||
Debt Instrument [Line Items] | ||
Debt instrument variable rate | 2.50% |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||
May 31, 2021 | Feb. 28, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Indefinite-lived Intangible Assets [Line Items] | |||||||
Goodwill acquired | $ 9,681,548 | $ 6,479,218 | |||||
Gross Amount | $ 2,817,670 | $ 2,817,670 | |||||
Accumulated Amortization | (575,736) | (575,736) | |||||
Carrying Value-Amortized | 2,241,934 | 2,241,934 | |||||
Indefinite-lived | 11,751,530 | 11,751,530 | |||||
Intangible Assets, Net (Excluding Goodwill), Total | 11,175,794 | 11,175,794 | $ 7,494,667 | ||||
Amortization expense | 163,236 | $ 91,656 | 254,903 | $ 137,500 | |||
Customer relationships | |||||||
Indefinite-lived Intangible Assets [Line Items] | |||||||
Gross Amount | 2,817,670 | 2,817,670 | |||||
Accumulated Amortization | (575,736) | (575,736) | |||||
Carrying Value-Amortized | 2,241,934 | 2,241,934 | |||||
Brand name | |||||||
Indefinite-lived Intangible Assets [Line Items] | |||||||
Indefinite-lived | 8,933,860 | 8,933,860 | |||||
Intangible Assets, Net (Excluding Goodwill), Total | $ 8,933,860 | $ 8,933,860 |
LIABILITIES AND DEBT - Accrued
LIABILITIES AND DEBT - Accrued Expenses and Other Liabilities (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
LIABILITIES AND DEBT | ||
Accrued expenses | $ 285,387 | $ 92,074 |
Reserve for returns | 22,214 | 5,229 |
Payroll related liabilities | 973,099 | 843,704 |
Sales tax liability | 206,092 | 196,410 |
Other liabilities | 128,830 | 108,230 |
Accrued Liabilities and Other Liabilities, Total | 1,615,622 | 1,245,646 |
Estimated Penalties Associated With Accrued Payroll Taxes | $ 265,000 | $ 152,000 |
LIABILITIES AND DEBT - Venture
LIABILITIES AND DEBT - Venture Debt (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Mar. 31, 2017 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Line of Credit Facility [Line Items] | ||||||||
Interest expense | $ 202,041 | $ 170,877 | $ 402,027 | $ 334,923 | ||||
Interest expense and effective interest rate | 13.40% | 14.00% | ||||||
Note Warrant [Member] | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Percentage diluted capitalization | 1.358% | 1.00% | ||||||
Principal loaned under the agreement | $ 1,000,000 | |||||||
Loan fees and discounts from warrants were amortized to interest expense | $ 147,389 | $ 69,830 | ||||||
Lioan fees and discounts from warrants unamortized balance | 0 | $ 147,389 | ||||||
Venture Debt [Member] | Secured Debt | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Maximum borrowing capacity | $ 4,000,000 | |||||||
Amended Venture Debt [Member] | Secured Debt | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Maximum borrowing capacity | $ 6,000,000 | |||||||
Loan bearsinterest rate | 12.50% | |||||||
Compounded monthly fees | $ 5,000 | |||||||
Line of credit, current | 300,000 | 300,000 | ||||||
Gross loan | $ 6,001,755 | $ 6,001,755 | $ 6,001,755 | |||||
Amended Venture Debt [Member] | Secured Debt | Follow-On Public Offering | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Loan payment | $ 3,000,000 | |||||||
Line of credit facility days | 5 days | |||||||
Amended Venture Debt [Member] | Secured Debt | Secondary Follow-On Public Offering Prior To September 30 2021 | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Loan payment | $ 3,000,000 | |||||||
Line of credit facility days | 5 days | |||||||
Amended Venture Debt [Member] | Secured Debt | Secondary Follow-On Public Offering After September 30 2021 | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Loan payment | $ 300,000 |
LIABILITIES AND DEBT - Converti
LIABILITIES AND DEBT - Convertible Debt (Details) | Apr. 01, 2021shares | Jun. 30, 2021USD ($) | Jun. 30, 2021USD ($)shares | Jun. 30, 2020USD ($) | Dec. 31, 2020USD ($)shares | Dec. 31, 2019USD ($)item$ / shares |
Debt Instrument [Line Items] | ||||||
Gross proceeds received | $ 2,626,050 | $ 1,701,044 | ||||
Convertible Debt 2020 Regulation CF Offering | ||||||
Debt Instrument [Line Items] | ||||||
Outstanding principal and accrued interest upon closing of IPO | $ 16,942 | |||||
Conversion of shares | shares | 319,661 | |||||
Convertible Debt 2020 Regulation CF Offering | Convertible Debt [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Gross proceeds received | $ 473,650 | $ 450,308 | ||||
Interest rate of loans | 6.00% | 6.00% | ||||
Issuance costs | $ 69,627 | |||||
Amortization of debt issuance costs | 27,894 | |||||
Convertible Debt 2020 Regulation D Offering | ||||||
Debt Instrument [Line Items] | ||||||
Gross proceeds received | 755,000 | |||||
Outstanding principal and accrued interest upon closing of IPO | $ 100,000 | 100,000 | $ 185,000 | |||
Amortization of debt issuance costs | $ 32,331 | 100,000 | ||||
Default interest expense | 132,609 | |||||
Convertible Debt 2020 Regulation D Offering | Convertible Debt [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Gross proceeds received | $ 55,000 | $ 800,000 | ||||
Interest rate of loans | 14.00% | 14.00% | ||||
Debt instrument term | 9 months | |||||
Issuance costs | $ 100,000 | |||||
Gross proceeds from converted debt conversion | $ 10,000,000 | |||||
Converted percentage of IPO price | 50.00% | |||||
Common stock warrants issued | shares | 512 | |||||
Convertible Debt 2020 Regulation D Offering | Debt Converted Into Common Stock [Member] | Convertible Debt [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Number of shares resulting from conversion | shares | 453,437 | |||||
Convertible Debt 2019 Regulation D Offering | Convertible Debt [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Gross proceeds received | $ 799,280 | |||||
Interest rate of loans | 12.00% | |||||
Debt instrument term | 36 months | |||||
Debt conversion price | $ / shares | $ 2.19 | |||||
Debt conversion share price triggering conversion | $ / shares | $ 2.19 | |||||
Debt conversion based on value of the principle | item | 2 | |||||
Valuation cap | $ 9,000,000 | |||||
Convertible Debt 2019 Regulation D Offering | Debt Converted Into Common Stock [Member] | Convertible Debt [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Number of shares resulting from conversion | shares | 362,055 |
LIABILITIES AND DEBT - Loan Pay
LIABILITIES AND DEBT - Loan Payable - PPP and SBA Loan (Details) - USD ($) | 1 Months Ended | ||||
Apr. 30, 2020 | Jun. 30, 2021 | May 31, 2021 | Feb. 28, 2021 | Jun. 25, 2020 | |
Debt Instrument [Line Items] | |||||
Aggregate principal amount | $ 73,695 | ||||
Harper & Jones LLC | |||||
Debt Instrument [Line Items] | |||||
Aggregate principal amount | $ 299,489 | $ 75,000 | |||
Interest rate of loans | 12.00% | 7.76% | |||
Paycheck Protection Program, Cares Act | |||||
Debt Instrument [Line Items] | |||||
Aggregate principal amount | $ 203,994 | ||||
Interest rate of loans | 1.00% | ||||
Interest deferral term | 6 months | ||||
Debt instrument term | 2 years | ||||
Paycheck Protection Program, Cares Act | Bailey | |||||
Debt Instrument [Line Items] | |||||
Aggregate principal amount | $ 1,347,050 | $ 204,000 | $ 1,347,050 | ||
Economic Injury Disaster Loan | |||||
Debt Instrument [Line Items] | |||||
Aggregate principal amount | $ 148,900 | $ 150,000 | |||
Interest rate of loans | 3.75% |
LIABILITIES AND DEBT - Promisso
LIABILITIES AND DEBT - Promissory Note Payable (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Apr. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | May 31, 2021 | |
Debt Instrument [Line Items] | ||||||
Aggregate principal amount | $ 73,695 | $ 73,695 | ||||
Gross proceeds received | 2,626,050 | $ 1,701,044 | ||||
Debt discount cost | 263,958 | 263,958 | ||||
Harper & Jones LLC | ||||||
Debt Instrument [Line Items] | ||||||
Aggregate principal amount | $ 299,489 | $ 299,489 | $ 75,000 | |||
Interest rate of loans | 12.00% | 12.00% | 7.76% | |||
Promissory note payable | ||||||
Debt Instrument [Line Items] | ||||||
Aggregate principal amount | $ 1,000,000 | $ 3,500,000 | $ 3,500,000 | $ 1,000,000 | ||
Gross proceeds received | $ 810,000 | |||||
Warrants issued | 120,482 | |||||
Debt discount cost | $ 73,958 | $ 73,958 | ||||
Promissory note payable | Common Stock | ||||||
Debt Instrument [Line Items] | ||||||
Stock issued during period | 20,000 | |||||
Promissory note payable | Notes Payable to Banks [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Interest rate of loans | 12.00% | 12.00% | ||||
Interest expense | $ 120,000 | $ 135,000 | $ 284,000 | $ 202,500 | ||
Promissory note payable | Notes Payable to Banks [Member] | Bailey | ||||||
Debt Instrument [Line Items] | ||||||
Aggregate principal amount | $ 4,500,000 | $ 4,500,000 |
STOCKHOLDERS' EQUITY (DEFICIT)
STOCKHOLDERS' EQUITY (DEFICIT) (Details) - USD ($) | Jun. 28, 2021 | May 18, 2021 | May 13, 2021 | May 31, 2021 | Apr. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 |
Class of Stock [Line Items] | |||||||||||
Preferred Stock, Shares Authorized | 20,714,518 | ||||||||||
Percentage of affirmative votes required to remove directors from the Board | 66.3333% | ||||||||||
Reverse stock split conversion ratio | 1-for-15.625 | ||||||||||
Value of shares issued | $ 126,837 | $ 311,312 | |||||||||
Common stock voting rights | one vote per share | ||||||||||
Stock-based compensation expense | $ 3,568,370 | $ 49,932 | $ 3,605,346 | $ 99,864 | |||||||
Contingent consideration liability | 6,539,417 | 6,539,417 | |||||||||
Proceeds from exercise of warrants | $ 145,696 | ||||||||||
Initial Public Offering | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of shares issued | 2,409,639 | ||||||||||
Warrants issued | 2,771,084 | ||||||||||
Aggregate net proceeds | $ 8,600,000 | ||||||||||
Amount of debt converted into shares | 2,680,289 | ||||||||||
Underwriting commissions | 800,000 | ||||||||||
Direct offering expenses | 600,000 | ||||||||||
Underwriting discounts and commissions | $ 800,000 | ||||||||||
Initial Public Offering | Certain officers and directors | |||||||||||
Class of Stock [Line Items] | |||||||||||
Amount of debt converted into shares | $ 257,515 | ||||||||||
Number of shares resulting from conversion | 152,357 | ||||||||||
Stock-based compensation expense | $ 233,184 | ||||||||||
Over-allotment option | |||||||||||
Class of Stock [Line Items] | |||||||||||
Warrants issued | 361,445 | ||||||||||
April 2021 Financing | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of shares issued | 20,000 | ||||||||||
Consulting agreement | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of shares issued | 50,000 | ||||||||||
Guaranteed equity value of shares issued | $ 250,000 | ||||||||||
Contingent consideration liability | $ 67,000 | $ 67,000 | |||||||||
Preferred Stock | |||||||||||
Class of Stock [Line Items] | |||||||||||
Preferred Stock, Shares Authorized | 10,000,000 | ||||||||||
Preferred Stock | Initial Public Offering | |||||||||||
Class of Stock [Line Items] | |||||||||||
Stock issued upon conversion (in shares) | 4,027,181 | ||||||||||
Common Stock | |||||||||||
Class of Stock [Line Items] | |||||||||||
Common stock authorized (in shares) | 200,000,000 | 200,000,000 | 200,000,000 | ||||||||
Common stock par value (in dollars per share) | $ 0.0001 | $ 0.0001 | |||||||||
Number of warrants exercised | 31,881 | ||||||||||
Proceeds from exercise of warrants | $ 145,696 | ||||||||||
Common Stock | H&J acquisition | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of shares issued | 2,192,771 | ||||||||||
Common Stock | Initial Public Offering | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of shares issued | 2,409,639 | ||||||||||
Issue price (in dollars per share) | $ 4.15 | ||||||||||
Number of shares resulting from conversion | 1,135,153 | ||||||||||
Common Stock | Over-allotment option | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of shares issued | 361,445 | ||||||||||
Issue price (in dollars per share) | $ 4.15 | ||||||||||
Aggregate net proceeds | $ 1,400,000 | ||||||||||
Underwriting discounts and commissions | $ 100,000 | ||||||||||
Series Seed Preferred Stock | |||||||||||
Class of Stock [Line Items] | |||||||||||
Preferred Stock, Shares Authorized | 0 | 0 | 20,714,518 | ||||||||
Preferred stock issued (in shares) | 0 | 0 | 20,714,518 | ||||||||
Preferred stock outstanding (in shares) | 0 | 0 | 20,714,518 | ||||||||
Series A convertible preferred stock | |||||||||||
Class of Stock [Line Items] | |||||||||||
Preferred Stock, Shares Authorized | 0 | 0 | 14,481,413 | ||||||||
Preferred stock issued (in shares) | 0 | 0 | 5,654,072 | ||||||||
Preferred stock outstanding (in shares) | 0 | 0 | 5,654,072 | ||||||||
Series A-2 convertible preferred stock | |||||||||||
Class of Stock [Line Items] | |||||||||||
Preferred Stock, Shares Authorized | 0 | 0 | 20,000,000 | ||||||||
Preferred stock issued (in shares) | 0 | 0 | 5,932,742 | ||||||||
Preferred stock outstanding (in shares) | 0 | 0 | 5,932,742 | ||||||||
Series CF convertible preferred stock | |||||||||||
Class of Stock [Line Items] | |||||||||||
Preferred Stock, Shares Authorized | 0 | 0 | 2,000,000 | ||||||||
Preferred stock issued (in shares) | 0 | 0 | 836,331 | ||||||||
Preferred stock outstanding (in shares) | 0 | 0 | 836,331 | ||||||||
Number of shares issued | 709,690 | ||||||||||
Issue price (in dollars per share) | $ 0.52 | $ 0.52 | |||||||||
Series A-3 convertible preferred stock | |||||||||||
Class of Stock [Line Items] | |||||||||||
Preferred Stock, Shares Authorized | 0 | 0 | 18,867,925 | ||||||||
Preferred stock issued (in shares) | 0 | 0 | 9,032,330 | ||||||||
Preferred stock outstanding (in shares) | 0 | 0 | 9,032,330 | ||||||||
Number of shares issued | 809,294 | 809,294 | |||||||||
Issue price (in dollars per share) | $ 0.53 | $ 0.53 | |||||||||
Value of shares issued | $ 81 | ||||||||||
Series B convertible preferred stock | Bailey | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of shares issued | 20,754,717 | ||||||||||
Issue price (in dollars per share) | $ 0.53 | $ 0.53 | |||||||||
Value of shares issued | $ 11,000,000 |
RELATED PARTY TRANSACTIONS - Du
RELATED PARTY TRANSACTIONS - Due to Related Parties (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2021 | Dec. 31, 2020 | |
Due to related parties | ||
Conversion of stock, shares converted | 25,080 | |
Advances | ||
Due to related parties | ||
Advance due to related parties | $ 124,568 | $ 194,568 |
Accrued Salary | ||
Due to related parties | ||
Advance due to related parties | $ 126,706 | |
Expense Reimbursements | ||
Due to related parties | ||
Advance due to related parties | $ 246,885 |
RELATED PARTY TRANSACTIONS - No
RELATED PARTY TRANSACTIONS - Note Payable (Details) | 6 Months Ended |
Jun. 30, 2021USD ($)shares | |
Related Party Transaction [Line Items] | |
Note payable total | $ 73,695 |
Chief Executive Officer | |
Related Party Transaction [Line Items] | |
Common Stock, Shares, Issued | shares | 127,278 |
Additional Stock Compensation Expense | $ 233,184 |
Interest rate of loans | 12.00% |
Notes Payable, Other Payables | Chief Executive Officer | Note Payable, Chief Executive Officer | |
Related Party Transaction [Line Items] | |
Increase (Decrease) in Notes Receivables | $ 115,000 |
Note payable total | $ 299,489 |
SHARE-BASED PAYMENTS - Common S
SHARE-BASED PAYMENTS - Common Stock Warrants - General Information (Details) - USD ($) | May 13, 2021 | May 31, 2021 | Apr. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2020 |
Class of Warrant or Right [Line Items] | |||||
Class of warrant or right, warrants issued | 31,881 | ||||
Warrants value | $ 145,696 | ||||
Common stock warrants | |||||
Class of Warrant or Right [Line Items] | |||||
Class of warrant or right, warrants issued | 152,280 | ||||
Warrants exercise price | $ 2.50 | ||||
Warrants value | $ 58,421 | ||||
Common stock warrants | Initial Public Offering | |||||
Class of Warrant or Right [Line Items] | |||||
Class of warrant or right, warrants issued | 120,482 | 2,409,639 | |||
Warrants exercise price | $ 5.19 | $ 4.57 | |||
Percentage of warrants exercise price | 110.00% | ||||
Warrants expiration term | 5 years | 5 years | |||
Common stock warrants | Over-allotment option | |||||
Class of Warrant or Right [Line Items] | |||||
Class of warrant or right, warrants issued | 361,445 | ||||
Common Stock Warrants, Venture Debt Lender [Member] | |||||
Class of Warrant or Right [Line Items] | |||||
Class of warrant or right, warrants issued | 120,482 | ||||
Warrants exercise price | $ 4.15 | ||||
Common Stock Warrants, Funding Platform, Preferred Stock Raise [Member] | |||||
Class of Warrant or Right [Line Items] | |||||
Class of warrant or right, warrants issued | 2,603 | ||||
Warrants exercise price | $ 8.28 |
SHARE-BASED PAYMENTS - Common_2
SHARE-BASED PAYMENTS - Common Stock Warrants - Valuation (Details) - Common stock warrants | Jun. 30, 2020Y |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants and Rights Outstanding, Valuation Technique [Extensible List] | us-gaap:ValuationTechniqueOptionPricingModelMember |
Risk Free Interes Rate | Minimum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | 1.54 |
Risk Free Interes Rate | Maximum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | 1.59 |
Expected Dividend Yield | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | 0 |
Expected Volatility | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | 58 |
Expected Life (years) | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants measurement input | 10 |
SHARE-BASED PAYMENTS - Warrants
SHARE-BASED PAYMENTS - Warrants Roll Forward (Details) | 6 Months Ended |
Jun. 30, 2021$ / sharesshares | |
Class of Warrant or Right [Line Items] | |
Convertible ratio | 15.625 |
Common stock warrants | |
Class of Warrant or Right [Line Items] | |
Warrant Outstanding Beginning Balance | shares | 914,539 |
Granted | shares | 3,012,048 |
Converison of stock warrants upon IPO | shares | 51,642 |
Exercised | shares | (31,881) |
Warrant Outstanding Ending Balance | shares | 3,946,348 |
Common Stock Warrants Exercisable | shares | 3,825,866 |
Weighted Average Exercise Price Outstanding Beginning Balance | $ / shares | $ 2.66 |
Granted | $ / shares | $ 4.58 |
Converison of stock warrants upon IPO | $ / shares | 7.66 |
Exercised | $ / shares | $ 4.57 |
Weighted Average Exercise Price Outstanding Ending Balance | $ / shares | 4.17 |
Weighted Average Exercise Price Exercisable | $ / shares | $ 4.14 |
Preferred stock warrants | |
Class of Warrant or Right [Line Items] | |
Warrant Outstanding Beginning Balance | shares | 806,903 |
Converison of stock warrants upon IPO | shares | (806,903) |
Weighted Average Exercise Price Outstanding Beginning Balance | $ / shares | $ 0.49 |
Converison of stock warrants upon IPO | $ / shares | 0.49 |
SHARE-BASED PAYMENTS - Stock Op
SHARE-BASED PAYMENTS - Stock Options - Activity (Details) | 6 Months Ended |
Jun. 30, 2021$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Beginning Balance | shares | 1,163,103 |
Granted | shares | 2,712,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance | shares | 3,875,103 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Beginning Balance | $ / shares | $ 2.34 |
Granted | $ / shares | 4.15 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Ending Balance | $ / shares | $ 3.62 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | |
Share-based Compensation Arrangement by Share-based Option Exercisable at June 30, 2021 | shares | 2,996,861 |
Share-based Compensation Arrangement by Weighted Average Exercise Price at June 30, 2021 | $ / shares | $ 3.60 |
Weighted average duration (years) to expiration of outstanding options at June 30, 2021 | 8 years 6 months 10 days |
SHARE-BASED PAYMENTS - Stock-ba
SHARE-BASED PAYMENTS - Stock-based Compensation (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 3,568,370 | $ 49,932 | $ 3,605,346 | $ 99,864 |
Unrecognized compensation cost related to non-vested stock option | $ 1,298,335 | $ 1,298,335 | ||
Share-based arrangement, non-vested weighted average period | 2 years 8 months 26 days | |||
Sales and Marketing Expense | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 523,151 |
SHARE-BASED PAYMENTS - 2020 Inc
SHARE-BASED PAYMENTS - 2020 Incentive Stock Plan (Details) - $ / shares | 6 Months Ended | |
Jun. 30, 2021 | May 13, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award, Additional General Disclosures [Abstract] | ||
Aggregate shares of stock options granted | 2,712,000 | |
Initial Public Offering | ||
Share-based Compensation Arrangement by Share-based Payment Award, Additional General Disclosures [Abstract] | ||
Exercise price | $ 4.15 | |
Omnibus Incentive Stock Plan, 2020 [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Additional General Disclosures [Abstract] | ||
Common stock, capital shares reserved for future issuance | 3,300,000 | |
Omnibus Incentive Stock Plan, 2020 [Member] | Initial Public Offering | ||
Share-based Compensation Arrangement by Share-based Payment Award, Additional General Disclosures [Abstract] | ||
Common stock, capital shares reserved for future issuance | 588,000 | |
Exercise price | $ 4.15 | |
Aggregate shares of stock options granted | 2,712,000 |
LEASE OBLIGATIONS (Details)
LEASE OBLIGATIONS (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 18 Months Ended | ||
Apr. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2022 | |
Operating lease agreements | ||||||
Rent expense | $ 17,257 | $ 173,052 | $ 181,152 | $ 305,841 | $ 463,349 | |
Minimum Rent base | $ 3,400 | |||||
Maximum Rent base | $ 6,500 | |||||
Security deposit | $ 19,500 | |||||
Leased retail location, lease was vacated | ||||||
Minimum lease payments | ||||||
Lease liability | $ 0 | $ 0 |
CONTINGENCIES (Details)
CONTINGENCIES (Details) | Dec. 21, 2020USD ($) | Sep. 24, 2020USD ($) | Mar. 25, 2020USD ($)item | Feb. 28, 2020USD ($) | Mar. 31, 2021USD ($)item | Aug. 31, 2020USD ($)item | Apr. 30, 2021USD ($) |
Operating lease agreements | |||||||
Security deposit | $ 19,500 | ||||||
Litigation Matters | |||||||
Settlement amount payable to vendor | $ 37,000 | ||||||
Number of monthly payments to be made | item | 10 | ||||||
Lawsuits filed related to prior services rendered | |||||||
Litigation Matters | |||||||
Damages sought | $ 96,900 | $ 96,900 | |||||
Number of lawsuits filed | item | 2 | 2 | |||||
Non-payment of trade payables | |||||||
Litigation Matters | |||||||
Damages sought | $ 492,390 | $ 123,000 | |||||
Non-payment of trade payables | Lawsuits filed related to prior services rendered | |||||||
Litigation Matters | |||||||
Damages sought | $ 481,000 | ||||||
Additional damages sought | $ 296,000 | ||||||
Reimbursement of investment | |||||||
Litigation Matters | |||||||
Damages sought | $ 100,000 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
INCOME TAXES | ||||
Income Tax Expense (Benefit) | $ (1,100,120) | $ (709) | $ (1,100,120) | $ 13,381 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Subsequent Events | 1 Months Ended |
Jul. 31, 2021USD ($)shares | |
Subsequent Event [Line Items] | |
Number Of Warrants Sold Upon Partial Exercise Of Overallotment Option | shares | 355,000 |
Proceeds from Issuance Initial Public Offering | $ | $ 1,622,350 |