Document and Entity Information
Document and Entity Information | 6 Months Ended |
Jun. 30, 2023 | |
Document and Entity Information [Abstract] | |
Document Type | S-1 |
Entity Registrant Name | Digital Brands Group, Inc. |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | true |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | true |
Entity Central Index Key | 0001668010 |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | |||
Cash and cash equivalents | $ 335,470 | $ 1,275,616 | $ 515,796 |
Accounts receivable, net | 196,919 | 583,368 | 67,384 |
Due from factor, net | 438,142 | 839,400 | 985,288 |
Inventory | 4,771,271 | 5,122,564 | 2,660,203 |
Prepaid expenses and other current assets | 872,142 | 766,901 | 288,474 |
Assets per discontinued operations, current | 241,544 | 259,190 | |
Total current assets | 6,613,944 | 8,829,394 | 4,776,334 |
Deferred offering costs | 104,512 | 367,696 | |
Property, equipment and software, net | 98,170 | 104,512 | 69,367 |
Goodwill | 8,973,501 | 10,103,812 | 8,583,274 |
Intangible assets, net | 11,421,311 | 12,906,238 | 9,263,131 |
Deposits | 106,547 | 193,926 | 133,378 |
Right of use asset | 339,085 | 102,349 | |
Assets per discontinued operations. | 2,628,136 | 13,292,043 | |
Total assets | 27,552,558 | 33,738,056 | 36,485,224 |
Current liabilities: | |||
Accounts payable | 8,143,991 | 8,016,173 | 6,507,709 |
Accrued expenses and other liabilities | 5,038,937 | 3,936,920 | 2,078,087 |
Due to related parties | 472,790 | 555,217 | 256,274 |
Contingent consideration liability | 12,098,475 | 12,179,476 | |
Convertible note payable, net | 100,000 | 2,721,800 | 100,000 |
Accrued interest payable | 1,779,274 | 1,561,795 | 1,110,679 |
Venture debt, net of discount | 6,001,755 | ||
Loan payable, current | 1,190,405 | 1,829,629 | 2,279,768 |
Promissory note payable, net | 5,613,839 | 9,000,000 | 3,500,000 |
Right of use liability, current portion | 312,226 | 40,893,791 | |
Liabilities per discontinued operations, current | 1,071,433 | 1,033,518 | |
Total current liabilities | 22,651,462 | 40,893,792 | 35,047,266 |
Convertible note payable, net | 150,000 | 5,723,846 | |
Loans payable, net of current portion | 443,635 | 150,000 | 342,050 |
Right of use liability | 33,501 | ||
Derivative liability | 0 | 2,294,720 | |
Warrant liability | 18,223 | ||
Liabilities per discontinued operations | 147,438 | 148,900 | |
Total liabilities | 23,128,598 | 41,191,230 | 43,575,005 |
Commitments and contingencies | |||
Stockholders' deficit: | |||
Additional paid-in capital | 96,294,123 | 58,614,160 | |
Accumulated deficit | (104,839,404) | (103,747,316) | (65,703,954) |
Total stockholders' deficit | 4,423,960 | (7,453,174) | (7,089,781) |
Total liabilities and stockholders' deficit | 27,552,558 | 33,738,056 | 36,485,224 |
Undesignated preferred stock | |||
Stockholders' deficit: | |||
Preferred stock | |||
Series A preferred stock | |||
Stockholders' deficit: | |||
Preferred stock | |||
Series A Convertible Preferred Stock | |||
Stockholders' deficit: | |||
Preferred stock | 1 | 1 | |
Series C convertible preferred stock | |||
Stockholders' deficit: | |||
Preferred stock | 1 | ||
Common stock | |||
Stockholders' deficit: | |||
Common stock, $0.0001 par, 1,000,000,000 shares authorized, 317,102 and 178,758 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively | 31 | 18 | $ 13 |
Additional paid-in capital | $ 109,263,332 | $ 96,294,123 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) | Jun. 30, 2023 USD ($) $ / shares shares |
Common stock par value | $ / shares | $ 0.0001 |
Common stock, share authorized (in shares) | 1,000,000,000 |
Common stock, share issued (in shares) | 316,906 |
Common stock, shares outstanding (in shares) | 316,906 |
Undesignated preferred stock | |
Preferred stock | $ | |
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 |
Preferred stock, shares outstanding (in shares) | 0 |
Series A preferred stock | |
Preferred stock | $ | |
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 1 |
Preferred stock, shares issued (in shares) | 0 |
Preferred stock, shares outstanding (in shares) | 0 |
Series A Convertible Preferred Stock | |
Preferred stock | $ | $ 1 |
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 6,800 |
Preferred stock, shares issued (in shares) | 6,300 |
Preferred stock, shares outstanding (in shares) | 6,300 |
Series C convertible preferred stock | |
Preferred stock | $ | $ 1 |
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 5,671 |
Preferred stock, shares issued (in shares) | 5,671 |
Preferred stock, shares outstanding (in shares) | 5,671 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
Net revenues | $ 4,493,424 | $ 2,649,432 | $ 8,869,803 | $ 5,278,562 | $ 10,333,558 | $ 5,764,963 | ||
Cost of net revenues | 2,157,349 | 1,536,703 | 4,540,488 | 3,552,396 | 6,789,314 | 3,828,496 | ||
Gross profit | 2,336,075 | 1,112,729 | 4,329,315 | 1,726,166 | 3,544,244 | 1,936,467 | ||
Operating expenses: | ||||||||
General and administrative | 4,074,051 | 4,243,031 | 8,380,063 | 8,073,621 | 14,067,681 | 16,149,510 | ||
Sales and marketing | 1,097,326 | 1,372,568 | 2,036,677 | 2,230,087 | 4,018,985 | 3,269,710 | ||
Distribution | 242,214 | 221,925 | 512,399 | 424,773 | 611,569 | 489,371 | ||
Impairment | 5,503,095 | 3,400,000 | ||||||
Change in fair value of contingent consideration | (10,698,475) | 5,920,919 | (10,698,475) | 7,121,240 | 564,303 | 8,764,460 | ||
Total operating expenses | (5,284,884) | 11,758,443 | 230,664 | 17,849,721 | 24,765,633 | 32,073,050 | ||
Income (loss) from operations | 7,620,959 | (10,645,714) | 4,098,651 | (16,123,555) | (21,221,389) | (30,136,583) | ||
Other income (expense): | ||||||||
Interest expense | (1,086,889) | (2,173,769) | (2,951,487) | (3,730,612) | (8,961,410) | (3,619,093) | ||
Other non-operating income (expenses) | 2,240 | 3,336,963 | (676,749) | 2,653,375 | 3,068,080 | 1,321,472 | ||
Total other income (expense), net | (1,084,649) | 1,163,194 | (3,628,236) | (1,077,237) | (5,893,330) | (2,297,621) | ||
Income tax benefit (provision) | 1,100,120 | |||||||
Net income (loss) from continuing operations | 6,536,310 | (9,482,520) | 470,415 | (17,200,792) | (27,114,719) | (31,334,084) | ||
Income (loss) from discontinued operations, net of tax | (1,492,050) | (51,404) | (1,562,503) | (166,074) | (10,928,643) | (1,023,873) | ||
Net income (loss) | $ 5,044,260 | $ (6,136,349) | $ (9,533,924) | $ (7,832,942) | $ (1,092,088) | $ (17,366,866) | $ (38,043,362) | $ (32,357,957) |
Weighted average common shares outstanding - basic | 246,809 | 14,329 | 236,824 | 9,836 | 30,852 | 3,052 | ||
Weighted average common shares outstanding -diluted | 834,604 | 14,329 | 824,619 | 9,836 | 30,852 | 3,052 | ||
Net income (loss) from continuing per common share - basic | $ 26.48 | $ (661.78) | $ 1.99 | $ (1,748.68) | $ (878.87) | $ (10,268.22) | ||
Net income (loss) from continuing per common share - diluted | $ 7.83 | $ (661.78) | $ 0.57 | $ (1,748.68) | $ (878.87) | $ (10,268.22) |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - USD ($) | Preferred Stock Series Seed Preferred Stock | Preferred Stock Series A preferred stock | Preferred Stock Series B Preferred Stock | Preferred Stock Series A Convertible Preferred Stock | Preferred Stock Series C convertible preferred stock | Preferred Stock Series A-2 Preferred Stock | Preferred Stock Series A-3 Preferred Stock | Preferred Stock Series CF Preferred Stock | Common Stock | Accumulated Deficit | Additional Paid-in Capital | Total |
Beginning balance at Dec. 31, 2020 | $ 2,071 | $ 565 | $ 2,075 | $ 0 | $ 593 | $ 904 | $ 83 | $ 0 | $ (33,345,997) | $ 27,482,061 | $ (5,857,645) | |
Beginning balance (in shares) at Dec. 31, 2020 | 20,714,518 | 5,654,072 | 20,754,717 | 5,932,742 | 9,032,330 | 836,331 | 266 | |||||
Issuance of common stock in public offering | 10,000,002 | 10,000,002 | ||||||||||
Issuance of common stock in public offering (in shares) | 964 | |||||||||||
Offering costs | (2,116,957) | (2,116,957) | ||||||||||
Warrants issued in connection with note | 501,658 | 501,658 | ||||||||||
Warrants issued in connection with note (in shares) | 52 | |||||||||||
Stock-based compensation | 4,278,337 | 4,278,337 | ||||||||||
Stock-based compensation (Shares) | 29 | |||||||||||
Net Income (loss) | (32,357,957) | (32,357,957) | ||||||||||
Conversion of preferred stock into common stock | $ (2,071) | $ (565) | $ (2,075) | $ (593) | $ (904) | $ (83) | 6,291 | 6,291 | ||||
Conversion of preferred stock into common stock (shares) | (20,714,518) | (5,654,072) | (20,754,717) | (5,932,742) | (9,032,330) | (836,331) | 1,611 | |||||
Exercise of over-allotment option, net of offering costs | 1,364,997 | 1,364,997 | ||||||||||
Exercise of over-allotment option, net of offering costs (in shares) | 145 | |||||||||||
Conversion of debt into common stock (In shares) | 454 | |||||||||||
Conversion of related party notes and payables into common stock | 257,515 | 257,515 | ||||||||||
Conversion of related party notes and payables into common stock (in shares) | 61 | |||||||||||
Common stock issued in connection with business combination | 11,428,738 | 11,428,738 | ||||||||||
Common stock issued in connection with business combination (in shares) | 1,318 | |||||||||||
Exercise of warrants | 1,768,046 | 1,768,046 | ||||||||||
Exercise of warrants (in shares) | 155 | |||||||||||
Common stock issued pursuant to consulting agreement | 595,500 | 595,500 | ||||||||||
Common stock issued pursuant to consulting agreement (in shares) | 97 | |||||||||||
Issuance of common stock pursuant to equity line of credit | 367,696 | 367,696 | ||||||||||
Issuance of common stock pursuant to equity line of credit (in shares) | 51 | |||||||||||
Ending balance (in shares) at Dec. 31, 2021 | 521 | |||||||||||
Ending balance at Dec. 31, 2021 | $ 0 | (65,703,954) | 58,614,173 | (7,089,781) | ||||||||
Conversion of notes into common stock | 1,201,582 | 1,201,582 | ||||||||||
Conversion of notes into common stock (in shares) | 350 | |||||||||||
Stock-based compensation | 139,093 | 139,093 | ||||||||||
Net Income (loss) | (7,832,942) | (7,832,942) | ||||||||||
Ending balance (in shares) at Mar. 31, 2022 | 870 | |||||||||||
Ending balance at Mar. 31, 2022 | $ 0 | (73,536,896) | 59,954,848 | (13,582,048) | ||||||||
Beginning balance at Dec. 31, 2021 | $ 0 | (65,703,954) | 58,614,173 | (7,089,781) | ||||||||
Beginning balance (in shares) at Dec. 31, 2021 | 521 | |||||||||||
Net Income (loss) | (17,366,866) | |||||||||||
Ending balance (in shares) at Jun. 30, 2022 | 16,470 | |||||||||||
Ending balance at Jun. 30, 2022 | $ 2 | (83,070,820) | 68,190,600 | (14,880,218) | ||||||||
Beginning balance at Dec. 31, 2021 | $ 0 | (65,703,954) | 58,614,173 | (7,089,781) | ||||||||
Beginning balance (in shares) at Dec. 31, 2021 | 521 | |||||||||||
Issuance of common stock in public offering | $ 1 | 9,347,449 | 9,347,450 | |||||||||
Issuance of common stock in public offering (in shares) | 14,956 | |||||||||||
Offering costs | (2,921,646) | (2,921,646) | ||||||||||
Conversion of notes and derivative liability into common stock | $ 8 | 11,983,381 | 11,983,389 | |||||||||
Conversion of notes and derivative liability into common stock (in shares) | 79,807 | |||||||||||
Stock-based compensation | 479,038 | 479,038 | ||||||||||
Net Income (loss) | (38,043,362) | (38,043,362) | ||||||||||
Issuance of common stock and exercise of pre-funded warrants in public offering (in shares) | 72,727 | |||||||||||
Issuance of common stock and exercise of pre-funded warrants in public offering | $ 7 | 9,999,989 | 9,999,996 | |||||||||
Common stock issued in connection with business combination | 1,000,000 | 1,000,000 | ||||||||||
Common stock issued in connection with business combination (in shares) | 3,636 | |||||||||||
Common stock issued pursuant to consulting agreement | 123,000 | 123,000 | ||||||||||
Common stock issued pursuant to consulting agreement (in shares) | 30 | |||||||||||
Warrant and common shares issued with notes | 1,368,741 | 1,368,741 | ||||||||||
Warrant and common shares issued with notes (in shares) | 2,400 | |||||||||||
Conversion of venture debt into Series A convertible preferred stock | $ 1 | 6,299,999 | 6,300,000 | |||||||||
Conversion of venture debt into Series A convertible preferred stock (in shares) | 6,300 | |||||||||||
Ending balance (in shares) at Dec. 31, 2022 | 6,300 | 178,758 | ||||||||||
Ending balance at Dec. 31, 2022 | $ 1 | $ 18 | (103,747,316) | 96,294,123 | (7,453,174) | |||||||
Beginning balance at Mar. 31, 2022 | $ 0 | (73,536,896) | 59,954,848 | (13,582,048) | ||||||||
Beginning balance (in shares) at Mar. 31, 2022 | 870 | |||||||||||
Issuance of common stock in public offering | $ 1 | 9,347,449 | 9,347,450 | |||||||||
Issuance of common stock in public offering (in shares) | 14,956 | |||||||||||
Offering costs | (1,930,486) | (1,930,486) | ||||||||||
Conversion of notes and derivative liability into common stock | 600,790 | 600,790 | ||||||||||
Conversion of notes and derivative liability into common stock (in shares) | 644 | |||||||||||
Warrants issued in connection with note | 98,241 | 98,241 | ||||||||||
Stock-based compensation | 119,759 | 119,759 | ||||||||||
Net Income (loss) | (9,533,924) | (9,533,924) | ||||||||||
Ending balance (in shares) at Jun. 30, 2022 | 16,470 | |||||||||||
Ending balance at Jun. 30, 2022 | $ 2 | (83,070,820) | 68,190,600 | (14,880,218) | ||||||||
Beginning balance at Dec. 31, 2022 | $ 1 | $ 18 | (103,747,316) | 96,294,123 | (7,453,174) | |||||||
Beginning balance (in shares) at Dec. 31, 2022 | 6,300 | 178,758 | ||||||||||
Issuance of common stock pursuant to private placement | $ 5 | 4,999,998 | 5,000,003 | |||||||||
Issuance of common stock pursuant to private placement (in shares) | 50,890 | |||||||||||
Offering costs | (536,927) | (536,927) | ||||||||||
Shares issued for services | 499,338 | 499,338 | ||||||||||
Shares issued for services (in shares) | 4,756 | |||||||||||
Shares and warrants issued with notes | 658,494 | 658,494 | ||||||||||
Shares and warrants issued with notes (in shares) | 4,400 | |||||||||||
Stock-based compensation | 105,594 | 105,594 | ||||||||||
Net Income (loss) | (6,136,349) | (6,136,349) | ||||||||||
Ending balance (in shares) at Mar. 31, 2023 | 6,300 | 238,803 | ||||||||||
Ending balance at Mar. 31, 2023 | $ 1 | $ 23 | (109,883,665) | 102,020,620 | (7,863,022) | |||||||
Beginning balance at Dec. 31, 2022 | $ 1 | $ 18 | (103,747,316) | 96,294,123 | $ (7,453,174) | |||||||
Beginning balance (in shares) at Dec. 31, 2022 | 6,300 | 178,758 | ||||||||||
Issuance of common stock pursuant to private placement (in shares) | 50,890 | |||||||||||
Net Income (loss) | $ (1,092,088) | |||||||||||
Ending balance (in shares) at Jun. 30, 2023 | 1 | 6,300 | 5,761 | 316,906 | ||||||||
Ending balance at Jun. 30, 2023 | $ 1 | $ 1 | $ 31 | (104,839,404) | 109,263,332 | 4,423,960 | ||||||
Beginning balance at Mar. 31, 2023 | $ 1 | $ 23 | (109,883,665) | 102,020,620 | (7,863,022) | |||||||
Beginning balance (in shares) at Mar. 31, 2023 | 6,300 | 238,803 | ||||||||||
Conversion of notes into preferred stock | $ 1 | 5,759,177 | 5,759,177 | |||||||||
Conversion of notes into preferred stock (in shares) | 5,761 | |||||||||||
Issuance of Series B preferred stock | 25,000 | 25,000 | ||||||||||
Issuance of Series B preferred stock (in shares) | 1 | |||||||||||
Issuance of common stock pursuant to disposition | $ 8 | 1,357,035 | 1,357,043 | |||||||||
Issuance of common stock pursuant to disposition (in shares) | 78,103 | |||||||||||
Stock-based compensation | 101,500 | 101,500 | ||||||||||
Net Income (loss) | 5,044,260 | 5,044,260 | ||||||||||
Ending balance (in shares) at Jun. 30, 2023 | 1 | 6,300 | 5,761 | 316,906 | ||||||||
Ending balance at Jun. 30, 2023 | $ 1 | $ 1 | $ 31 | $ (104,839,404) | $ 109,263,332 | $ 4,423,960 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Cash flows from operating activities: | ||||
Net loss | $ (1,092,088) | $ (17,366,866) | $ (38,043,362) | $ (32,357,957) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Depreciation and amortization | 1,765,619 | 1,113,188 | 1,653,819 | 862,888 |
Amortization of loan discount and fees | 1,611,433 | 2,818,174 | 6,506,384 | 1,382,222 |
Loss on extinguishment of debt | 689,100 | |||
Loss on disposition of business | 1,523,940 | |||
Stock-based compensation | 207,094 | 258,852 | 602,038 | 4,800,337 |
Shares issued for services | 499,338 | |||
Accounts Receivable, Credit Loss Expense (Reversal) | (118,840) | 36,893 | ||
Change in credit reserve | 344,140 | (5,053) | ||
Change in fair value of contingent consideration | (10,698,475) | 7,121,240 | 564,303 | 8,764,460 |
Discontinued operations | 7,666 | |||
Fees incurred in connection with debt financings | 568,149 | 560,309 | ||
Change in fair value of warrant liability | (18,223) | (18,223) | 11,958 | |
Change in fair value of derivative liability | (880,388) | (1,354,434) | (910,204) | |
Forgiveness of Payroll Protection Program | (1,760,755) | (1,760,755) | (407,994) | |
Deferred offering costs | 367,696 | |||
Deferred income tax benefit | (1,100,120) | |||
Changes in operating assets and liabilities: | ||||
Accounts receivable, net | 375,685 | (100,662) | (452,030) | 150,288 |
Due from factor, net | (96,955) | 202,787 | 655,708 | (399,701) |
Inventory | 454,011 | (128,255) | 479,394 | (911,293) |
Prepaid expenses and other current assets | (44,213) | (395,781) | (445,798) | (151,917) |
Accounts payable | 92,494 | 435,110 | 892,120 | 456,690 |
Accrued expenses and other liabilities | 1,346,068 | 1,461,572 | 1,631,512 | 834,489 |
Deferred revenue | (183,782) | (55,034) | 4,882 | |
Due to related parties | 298,943 | (63,550) | ||
Accrued interest | 217,479 | 690,624 | 984,358 | 461,113 |
Net cash used in operating activities | (2,981,446) | (6,609,470) | (10,767,706) | (14,230,957) |
Cash flows from investing activities: | ||||
Cash acquired (consideration) pursuant to business combination | (7,247,303) | (5,936,757) | ||
Deposits | (18,192) | (60,548) | (31,117) | |
Purchase of property, equipment and software | (27,855) | (61,286) | (43,179) | |
Deposits | 87,378 | |||
Net cash provided by (used in) investing activities | 41,331 | (7,369,137) | (6,011,053) | |
Cash flows from financing activities: | ||||
Proceeds (repayments) from related party advances | (57,427) | (172,036) | ||
Advances (repayments) from factor | 154,073 | (142,436) | (3,096) | (41,200) |
Repayment of contingent consideration | (645,304) | |||
Issuance of loans and note payable | 4,194,799 | 548,808 | ||
Repayments of convertible notes and loans payable | (6,604,552) | (3,068,750) | (7,350,276) | (2,006,628) |
Issuance of convertible notes payable | 2,301,250 | 6,951,250 | 8,433,650 | |
Issuance of common stock in public offering | 5,000,003 | 9,347,450 | 19,347,446 | 10,000,002 |
Exercise of over-allotment option with public offering, net | (1,364,997) | |||
Exercise of warrants | 1,768,046 | |||
Offering costs | (686,927) | (1,930,486) | (2,921,216) | (2,116,957) |
Net cash provided by financing activities | 1,999,969 | 6,883,800 | 18,896,664 | 20,181,820 |
Net change in cash and cash equivalents | (940,146) | 274,330 | 759,820 | (60,190) |
Cash and cash equivalents at beginning of period | 1,275,616 | 515,796 | 515,796 | 575,986 |
Cash and cash equivalents at end of period | 335,470 | 802,724 | 1,275,616 | 515,796 |
Supplemental disclosure of cash flow information: | ||||
Cash paid for interest | 686,071 | 191,152 | 734,869 | 902,089 |
Supplemental disclosure of non-cash investing and financing activities: | ||||
Conversion of notes into common stock | 1,802,372 | 11,983,389 | 2,680,289 | |
Conversion of notes into preferred stock | 5,759,177 | |||
Right of use asset | $ 467,738 | 201,681 | 102,349 | |
Warrant and common shares issued with notes. | $ 98,241 | 1,368,741 | ||
Conversion of venture debt into preferred stock | $ 6,300,000 | |||
Conversion of related party notes and payables into preferred and common stock | 257,515 | |||
Conversion of preferred stock into common stock | 6,291 | |||
Conversion of contingent consideration into common stock | 73,500 | |||
Common shares issued pursuant to equity line of credit | $ 367,696 |
NATURE OF OPERATIONS
NATURE OF OPERATIONS | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
NATURE OF OPERATIONS | ||
NATURE OF OPERATIONS | NOTE 1: NATURE OF OPERATIONS Digital Brands Group, 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). The Company is a curated collection of lifestyle brands, including Bailey, DSTLD, Harper & Jones, Stateside and ACE Studios, that offers a variety of apparel products through direct-to-consumer and wholesale distribution. 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, LLC became a wholly owned subsidiary of the Company. 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. On August 30, 2021, the Company closed its acquisition of Mosbest, LLC dba Stateside (“Stateside”) pursuant to its Membership Interest Purchase Agreement with Moise Emquies to purchase 100% of the issued and outstanding equity of Stateside. On the acquisition date, Stateside became a wholly owned subsidiary of the Company. On December 30, 2022, the Company closed its previously announced acquisition of Sunnyside, LLC dba Sundry (“Sundry”) pursuant to its Second Amended and Restated Membership Interest Purchase Agreement with Moise Emquies to purchase 100% of the issued and outstanding equity of Sundry. On the acquisition date, Sundry became a wholly owned subsidiary of the Company. On June 21, 2023, the Company and the former owners of H&J executed a Settlement Agreement and Release (the “Settlement Agreement”) whereby contemporaneously with the parties’ execution of the Settlement Agreement (i) the Company agreed to make an aggregate cash payment of $229,000 to D. Jones Tailored Collection, Ltd. (“D. Jones”), (ii) the Company issued 78,103 shares of common stock to D. Jones, and (iii) the Company assigned and transferred one hundred percent (100%) of the Company’s membership interest in H&J to D. Jones. The H&J Settlement was accounted for a business disposition. | NOTE 1: NATURE OF OPERATIONS Digital Brands Group, 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 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. On August 30, 2021, the Company closed its acquisition of Mosbest, LLC dba Stateside (“Stateside”) pursuant to its Membership Interest Purchase Agreement with Moise Emquies to purchase 100% of the issued and outstanding equity of Stateside. On the acquisition date, Stateside became a wholly owned subsidiary of the Company. See Note 4. On December 30, 2022, the Company closed its previously announced acquisition of Sunnyside, LLC dba Sundry (“Sundry”) pursuant to its Second Amended and Restated Membership Interest Purchase Agreement with Moise Emquies to purchase 100% of the issued and outstanding equity of Sundry. On the acquisition date, Sundry became a wholly owned subsidiary of the Company. See Note 4. Reverse Stock Split On May 12, 2021, the Board of Directors approved a one On October 21, 2022, 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 964 shares of common stock at a public offering price of $10,375 per share. Additionally, the Company issued warrants to purchase 1,111 shares, which includes 145 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 | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
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 $1,092,088 and $17,366,866 for the six months ended June 30, 2023 and 2022, respectively, and has incurred negative cash flows from operations for the six months ended June 30, 2023 and 2022. The Company has historically lacked liquidity to satisfy obligations as they come due and as of June 30, 2023, and the Company had a working capital deficit of $16,037,518. These factors, among others, arise 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. The accompanying consolidated financial statements do not include any adjustments as a result of this uncertainty. The Company’s ability to continue as a going concern for the next 12 months from the date the financial statements were available to be issued is dependent upon its ability to generate sufficient cash flows from operations to meet its obligations, which it has not been able to accomplish to date, and/or to obtain additional capital financing. Through the date the financial statements were available to be issued, the Company has been primarily financed through the issuance of capital stock and debt. In the event that the Company cannot generate sufficient revenue to sustain its operations, the Company will need to reduce expenses or obtain financing through the sale of debt and/or equity securities. The issuance of additional equity would result in dilution to existing shareholders. If the Company is unable to obtain additional funds when they are needed or if such funds cannot be obtained on terms acceptable to the Company, the Company would be unable to execute upon the business plan or pay costs and expenses as they are incurred, which would have a material, adverse effect on the business, financial condition and results of operations. No assurance can be given that the Company will be successful in these efforts. | NOTE 2: GOING CONCERN The accompanying 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 $38,043,362 and $32,357,957 for the years ended December 31, 2022 and 2021, respectively, and has incurred negative cash flows from operations for the years ended December 31, 2022 and 2021. The Company has historically lacked liquidity to satisfy obligations as they come due and as of December 31, 2022, and the Company had a working capital deficit of $32,064,398. These factors, among others, arise 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. The accompanying consolidated financial statements do not include any adjustments as a result of this uncertainty. The Company’s ability to continue as a going concern for the next 12 months from the date the financial statements were available to be issued is dependent upon its ability to generate sufficient cash flows from operations to meet its obligations, which it has not been able to accomplish to date, and/or to obtain additional capital financing. Through the date the financial statements were available to be issued, the Company has been primarily financed through the issuance of capital stock and debt. In the event that the Company cannot generate sufficient revenue to sustain its operations, the Company will need to reduce expenses or obtain financing through the sale of debt and/or equity securities. The issuance of additional equity would result in dilution to existing shareholders. If the Company is unable to obtain additional funds when they are needed or if such funds cannot be obtained on terms acceptable to the Company, the Company would be unable to execute upon the business plan or pay costs and expenses as they are incurred, which would have a material, adverse effect on the business, financial condition and results of operations. No assurance can be given that the Company will be successful in these efforts. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
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”). Reverse Stock Split On October 21, 2022, the Board of Directors approved a one Unaudited Interim Financial Information The accompanying unaudited condensed consolidated balance sheet as of June 30, 2023, the unaudited condensed consolidated statements of operations for the six and six months ended June 30, 2023 and 2022 and of cash flows for the six months ended June 30, 2023 and 2022 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 consolidated results for the interim periods presented and of the consolidated financial condition as of the date of the interim consolidated balance sheet. The results of operations are not necessarily indicative of the results expected for the year ended December 31, 2023. 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, 2022 included in the Company’s Annual Form 10-K filed with SEC on April 17, 2023. Principles of Consolidation These condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries Bailey, H&J and Stateside from the dates of acquisition. All inter-company transactions and balances have been eliminated on consolidation. As of June 21, 2023, the Company no longer consolidated the assets, liabilities, revenues and expenses of H&J (see Note 4). Use of Estimates The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions reflected in these financial statements include, but are not limited to, inventory, impairment of long-lived assets, contingent consideration and derivative liabilities. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates when there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates. Reclassification of Previously Issued Financial Statements Certain prior year accounts have been reclassified to conform with current year presentation pertaining to cost of net revenue and general and administrative expenses. The Company has reclassified $297,696 and $630,976 in general and administrative expenses per previously reported financial statements to cost of net revenues in the accompanying consolidated statements of operations for the three and six months ended June 30, 2022, respectively. The reclassified costs from general and administrative expense to cost of net revenues are primarily personnel and warehouse related costs. The reclassification had no effect on the reported results of operations. Certain prior year accounts have been reclassified to conform with current year presentation regarding income (loss) from discontinued operations. H&J’s assets and liabilities as of December 31, 2022 have also been reclassified on the consolidated balance sheet. See Note 4. Cash and Equivalents and Concentration of Credit Risk The Company considers all highly liquid securities with an original maturity of less than six months to be cash equivalents. As of June 30, 2023 and December 31, 2022, 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 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, 2023 Using: Level 1 Level 2 Level 3 Total Liabilities: Contingent consideration $ — $ — $ — $ — $ — $ — $ — $ — Fair Value Measurements as of December 31, 2022 Using: Level 1 Level 2 Level 3 Total Liabilities: Contingent consideration $ — $ — $ 12,098,475 $ 12,098,475 $ — $ — $ 12,098,475 $ 12,098,475 Contingent Consideration The Company recorded a contingent consideration liability relating to stock price guarantees included in its acquisitions of Bailey44 and H&J. The estimated fair value of the contingent consideration was recorded using significant unobservable measures and other fair value inputs and was therefore classified as a Level 3 financial instrument. 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. Norwest Waiver On June 21, 2023, the Company, on the one hand, and Norwest Venture Partners XI, LP and Norwest Venture Partners XII, LP (together, the “Norwest Investors”), on the other hand, executed a Waiver and Amendment (the “Norwest Amendment”) whereby the Norwest Investors agreed to waive and terminate certain true up rights of the Norwest Investors under the Agreement and Plan of Merger, dated February 12, 2020 (the “Bailey Merger Agreement”), among the Company, Bailey 44, LLC, Norwest Venture Partners XI, LP, and Norwest Venture Partners XII, LP and Denim.LA Acquisition Corp. This transaction is known as the “Norwest Waiver”. As a result of the Norwest Waiver, the Company recorded a fair value of H&J Settlement Agreement On June 21, 2023, the Company and the former owners of H&J executed a Settlement Agreement and Release (the “Settlement Agreement”) whereby the Company transferred 100% of its membership interests in H&J to D. Jones (the “H&J Seller”). Pursuant to the Settlement Agreement, the Company agreed to make an aggregate cash payment of shares of common stock to the H&J Seller. In connection with the Settlement Agreement, the parties agreed that no further shares were owed to the H&J Seller resulting from the stock price guarantee pursuant to the May 2021 H&J acquisition. As a result, the Company recorded a fair value of The detail of contingent consideration by company is as follows: June 30, December 31, 2023 2022 Bailey $ — $ 10,698,475 Harper & Jones — 1,400,000 $ — $ 12,098,475 Inventory Inventory is stated at the lower of cost or net realizable value and accounted for using the weighted average cost method for DSTLD and first-in, first-out method for Bailey, Stateside and Sundry. The inventory balances as of June 30, 2023 and December 31, 2022 consist substantially of finished good products purchased or produced for resale, as well as any raw materials the Company purchased to modify the products and work in progress. Inventory consisted of the following: June 30, December 31, 2023 2022 Raw materials $ 1,508,416 $ 1,611,134 Work in process 653,412 888,643 Finished goods 2,609,443 2,725,505 Inventory $ 4,771,271 $ 5,225,282 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. Annual Impairment At December 31, 2022, management determined that certain events and circumstances occurred that indicated that the carrying value of the Company’s brand name assets, and the carrying amount of the reporting units, pertaining to Bailey44 and Harper & Jones may not be recoverable. The qualitative assessment was primarily due to reduced or stagnant revenues of both entities as compared to the Company’s initial projections at the time of each respective acquisition, as well as the entities’ liabilities in excess of assets. As such, the Company compared the estimated fair value of the brand names with its carrying value and recorded an impairment loss of $3,667,000 in the consolidated statements of operations. Additionally, the Company compared the fair value of the reporting units to the carrying amounts and recorded an impairment loss of $11,872,332 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. The following table sets forth the computation of basic and diluted net income (loss) per share: Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Numerator: Net income (loss) from continuing operations $ 6,536,310 $ (9,482,520) $ 470,415 $ (17,200,792) Income (loss) from discontinued operations, net of tax (1,492,050) (51,404) (1,562,503) (166,074) Net income (loss) $ 5,044,260 $ (9,533,924) $ (1,092,088) $ (17,366,866) Denominator: Weighted average common shares outstanding - basic 246,809 14,329 236,824 9,836 Weighted average common shares outstanding - diluted 834,604 14,329 824,619 9,836 Net income (loss) from continuing operations per share - basic $ 26.48 $ (661.78) $ 1.99 $ (1,748.68) Net income (loss) from continuing operations per share - diluted $ 7.83 $ (661.78) $ 0.57 $ (1,748.68) Net income (loss) from discontinued operations per common share – basic $ (6.05) $ (3.59) $ (6.60) $ (16.88) Net income (loss) from discontinued operations per common share – diluted $ (6.05) $ (3.59) $ (6.60) $ (16.88) Net income (loss) per share – $ 20.44 $ (665.36) $ (4.61) $ (1,765.57) Net income (loss) per share – $ 6.04 $ (665.36) $ (4.61) $ (1,765.57) The following table sets forth the a) the dilutive items included in the weighted average common shares – diluted amount above as of June 30, 2023 and b) the number of potential common shares excluded from the calculations of net loss per diluted share because their inclusion would be anti-dilutive as of June 30, 2022: June 30, 2023 2022 — 18,496 Convertible notes 27,097 — Series A convertible preferred stock 321,395 — Series C convertible preferred stock 237,746 2,533 Common stock warrants 1,558 1,558 Stock options 587,795 22,588 The stock options and warrants above are out-of-the-money as of June 30, 2023 and 2022. Recent Accounting Pronouncements In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which amends and clarifies several provisions of Topic 326. In May 2019, the FASB issued ASU 2019-05, Financial Instruments-Credit Losses (Topic 326): Targeted Transition Relief, which amends Topic 326 to allow the fair value option to be elected for certain financial instruments upon adoption. ASU 2019-10 extended the effective date of ASU 2016-13 until December 15, 2022. The Company adopted this new guidance, including the subsequent updates to Topic 326, on January 1, 2023 and the adoption did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures. 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 Unaudited Pro Forma Financial Information The following unaudited pro forma financial information presents the Company’s financial results as if the Sundry acquisition had occurred as of January 1, 2022. 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, 2022 Net revenues $ 14,728,296 Net loss $ (16,907,152) Net loss per common share $ (1,718.83) | 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”). H&J Disposition On June 21, 2023, the Company and the former owners of H&J executed a Settlement Agreement and Release (the “Settlement Agreement”) whereby contemporaneously with the parties’ execution of the Settlement Agreement (i) the Company agreed to make an aggregate cash payment of $229,000 to D. Jones Tailored Collection, Ltd. (“D. Jones”), (ii) the Company issued 78,103 shares of common stock to D. Jones, and (iii) the Company assigned and transferred one hundred percent (100%) of the Company’s membership interest in H&J to D. Jones. This transaction is known as the “H&J Settlement”. The H&J Settlement was accounted for a business disposition in accordance with ASC 810-40-40-3A. In accordance with the provisions of ASC 205-20, the Company has excluded the results of discontinued operations from its results of continuing operations in the accompanying consolidated statements of operations for the three and six months ended June 30, 2023 and 2022 in it’s Form 10-Q Quarterly Report filed on August 21, 2023. Accordingly, the consolidated financial statements as of and for the years ended December 31, 2022 and 2021 have been adjusted retroactively to account for the discontinued operations classification of H&J. Principles of Consolidation These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries Bailey, H&J, Stateside and Sundry from the dates of acquisition. All inter-company transactions and balances have been eliminated on consolidation. H&J has been retroactively adjusted to be presented as discontinued operations (see above). 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. Restatement of Previously Issued Financial Statements Certain prior year accounts have been reclassified to conform with current year presentation pertaining to cost of net revenue and general and administrative expenses. The Company has reclassified The reclassified costs from general and administrative expense to cost of net revenues made in the fourth quarter of 2022 and 2021 are fixed in nature as they are personnel and warehouse related costs. The impact of the reclassification was approximately for each of the quarters ended March 31, 2022, June 30, 2022 and September 30, 2022. The impact of the reclassification was approximately 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 December 31, 2022 and 2021, 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, accounts receivable, due from factor, prepaid expenses, accounts payable, accrued expenses, deferred revenue, due to related parties, related party note payable, accrued interest, loan 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 December 31, 2022 Using: Level 1 Level 2 Level 3 Total Liabilities: Warrant liability $ — $ — $ — $ — Contingent consideration — — 12,098,475 12,098,475 Derivative liability — — — — $ — $ — $ 12,098,475 $ 12,098,475 Fair Value Measurements as of December 31, 2021 Using: Level 1 Level 2 Level 3 Total Liabilities: Warrant liability $ — $ 18,223 $ — $ 18,223 Contingent consideration — — 12,179,476 12,179,476 Derivative liability — — 2,294,720 2,294,720 $ — $ 18,223 $ 14,474,196 $ 14,492,419 Warrant Liability 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 years ended December 31, 2022 and 2021 are as follows: Warrant Liability Outstanding as of December 31, 2020 $ 6,265 Change in fair value 11,958 Outstanding as of December 31, 2021 18,223 Change in fair value (18,223) Outstanding as of December 31, 2022 $ — Contingent Consideration The Company records a contingent consideration liability 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 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. 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 years ended December 31, 2022 and 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 Conversion into shares (73,500) Change in fair value 8,764,460 Outstanding as of December 31, 2021 12,179,476 Repayments to Harper & Jones seller (645,304) Change in fair value 564,303 Outstanding as of December 31, 2022 $ 12,098,475 During the year ended December 31, 2022, the Company utilized the following inputs for the fair value of the contingent consideration: volatilities of 79.3% and 88.9%, risk-free rate of 0.25%, expected share increase of 5% per annum, and the guaranteed stock price of $828 for Bailey and $10,375 for Harper & Jones. The detail of contingent consideration by company is as follows: December 31, 2022 2021 Bailey $ 10,698,475 7,935,016 Harper & Jones 1,400,000 4,244,460 $ 12,098,475 $ 12,179,476 The contingent consideration liabilities were revalued for a final time as of May 18, 2022, the anniversary date of the Company’s initial public offering. As of the date of the issuance of these financial statements, the contingent consideration liabilities were not yet settled with shares. In December 2022, the Company paid $645,304 to the H&J Seller to partially reduce the contingent consideration balance owed. The Company and the H&J Seller are in the process of amending the May 2021 purchase agreement to determine the ultimate settlement of the Company’s common stock to the H&J Seller by May 16, 2023. Refer to Note 12. Derivative Liability In connection with the Company’s convertible notes, the Company recorded a derivative liability (see Note 7). The estimated fair value of the derivative liability 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 derivative liability is valued using a multinomial lattice model. The multinomial lattice inputs include the underlying stock price, volatility of common stock and remaining term of the convertible note. Changes in derivative liability during the years ended December 31, 2022 and 2021 are as follows: Derivative Liability Outstanding as of December 31, 2020 $ — Initial fair value on issuance of convertible note 3,204,924 Change in fair value (910,204) Outstanding as of December 31, 2021 2,294,720 Initial fair value on issuance of convertible note 559,957 Conversion of underlying notes into common stock (1,500,243) Change in fair value (1,354,434) Outstanding as of December 31, 2022 $ — During the year ended December 31, 2022, the Company utilized the following inputs for the fair value of the derivative liability: volatility of 70.9% - 96.7%, risk-free rate of 2.71% - 3.74%, and remaining term ranging from .08 years - 0.62 years. The change in fair value of the derivative liability is included in other non-operating income (expense), net in the consolidated statements of operations. Inventory Inventory is stated at the lower of cost or net realizable value and accounted for using the weighted average cost method for DSTLD and H&J and first-in, first-out method for Bailey, Stateside and Sundry. The inventory balances as of December 31, 2022 and 2021 consist substantially of finished good products purchased or produced for resale, as well as any raw materials the Company purchased to modify the products and work in progress. Inventory consisted of the following: December 31, 2022 2021 Raw materials $ 1,508,416 $ 292,167 Work in process 888,643 242,673 Finished goods 2,725,505 2,220,519 Inventory $ 5,122,564 $ 2,660,203 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 December 31, 2022 and 2021 consist of software with three (3) year lives, property and equipment with three (3) to ten (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 $75,126 and $92,213 for the years ended December 31, 2022 and 2021, respectively. 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 Impairment 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 fourth quarter every year. 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. Annual Impairment Tests At December 31, 2021, management determined that certain events and circumstances occurred, primarily the continued reduction in revenues partially as a result of COVID-19, that indicated that the carrying value of the Company’s brand name asset pertaining to Bailey44 may not be recoverable. As such, the Company compared the estimated fair value of the brand name with its carrying value and recorded an impairment loss of $3,400,000 in the consolidated statements of operations. At December 31, 2022, management determined that certain events and circumstances occurred that indicated that the carrying value of the Company’s brand name assets, and the carrying amount of the reporting units, pertaining to Bailey44 and Harper & Jones may not be recoverable. The qualitative assessment was primarily due to reduced or stagnant revenues of both entities as compared to the Company’s initial projections at the time of each respective acquisition, as well as the entities’ liabilities in excess of assets. As such, the Company compared the estimated fair value of the brand names with its carrying value and recorded an impairment loss of $3,667,000 in the consolidated statements of operations. Additionally, the Company compared the fair value of the reporting units to the carrying amounts and recorded an impairment loss of $11,872,332 Year Ended December 31, 2022 2021 Bailey brand name (intangibles) $ 2,182,000 $ 3,400,000 Bailey goodwill 3,321,095 — Total impairment $ 5,503,095 $ 3,400,000 In determining the fair value of the respective reporting units, management estimated the price that would be received to sell the reporting unit as a whole in an orderly transaction between market participants at the measurement date. This includes reviewing market comparables such as revenue multipliers and assigning certain assets and liabilities to the reporting units, such as the respective working capital deficits of each entity and debt obligations that would need to be assumed by a market participant buyer in an orderly transaction. The Company calculated the carrying amounts of each reporting unit by utilizing the entities’ assets and liabilities at December 31, 2022, including the carrying value of the identifiable intangible assets and goodwill assigned to the respective reporting units. Refer to Note 12 for the related developments with H&J. 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 $307,725 and $33,933 as of December 31, 2022 and 2021, 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. Cost of revenues includes direct labor pertaining to our inventory production activities and an allocation of overhead costs including rent and insurance. Cost of revenues also includes inventory write-offs and reserves. 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 distribution costs. Total shipping and handling billed to customers as a component of net revenues was approximately $72,000 and $23,000 for the years ended December 31, 2022 and 2021, respectively. Total shipping and handling costs included in distribution costs were approximately $525,000 and $423,000, respectively. Advertising and Promotion Advertising and promotional costs are expensed as incurred. Advertising and promotional expense for the years ended December 31, 2022 and 2021 amounted to approximately $1,178,000 and $240,000, respectively. The amounts are included in sales and marketing expense. General and Administrative General and administrative expenses consist primarily of compensation and benefits costs, professional services and information technology. General and administrative expenses also include payment processing fees, design and warehousing fees. 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 December 31, 2022 and 2021, 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. 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 simplified method is based on the average of the vesting tranches and the contractual life of each grant. For stock price volatility, the Company uses comparable public companies as a basis for its expected volatility to calculate the fair value of options grants. 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. The number of stock award forfeitures are recognized as incurred. 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 an expense over the employee’s requisite vesting period and over the nonemployee’s period of providing goods or services. The Company measures employee stock-based awards at grant-date fair value and recognizes employee compensation expense on a straight-line basis over the vesting period of the award. Determining the appropriate fair value of stock-based awards requires the input of subjective assumptions, including the fair value of the Company’s common stock, and for stock options, the expected life of the option, and expected stock price volatility. The Company used the Black-Scholes option pricing model to value its stock option awards. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and management uses different assumptions, stock-based compensation expense could be materially different for future awards. 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. As of December 31, 2021, the Company capitalized $367,696 in deferred offering costs pertaining to its equity line of credit agreement with Oasis (Note 8). In 2022, the Company wrote off these costs to general and administrative expenses in the consolidated statements of operations as the equity line of credit financing never occurred. 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 December 31, 2022 our operating segments included: DSTLD, Bailey, H&J, Stateside and Sundry. 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 wher |
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS | 6 Months Ended |
Jun. 30, 2023 | |
DISCONTINUED OPERATIONS | |
DISPOSITION | NOTE 4: DISCONTINUED OPERATIONS On June 21, 2023, the Company and the former owners of H&J executed a Settlement Agreement and Release (the “Settlement Agreement”) whereby contemporaneously with the parties’ execution of the Settlement Agreement (i) the Company agreed to make an aggregate cash payment of $229,000 to D. Jones Tailored Collection, Ltd. (“D. Jones”), (ii) the Company issued 78,103 shares of common stock to D. Jones, and (iii) the Company assigned and transferred one hundred percent (100%) of the Company’s membership interest in H&J to D. Jones. This transaction is known as the “H&J Settlement”. The H&J Settlement was accounted for a business disposition in accordance with ASC 810-40-40-3A. As of June 21, 2023, the Company no longer consolidated the assets, liabilities, revenues and expenses of H&J. The components of the disposition are as follows: Cash payment due to H&J Seller $ (229,000) Common shares issued to H&J Seller* (1,357,043) Total fair value of consideration received (given) $ (1,586,043) Carrying amount of assets and liabilities Cash and cash equivalents 18,192 Accounts receivable, net 55,782 Prepaid expenses and other current assets 25,115 Goodwill 1,130,311 Intangible assets, net 1,246,915 Deposits 4,416 Accounts payable (40,028) Accrued expenses and other liabilities (734,068) Deferred revenue (18,347) Due to related parties (1,008) Contingent consideration (1,400,000) Loan payable (219,894) Note payable - related party (129,489) Total carrying amount of assets and liabilities (62,103) Loss on disposition of business $ (1,523,940) * Represents the fair value of 78,103 shares of common stock issued to D. Jones. Through June 30, 2023, the Company has made payments to D. Jones totaling $150,000. The remaining balance of $79,000 is included in accrued expenses and other liabilities on the consolidated balance sheet. The loss of disposition of business of $1,523,940 was included in income (loss) from discontinued operations, net of tax in the consolidated statements of operations. In accordance with the provisions of ASC 205-20, the Company has excluded the results of discontinued operations from its results of continuing operations in the accompanying consolidated statements of operations for the three and six months ended June 30, 2023 and 2022. The results of the discontinued operations of HJ for the three and six months ended June 30, 2023 and 2022 consist of the following: Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Net revenues $ 686,627 $ 1,089,569 $ 1,405,482 $ 1,892,849 Cost of net revenues 292,107 328,915 565,621 605,413 Gross profit 394,520 760,654 839,861 1,287,436 Operating expenses: General and administrative 189,751 449,508 520,582 896,873 Sales and marketing 169,875 332,723 346,167 515,775 Distribution — — — — Change in fair value of contingent consideration — — — — Total operating expenses 359,626 782,231 866,749 1,412,648 Income (loss) from operations 34,894 (21,577) (26,888) (125,212) Other income (expense): Interest expense (3,003) (29,828) (11,675) (40,862) Loss on disposition of business (1,523,940) — (1,523,940) — Other non-operating income (expenses) — — — — Total other income (expense), net (1,526,944) (29,828) (1,535,615) (40,862) Income tax benefit (provision) — — — — Net income (loss) from discontinued operations $ (1,492,050) $ (51,404) $ (1,562,503) $ (166,074) Weighted average common shares outstanding - basic 246,809 14,329 236,824 9,836 Weighted average common shares outstanding - diluted 834,604 14,329 824,619 9,836 Net income (loss) from discontinued operations per common share - basic $ (6.05) $ (3.59) $ (6.60) $ (16.88) Net income (loss) from discontinued operations per common share - diluted $ (6.05) $ (3.59) $ (6.60) $ (16.88) |
DUE FROM FACTOR
DUE FROM FACTOR | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
DUE FROM FACTOR | ||
DUE FROM FACTOR | NOTE 5: DUE FROM FACTOR Due to/from factor consist of the following: June 30, December 31, 2023 2022 Outstanding receivables: Without recourse $ 787,542 $ 1,680,042 With recourse 50,979 65,411 Matured funds and deposits 88,516 81,055 Advances (478,753) (632,826) Credits due customers (10,142) (354,282) $ 438,142 $ 839,400 | NOTE 5: DUE FROM FACTOR The Company, via its subsidiaries, Bailey, Stateside and Sundry, assigns a portion of its trade accounts receivable to third- party factoring companies, 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 based on the terms of one of our agreements that terminated in 2021. The factor charges a commission on the net sales factored for credit and collection services. For one factoring company, interest on advances is charged as of the last day of each month at a rate equal to the LIBOR rate plus 2.5% for Bailey. For Stateside and Sundry, should total commission and fees payable be less than $30,000 in a single year, then the factor shall charge the difference between the actual fees in said year and $30,000 to the Company. Interest on advances is charged as of the last day of each month at a rate equal to the greater of either, (a) the Chase Prime Rate + (2.0)% or (b) (4.0)% per annum. For another factoring company, interest is charged at one-thirty- third Advances are collateralized by a security interest in substantially all of the companies’ assets. Due to/from factor consist of the following: December 31, 2022 2021 Outstanding receivables: Without recourse $ 564,548 $ 579,295 With recourse 352,379 361,584 Advances 118,521 121,617 Credits due customers (196,048) (77,208) $ 839,400 $ 985,288 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
GOODWILL AND INTANGIBLE ASSETS | ||
GOODWILL AND INTANGIBLE ASSETS | NOTE 6: GOODWILL AND INTANGIBLE ASSETS The following is a summary of goodwill attributable to each business combination: June 30, December 31, 2023 2022 Bailey $ 3,158,123 $ 3,158,123 Stateside 2,104,056 2,104,056 Sundry 3,711,322 3,711,322 $ 8,973,501 $ 10,103,812 In connection with the H&J disposition, the Company derecognized $1,130,311 in goodwill. The following table summarizes information relating to the Company’s identifiable intangible assets as of June 30, 2023: Gross Accumulated Carrying Amount Amortization Value Amortized: Customer relationships $ 9,734,560 $ (4,155,129) $ 5,579,431 $ 9,734,560 $ (4,155,129) $ 5,579,431 Indefinite-lived: Brand name $ 5,841,880 — 5,841,880 $ 15,576,440 $ (4,155,129) $ 11,421,311 In connection with the H&J disposition, the Company derecognized $1,246,915 in intangible assets. The Company recorded amortization expense of $804,924 and $537,812 during the three months ended June 30, 2023 and 2022, and $1,759,277 and $1,075,625 during the six months ended June 30, 2023 and 2022, respectively, which is included in general and administrative expenses in the consolidated statements of operations. | NOTE 6: GOODWILL AND INTANGIBLE ASSETS Goodwill The Company recorded goodwill from each of its business combinations. The following is a summary of goodwill by entity for the years ended December 31, 2022 and 2021: Bailey Stateside Sundry Total Balances at December 31, 2020 $ 6,479,218 $ — $ — $ 6,479,218 Business combination — 2,104,056 — 2,104,056 Impairment — — — — Balances at December 31, 2021 6,479,218 2,104,056 — 8,583,274 Business combination — — 3,711,322 3,711,322 Impairment (3,321,095) — — (3,321,095) Balances at December 31, 2022 $ 3,158,123 $ 2,104,056 $ 3,711,322 $ 8,973,501 Refer to Note 3 for discussion on the goodwill impairment recorded in 2022. As of December 31, 2022, there was approximately $3.2 million for Bailey in goodwill that relates to liabilities in excess of assets. Intangible Assets The following table summarizes information relating to the Company’s identifiable intangible assets as of December 31, 2022 and 2021: Gross Accumulated Carrying December 31, 2022 Amount Amortization Value Amortized: Customer relationships $ 9,734,560 (2,670,202) $ 7,064,358 9,734,560 (2,670,202) 7,064,358 Indefinite-lived: Brand name $ 5,841,880 — 5,841,880 $ 15,576,440 $ (2,670,202) $ 12,906,238 Gross Accumulated Carrying December 31, 2021 Amount Amortization Value Amortized: Customer relationships $ 4,736,080 (1,091,509) $ 3,644,571 4,736,080 (1,091,509) 3,644,571 Indefinite-lived: Brand name $ 5,618,560 — 5,618,560 $ 10,354,640 $ (1,091,509) $ 9,263,131 Due to the effects of COVID-19 and revenue levels not recovering as quickly as anticipated and related uncertainty which affected Bailey’s results and near-term demand for its products, the Company determined that there were indications for further impairment analysis in both 2022 and 2021. Due to Harper’s revenue levels lower as compared to initial projects, the Company determined that there were indications for further impairment analysis in 2022. Refer to Note 3 for discussion on the intangible asset impairment recorded in 2022 and 2021. Management determined circumstances existed that indicated the carrying value may not be recoverable. The impairment analysis was based on the relief from royalty method using projected revenue estimates and discounts rates believed to be appropriate. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates and market factors. The discount rate, revenue assumptions and terminal growth rate of our reporting unit were the material assumptions utilized in the model used to estimate the fair value of the Bailey unit. The analysis requires estimates, assumptions and judgments about future events. Our analysis uses our internally generated long-range plan. The long-range plan reflects management judgment, which includes observation of expected industry trends. The Company recorded amortization expense of $1,653,819 and $1,128,524 during the years ended December 31, 2022 and 2021, respectively, which is included in general and administrative expenses in the consolidated statements of operations. Future amortization expense at December 31, 2022 is as follows: Year Ending December 31, 2023 2,924,020 2024 2,474,178 2025 1,666,160 $ 7,064,358 |
LIABILITIES AND DEBT
LIABILITIES AND DEBT | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
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, 2023 and December 31,2022: June 30, December 31, 2023 2022 Accrued expenses $ 503,927 $ 668,714 Reserve for returns — 307,725 Payroll related liabilities 4,009,812 2,618,870 Sales tax liability 277,800 262,765 Other liabilities 247,398 78,845 $ 5,038,937 $ 3,936,920 As of June 30, 2023, payroll liabilities included an aggregate of $1,288,048 in payroll taxes due to remit to federal and state authorities. Of this amount, $620,400 pertained to DBG and $667,648 pertained to Bailey44. The amounts are subject to further penalties and interest. The amounts are subject to further penalties and interest. As of June 30, 2023 and December 31, 2022, accrued expenses included $535,000 in accrued common stock issuances pursuant to an advisory agreement for services performed in 2022. The 5,000 shares of common stock owed per the agreement are expected to be issued in the third quarter of 2023. At June 30, 2023, accrued expenses also includes owed to Sundry executives based on their employment agreements with the Company, which is expected to be issued in the third quarter of 2023. Convertible Debt 2020 Regulation D Offering As of June 30, 2023 and December 31, 2022, there was $100,000 remaining in outstanding principal that was not converted into equity. Convertible Promissory Note On December 29, 2022, the Company and various purchasers executed a Securities Purchase Agreement (“December Notes”) whereby the investors purchased from the Company convertible promissory notes in the aggregate principal amount of $4,000,000, consisting of original issue discount of $800,000. The Company received net proceeds of $3,000,000. The December Notes were due and payable on February 15, 2023. If the December Notes are not repaid in full by the maturity date or if any other event of default occurs, (1) the face value of the December Notes will be automatically increased to 120%; (2) the Notes will begin generating an annual interest rate of 20%, which will be paid in cash monthly until the default is cured; and (3) if such default continues for 14 or more calendar days, at the investors’ discretion, the December Notes shall become convertible at the option of the investors into shares of the Company’s common stock at a conversion price equal to the closing price of the Company’s common stock on the date of the note conversion. In connection with the December Notes, the Company issued to the investors an aggregate of 18,779 warrants to purchase common stock at an exercise price equal to $106.50, and 2,400 shares of common stock. The Company recognized $428,200 as a debt discount for the fair value of the warrants and common shares using the Black-Scholes option model, resulting in a total debt discount of $1,378,200. In February 2023, the principal of $4,000,000 of the December Notes were fully repaid. The Company amortized $689,100 of debt discount up until the repayment date, and then recognized a loss on extinguishment of debt of $689,100 which is included in other non-operating income (expenses) on the consolidated statements of operations. The following is a summary of the convertible notes for the six months ended June 30, 2023: Unamortized Convertible Note Principal Debt Discount Payable, Net Balance, December 31, 2022 $ 4,100,000 $ (1,378,200) $ 2,721,800 Repayments of notes (4,000,000) — (4,000,000) Amortization of debt discount — 689,100 689,100 Loss on extinguishment of debt — 689,100 689,100 Balance, June 30, 2023 $ 100,000 $ — $ 100,000 During the six months ended June 30, 2022, the Company converted an aggregate of $888,930 in outstanding principal into 350 shares of common stock. During the six months ended June 30, 2023 and 2022, the Company amortized $689,100 and $1,724,291, respectively of debt discount to interest expense pertaining to convertible notes. In January 2023, the Company issued 4,400 shares of common stock at a fair value of $322,300 to a former convertible noteholder pursuant to default provisions. The amount was included in interest expense in the consolidated statements of operations. Loan Payable — PPP and SBA Loan As of both June 30, 2023 and December 31, 2022, Bailey had an outstanding PPP Loan balance of $933,295 and matures in 2026. Merchant Advances In 2022, the Company obtained several merchant advances. These advances are, for the most part, secured by expected future sales transactions of the Company with expected payments on a weekly basis. As of December 31, 2022, $896,334 remained outstanding. During the six months ended June 30, 2023, the Company received additional proceeds totaling $1,692,748 and made repayments totaling $2,331,972. As of June 30, 2023, the remaining principal outstanding was $257,110. In connection with these advances, the Company granted 6,095 warrants to purchase common stock at an exercise price of $131.25 to the lender in connection with its merchant advances. In 2023, the Company obtained merchant advances totaling $502,051 from Shopify Capital, and made repayments totaling $208,416 . As of June 30, 2023, the remaining principal outstanding was Promissory Note Payable As of June 30, 2023 and December 31, 2022, the outstanding principal on the note to the sellers of Bailey was $3,500,000. The maturity date was December 31, 2022. On July 5, 2023, the parties agreed to extend the maturity date to June 30, 2024. Interest expense was $105,000 and $105,000 for the three months ended June 30, 2023 and 2022 and $210,000 and $210,000 for the six months ended June 30, 2023 and 2022, all respectively, which was accrued and unpaid as of June 30, 2023. The Company issued a promissory note in the principal amount of $5,500,000 to the Sundry Holders pursuant to the Sundry acquisition. The note bears interest at 8% per annum and matures on February 15, 2023. In February 2023, the parties verbally agreed to extend the maturity date to December 31, 2023. Interest expense was $149,177 and $259,177 for the three and six months ended June 30, 2023, respectively. On June 21, 2023, the Company and the Sundry Holders executed a Securities Purchase Agreement (the “Sundry SPA”) whereby the Company issued per share (see Note 7). The shares were issued pursuant to the cancellation of the Sundry Holders’ entire principal amount of In March 2023, the Company and various purchasers executed a Securities Purchase Agreement (“March 2023 Notes”) whereby the investors purchased from the Company promissory notes in the aggregate principal amount of $2,458,750, consisting of original issue discount of $608,750. The Company received net proceeds of $1,850,000 after additional fees. The March 2023 Notes are due and payable on September 30, 2023 (the “Maturity Date”). The Company will also have the option to prepay the Notes with no penalties at any time prior to the Maturity Date. If the Company completes a debt or equity financing of less than $7,500,000, the Company is required to repay 50% of the remaining balance of the March 2023 Notes. Following such 50% repayment, the Company must also use any proceeds from any subsequent debt or equity financing to repay the March 2023 Notes. Upon the closing of any debt or equity financing of $7,500,000 or greater, the Company is required to repay 100% of the Notes with no penalties. There is no additional interest after the 20% original interest discount. The Company recognized a debt discount of $608,750, of which $263,839 was amortized through June 30, 2023. The following is a summary of promissory notes payable, net: June 30, December 31, 2023 2022 Bailey Note $ 3,500,000 $ 3,500,000 Sundry Note — 5,500,000 March 2023 Notes - principal 2,458,750 — March 2023 Notes - unamortized debt discount (344,911) — Promissory note payable, net $ 5,613,839 $ 9,000,000 | 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 December 31, 2022 and 2021: December 31, 2022 2021 Accrued expenses $ 668,714 $ 178,819 Reserve for returns 307,725 33,933 Payroll related liabilities 2,618,870 1,183,598 Sales tax liability 262,765 225,804 Due to seller — 396,320 Other liabilities 78,845 59,613 $ 3,936,920 $ 2,078,087 As of December 31, 2022, payroll liabilities included an aggregate of $1,074,316 in payroll taxes due to remit to federal and state authorities. Of this amount, $539,839 pertained to DBG and $534,477 pertained to Bailey44. The amounts are subject to further penalties and interest. As of December 31, 2022, accrued expenses included $535,000 in accrued common stock issuances pursuant to an advisory agreement for services performed in 2022. The 200 shares of common stock owed per the agreement are expected to be issued in the second quarter of 2023. Due to seller represents amounts to the seller owed pursuant the Stateside Acquisition after certain purchase price adjustments were made in the fourth quarter of 2021, and repaid in 2022. Venture Debt As of December 31, 2021, the gross loan balance with Black Oak Capital (“Black Oak”) pertaining to its senior credit agreement was $6,001,755. In February 2022, the Company received $237,500 in proceeds, including loan fees of $12,500, from the existing venture debt lender under the same terms as the existing facility. On September 29, 2022, the Company and Black Oak executed a Securities Purchase Agreement (the “Black Oak SPA”) whereby the Company issued 6,300 shares of Series A Convertible Preferred Stock to Black Oak for $1,000 per share (see Note 7). The shares were issued pursuant to the conversion of Black Oak’s entire principal amount of $6,251,755, and the Company recorded $48,245 in interest as part of the conversion. Pursuant to the Black Oak SPA, all accrued interest remaining outstanding. Accrued interest was $269,880 as of December 31, 2022. For the year ended December 31, 2022 and 2021, $12,500 and $147,389 of loan fees and discounts from warrants were amortized to interest expense, leaving unamortized balance of $0 as of December 31 2022. Interest expense was $573,455 and $825,219 for the years ended December 31, 2022 and 2021, 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 12,786 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 year ended December 31, 2021, $27,894 of the debt discount was amortized to interest expense. 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. In addition, the Company issued 0.2 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 181 shares of common stock. As of December 31, 2022 and 2021, there was $100,000 remaining in outstanding principal that was not converted into equity (see table below). During the year ended December 31, 2021, $100,000 of the 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. Upon closing of the IPO, the outstanding principal was converted into 145 shares of common stock. Convertible Promissory Notes 2021 Notes On August 27, 2021, the Company entered into a Securities Purchase Agreement with Oasis Capital, LLC (“Oasis Capital”) further to which Oasis Capital purchased a senior secured convertible note (the “Oasis Note”), with an interest rate of 6% per annum, having a face value of $5,265,000 for a total purchase price of $5,000,000, secured by all assets of the Company. The Oasis Note, in the principal amount of $5,265,000, bears interest at 6% per annum and is due and payable 18 months from the date of issuance, unless sooner converted. The Oasis Note is convertible at the option of Oasis Capital into shares of the Company’s common stock at a conversion price (the “ Oasis Conversion Price”) which is the lesser of (i) $90.601, and (ii) 90% of the average of the two lowest volumed weighted average prices (“VWAPs’) during the five consecutive trading day period preceding the delivery of the notice of conversion. Oasis Capital is not permitted to submit conversion notices in any thirty day period having conversion amounts equaling, in the aggregate, in excess of $500,000. If the Oasis Conversion Price set forth in any conversion notice is less than $7,500 per share, the Company, at its sole option, may elect to pay the applicable conversion amount in cash rather than issue shares of its common stock. On October 1, 2021, the Company entered into an Amended and Restated Securities Purchase Agreement with FirstFire Global Opportunities Fund, LLC (“FirstFire”) and Oasis Capital further to which FirstFire purchased a Senior Secured Convertible Promissory Note (the “First FirstFire Note”), with an interest rate of 6% per annum, having a face value of $1,575,000 for a total purchase price of $1,500,000, secured by all assets of the Company. The First FirstFire Note, in the principal amount of $1,575,000, bears interest at 6% per annum and is due and payable 18 months from the date of issuance, unless sooner converted. The First FirstFire Note is convertible at the option of FirstFire into shares of the Company’s common stock at a conversion price (the “First FirstFire Conversion Price”) which is the lesser of (i) $9,880, and (ii) 90% of the average of the two lowest volume-weighted average prices during the five consecutive trading day period preceding the delivery of the notice of conversion. On November 16, 2021, the Company entered into a Securities Purchase Agreement with FirstFire further to which FirstFire purchased a Senior Secured Convertible Promissory Note (the “Second FirstFire Note” and together with the First FirstFire Note, the “FirstFire Notes”), with an interest rate of 6% per annum, having a face value of $2,625,000 for a total purchase price of $2,500,000. The Second FirstFire Note is convertible at the option of FirstFire into shares of the Company’s common stock at a conversion price (the “Second FirstFire Conversion Price”) which is the lesser of (i) $10,700, and (ii) 90% of the average of the two lowest volume-weighted average prices during the five consecutive trading day period preceding the delivery of the notice of conversion. The Company evaluated the terms of the conversion features of the Oasis and FirstFire Notes as noted above in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity’s Own Stock, and determined they are not indexed to the Company’s common stock and that the conversion features meet the definition of a liability. The notes contain an indeterminate number of shares to settle with conversion options outside of the Company’s control. Therefore, the Company bifurcated the conversion feature and accounted for it as a separate derivative liability. Upon issuance of the Oasis and FirstFire Notes, the Company recognized a derivative liability at an aggregate fair value of $3,204,924, which is recorded as a debt discount and was amortized over the life of the notes. The original issue discount and issuance costs for the Oasis and FirstFire Notes totaled $1,560,000, which were recognized as a debt discount and was amortized over the life of the notes. As of December 31, 2021, the outstanding principal of the FirstFire and Oasis Notes was $9,465,000. During the year ended December 31, 2022, the Company fully converted the outstanding principal of $9,465,000 and accrued interest of $533,242 into an aggregate of 79,807 shares of commons stock. The Company recorded an additional $484,904 in interest expense as a result of the conversions. As a result of the conversions, all terms and conditions under the notes were met and no further obligations exist. 2022 Notes On April 8, 2022, the Company and various purchasers executed a Securities Purchase Agreement (“April Notes”) whereby the investors purchased from the Company convertible promissory notes in the aggregate principal amount of $3,068,750, consisting of original issue discount of $613,750. The Company received net proceeds of $2,313,750 after the original issue discount and fees, resulting in a debt discount of $755,000. Upon the Company’s public offering in May 2022 (see below), the Company repaid $3,068,750 to the investors and the debt discount was fully amortized. In connection with the April Notes, the Company issued an aggregate of 503 warrants to purchase common stock at an exercise price of $3,050 per share. The Company recognized $98,241 as a debt discount for the fair value of the warrants using the Black-Scholes option model, which was fully amortized upon the notes’ repayment in May. On July 22 and July 28, 2022, the Company and various purchasers executed a Securities Purchase Agreement (“July Notes”) whereby the investors purchased from the Company convertible promissory notes in the aggregate principal amount of $1,875,000, consisting of original issue discount of $375,000. The Company received net proceeds of $1,450,000 after the original issue discount and fees. In connection with the July 22 and July 28 notes, the Company issued an aggregate of 1,645 and 1,106 warrants to purchase common stock at an exercise price of $380 and $282.50 per share, respectively. The Company recognized $692,299 as a debt discount for the fair value of the warrants using the Black-Scholes option model, which will be amortized to interest expense over the life of the notes. If the July Notes are not repaid in full by the maturity date or if any other event of default occurs, (1) the face value of the notes will be automatically increased to 120%; (2) the notes will begin generating an annual interest rate of 20%, which will be paid in cash monthly until the default is cured; and (3) if such default continues for 14 or more calendar days, at the Investors’ discretion, the notes shall become convertible at the option of the investors into shares of the Company’s common stock at a conversion price equal to the closing price of the Company’s common stock on the on the date of the note conversion. The Company evaluated the terms of the conversion features of the July notes as noted above in accordance with ASC Topic No. 815 — 40, Derivatives and Hedging — Contracts in Entity’s Own Stock In December 2022, the Company fully repaid the outstanding principal of $1,875,000 pertaining to the July 22 and 28 notes, as well as an additional $416,923 due to the default provisions noted above. This amount was included in interest expense in the consolidated statements of operations. On December 29, 2022, the Company and various purchasers executed a Securities Purchase Agreement (“December Notes”) whereby the investors purchased from the Company convertible promissory notes in the aggregate principal amount of $4,000,000, consisting of original issue discount of $800,000. The Company received net proceeds of $3,000,000. The December Notes were due and payable on February 15, 2023. If the December Notes are not repaid in full by the maturity date or if any other event of default occurs, (1) the face value of the December Notes will be automatically increased to 120%; (2) the Notes will begin generating an annual interest rate of 20%, which will be paid in cash monthly until the default is cured; and (3) if such default continues for 14 or more calendar days, at the investors’ discretion, the December Notes shall become convertible at the option of the investors into shares of the Company’s common stock at a conversion price equal to the closing price of the Company’s common stock on the date of the note conversion. The December Notes were fully repaid in February 2023. In connection with the December Notes, the Company issued to the investors an aggregate of 18,779 warrants to purchase common stock at an exercise price equal to $106.50, and 2,400 shares of common stock. The Company recognized $428,200 as a debt discount for the fair value of the warrants and common shares using the Black-Scholes option model, which will be amortized to interest expense over the life of the notes. The following is a summary of the convertible notes for the years ended December 31, 2022 and 2021: Unamortized Convertible Note Principal Debt Discount Payable, Net Balance, December 31, 2020 $ 100,000 $ — $ 100,000 Issuance of Oasis note, net of issuance costs 5,265,000 (715,000) 4,550,000 Issuance of FirstFire First note, net of issuance costs 1,575,000 (315,000) 1,260,000 Issuance of Second FirstFire note, net of issuance costs 2,625,000 (530,000) 2,095,000 Derivative liability in connection with notes — (3,204,924) (3,204,924) Amortization of debt discount — 801,538 801,538 Balance, December 31, 2021 9,565,000 (3,963,386) 5,601,614 Proceeds from issuance of notes 8,943,750 (1,992,500) 6,951,250 Repayments of notes (4,943,750) — (4,943,750) Conversion of notes into common stock (9,465,000) — (9,465,000) Warrant and common shares issued with convertible notes — (1,368,741) (1,368,741) Derivative liability in connection with notes — (559,957) (559,957) Amortization of debt discount — 6,506,384 6,506,384 Balance, December 31, 2022 $ 4,100,000 $ (1,378,200) $ 2,721,800 As of December 31, 2022, the December Notes remained outstanding with a principal of $4,000,000 and unamortized debt discount of $1,278,200, consisting of the original issue discount, $50,000 in other financing fees, and the fair value of warrants and shares. The December Notes were fully repaid in February 2023 (see Note 14). During the years ended December 31, 2022 and 2021, the Company amortized $6,506,384 and $801,538, respectively of debt discount to interest expense pertaining to all convertible notes. As of December 31, 2022, there was no remaining derivative liability outstanding pertaining to any convertible notes. Loan Payable — PPP and SBA Loan In December 2021, the Company received notification that both its PPP Loans of $203,994 and $204,000 were approved for full forgiveness. As such, $407,994 was recorded as other non-operating income in the consolidated financial statements. In April 2022, Bailey received notification of full forgiveness of its 2 nd st As of December 31, 2022, the Company and H&J had outstanding loans under the EIDL program of $150,000 and $147,438, respectively. The EIDL Loans mature in thirty years from the effective date of the Loan and has a fixed interest rate of 3.75% per annum. The H&J loan was classified in liabilities per discontinued operations. Loan Payable In May 2021, H&J entered into a loan payable with a bank and received proceeds of $75,000. The line bears interest at 7.76% and matures in December 2025. As of December 31, 2022 and 2021, the outstanding balance was $73,187 and $72,269, respectively. The H&J loan was classified in liabilities per discontinued operations. In December 2021, H&J entered into a merchant advance loan for a principal amount of $153,860 and received proceeds of $140,000. The loan bears interest at 9.9% and matures in June 2023. As of December 31, 2021, the outstanding balance was $149,962. The H&J loan was classified in liabilities per discontinued operations. Note Payable – Related Party As of December 31, 2022 and 2021, H&J had an outstanding note payable of $129,489 and $299,489, respectively owned by the H&J Seller. The note matured in July 2022 and bears interest at 12% per annum. The H&J loan was classified in liabilities per discontinued operations. Merchant Advances In 2022 and 2021, H&J entered into merchant advance loans for proceeds of $147,267 and $140,000, respectively. The loan bears interest at 9.9% per annum. As of December 31, 2022 and 2021, the outstanding principal of the loans was $63,433 and $149,962, respectively. The outstanding loan at December 31, 2022 matures in November 2023. In 2022, the Company obtained several merchant advances for net proceeds of $1,335,360 to fund operations. These advances are, for the most part, secured by expected future sales transactions of the Company with expected payments on a weekly basis. During 2022, the Company made repayments totaling $1,078,385 and $896,334 remained outstanding, which is expected to be repaid in 2023. As of the date of these financial statements, the Company was in compliance with these covenants. 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. Upon the IPO closing in May 2021, the Company repaid $1,000,000 of the outstanding principal on this note in May 2021. In August 2021, the maturity date was further extended to December 31, 2022. The Company is required to make prepayments of $2,000,000 to $4,000,000 if the Company completes a secondary public offering. If a public offering is not consummated before October 31, 2021 and June 30, 2022, the Company shall repay 10% of the outstanding principal at each date. The Company did not make any payments in October 2021, and the Company and the lender agreed to defer these payments to the maturity date of the loan, December 31, 2022. As of the date of these financial statements, the parties are undergoing an extension of the maturity date, but is in technical default. The note incurs interest at 12% per annum. As of December 31, 2022 and 2021, $3,500,000 remained outstanding. Interest expense was $420,000 and $494,000 for the years ended December 31, 2022 and 2021, respectively, all of which was accrued and unpaid as of December 31, 2022. 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 48 warrants to the lender, 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. As noted in Note 4, the Company issued a promissory note in the principal amount of $5,500,000 to the Sundry Holders pursuant to the Sundry acquisition. The note bears interest at 8% per annum and matures on February 15, 2023. In February 2023, the parties verbally agreed to extend the maturity date to December 31, 2023. |
STOCKHOLDERS' DEFICIT
STOCKHOLDERS' DEFICIT | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
STOCKHOLDERS' DEFICIT | ||
STOCKHOLDERS' DEFICIT | NOTE 8: STOCKHOLDERS’ DEFICIT On January 11, 2023, the Company, entered into a Securities Purchase Agreement (the “Purchase Agreement”) with a certain accredited investor (the “Investor”), pursuant to which the Company agreed to issue and sell, in a private placement (the “January Private Placement”), an aggregate of 19,000 shares (the “Shares”) of the Company’s common stock (“Common Stock”), and accompanying warrants (the “Common Warrants”) to purchase 19,000 shares of Common Stock, at a combined purchase price of $97.875 per share and Common Warrant, and (ii) 32,086 pre-funded warrants (the “Pre-Funded Warrants” and together with the Common Warrants, the “Warrants” and together with the Shares and the shares of Common Stock underlying the Warrants, the “Securities”) exercisable for 32,086 shares of Common Stock, and accompanying Common Warrants to purchase 32,086 shares of Common Stock, at a combined purchase price of $97.875 per Pre-Funded Warrant and accompanying Common Warrant, to the Investors, for aggregate gross proceeds from the Private Placement of approximately $5 million before deducting placement agent fees and related offering expenses. As a result of the transaction, the Company issued 50,890 shares of common stock, including the 19,000 shares and the immediate exercise of 32,086 pre-funded warrants, for gross proceeds of $5.0 million. The Company received net proceeds of $4.3 million after deducting placement agent fees and offering expenses. In January 2023, the Company issued 4,400 shares of common stock at a fair value of $322,300 to a former convertible noteholder pursuant to default provisions. The amount was included in interest expense in the consolidated statements of operations. In March 2023, the Company issued an aggregate of 4,756 shares of common stock to Sundry executives based on their employment agreements with the Company. The fair value of $499,338, or $4.20 per share as determined by the agreements, was included in general and administrative expenses in the consolidated statements of operations. In June 2023, the Company issued 78,103 shares of common stock to D. Jones at a fair value of $1,357,043 pursuant to the H&J Settlement Agreement. During the six months ended June 30, 2022, the Company converted an aggregate of $888,930 in outstanding principal into 350 shares of common stock. Series B Preferred Stock On May 30, 2023, the Company entered into a Subscription and Investment Representation Agreement (the “Subscription Agreement”) with John Hilburn Davis IV, its Chief Executive Officer pursuant to which the Company agreed to issue and sell 1 share of the Company’s Series B Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock”) for $25,000. On May 30, 2023, the Company filed a certificate of designation (the “Certificate of Designation”) with the Secretary of State of the State of Delaware, effective as of the time of filing, designating the rights, preferences, privileges and restrictions of the share of Series B Preferred Stock. The Certificate of Designation provides that the Series B Preferred Stock will have 250,000,000 votes per share of Series B Preferred Stock and will vote together with the outstanding shares of the Company’s common stock, par value 0.0001 per share (the “Common Stock”) and Series A Convertible Preferred Stock, par value 0.0001 per share (the “Series A Convertible Preferred Stock”) as a single class exclusively with respect to any proposal to amend the Company’s Sixth Amended and Restated Certificate of Incorporation (as may be amended and/or restated from time to time, the “Restated Certificate”) to effect a reverse stock split of the Company’s common stock. The Series B Preferred Stock will be voted, without action by the holder, on any such proposal in the same proportion as shares of Common Stock and Series A Convertible Preferred Stock are voted. The Series B Preferred Stock otherwise has no voting rights. The Series B Preferred Stock is not convertible into, or exchangeable for, shares of any other class or series of stock or other securities of the Company. The Series B Preferred Stock has no rights with respect to any distribution of assets of the Company, including upon a liquidation, bankruptcy, reorganization, merger, acquisition, sale, dissolution or winding up of the Company, whether voluntarily or involuntarily. The holder of the Series B Preferred Stock will not be entitled to receive dividends of any kind. The outstanding share of Series B Preferred Stock shall be redeemed in whole, but not in part, at any time (i) if such redemption is ordered by the Board of Directors in its sole discretion or (ii) automatically upon the effectiveness of the amendment to the Restated Certificate implementing a reverse stock split. Upon such redemption, the holder of the Series B Preferred Stock will receive consideration of $25,000 in cash. Series C Convertible Preferred Stock On June 21, 2023, the Company, on the one hand, and Moise Emquies, George Levy, Matthieu Leblan, Carol Ann Emquies, Jenny Murphy and Elodie Crichi (collectively, the “Sundry Investors”), on the other hand, executed a Securities Purchase Agreement (the “Sundry SPA”) whereby the Company issued 5,761 shares of Series C Convertible Preferred Stock, par value $0.0001 per share (the “Series C Preferred Stock”) to the Sundry Investors at a purchase price of $1,000 per share. The Series C Preferred Stock is convertible into a number of shares of the Company’s Common Stock equal to $1,000 divided by an initial conversion price of $17.925 which represents the lower of (i) the closing price per share of the Common Stock as reported on the Nasdaq on June 20, 2023, and (ii) the average closing price per share of Common Stock as reported on the Nasdaq for the five trading days preceding June 21, 2023. The shares of Series C Preferred Stock were issued in consideration for the cancellation of certain promissory notes issued by the Company to the Sundry Investors dated December 30, 2022 (the “Sundry Loan Documents”). The following is a summary of the rights and preferences of the Series C Convertible Preferred Stock. On June 21, 2023, the Company filed the Certificate of Designation with the Secretary of State for the State of Delaware designating up to 5,761 shares out of the authorized but unissued shares of its preferred stock as Series C Convertible Preferred Stock. The following is a summary of the principal terms of the Series C Preferred Stock. Except for stock dividends or distributions for which adjustments are to be made pursuant to the Certificate of Designation, the holders of the Series C Preferred Stock (the “Series C Holders”) shall be entitled to receive, and the Company shall pay, dividends on shares of the Series C Preferred Stock equal (on an as-if-converted-to-Common-Stock basis) to and in the same form as dividends actually paid on shares of the Common Stock when, as and if such dividends are paid on shares of the Common Stock. No other dividends shall be paid on shares of the Series C Preferred Stock. The Series C Holders are entitled to vote as a class as expressly provided in the Certificate of Designation. The Series C Holders are also entitled to vote with the holders of shares of Common Stock, voting together as one class, on all matters in which the Series C Holders are permitted to vote with the class of shares of Common Stock. With respect to any vote with the class of Common Stock, each share of the Series C Preferred Stock shall entitle the Holder thereof to cast that number of votes per share as is equal to the number of shares of Common Stock into which it is then convertible (subject to the ownership limitations specified in the Certificate of Designation) using the record date for determining the stockholders of the Company eligible to vote on such matters as the date as of which the conversion price is calculated. The Series C Preferred Stock shall rank (i) senior to all of the Common Stock; (ii) senior to Junior Securities; (iii) on parity with Parity Securities; and (iv) junior to Senior Securities, in each case, as to dividends or distributions of assets upon liquidation, dissolution or winding up of the Company, whether voluntarily or involuntarily. Subject to any superior liquidation rights of the holders of any Senior Securities of the Company and the rights of the Company’s existing and future creditors, upon a Liquidation, each Holder shall be entitled to be paid out of the assets of the Company legally available for distribution to stockholders, prior and in preference to any distribution of any of the assets or surplus funds of the Company to the holders of the Common Stock and Junior Securities and pari passu with any distribution to the holders of Parity Securities, an amount equal to the Stated Value (as defined in the Certificate of Designation) for each share of the Series C Preferred Stock held by such Holder and an amount equal to any accrued and unpaid dividends thereon, and thereafter the Series C Holders shall be entitled to receive out of the assets, whether capital or surplus, of the Company the same amount that a holder of Common Stock would receive if the Series C Preferred Stock were fully converted (disregarding for such purposes any conversion limitations hereunder) to Common Stock which amounts shall be paid pari passu with all holders of Common Stock. Each share of the Series C Preferred Stock shall be convertible, at any time and from time to time from and after June 21, 2023 at the option of the Holder thereof, into that number of shares of Common Stock determined by dividing the Stated Value of such share of the Series C Preferred Stock ($1,000 as of June 21, 2023) by the Conversion Price. The conversion price for each share of the Series C Preferred Stock is $17.925, which is the lower of (a) the closing price per share of the Common Stock as reported on the Nasdaq Capital Market on June 20, 2023 (the trading day before the date of the Sundry SPA), and (b) the average closing price per share of Common Stock as reported on the Nasdaq Capital Market for the five The Company has the option to redeem any or all of the then outstanding Series C Preferred Stock at 112% of the then Stated Value any time after June 21, 2023 and so long as there is an effective Registration Statement covering the shares issuable upon conversion of the Series C Preferred Stock. | NOTE 8: STOCKHOLDERS’ DEFICIT Amendments to Articles of Incorporation On October 13, 2022, On October 21, 2022, the Board of Directors approved a one reverse stock split became effective as of November 3, 2022. Accordingly, all share and per share amounts for all periods presented in the accompanying consolidated financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect this reverse stock split and adjustment of the preferred stock conversion ratios. 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 66⅔% The Restated Certificate also effected a 1-for-15.625 reverse stock split approved by the Company’s Board of Directors as described above. Series A Preferred Stock On August 31, 2022, the Company entered into a Subscription and Investment Representation Agreement with Hil Davis, its Chief Executive Officer, pursuant to which the Company agreed to issue 1 share of the Company’s Series A Preferred Stock to for $25,000. The issuance of the preferred stock reduced the due to related party balance. The share of Series A Preferred Stock had 250,000,000 votes per share and voted together with the outstanding shares of the Company’s common stock as a single class exclusively with respect to any proposals to amend the Certificate of Incorporation to effect a reverse stock split of the Company’s common stock and to increase the authorized number of shares of the Company’s common stock. The terms of the Series A Preferred Stock provided that the outstanding share of Series A Preferred Stock would be redeemed in whole, but not in part, at any time: (i) if such redemption is ordered by the Board of Directors in its sole discretion or (ii) automatically upon the approval of Proposals 2 and 6 presented at the Company’s 2022 annual shareholders meeting. Following conclusion of the shareholders meeting, such share of the Company’s Series A Preferred Stock was redeemed. On October 13, 2022, the outstanding share of the Company’s Series A Preferred Stock was redeemed for $25,000. Series A Convertible Preferred Stock On September 29, 2022, the Company filed the Certificate of Designation designating up to 6,800 shares out of the authorized but unissued shares of its preferred stock as Series A Convertible Preferred Stock. Except for stock dividends or distributions for which adjustments are to be made pursuant to the Certificate of Designation, the holders of the Series A Preferred Stock (the “Holders”) shall be entitled to receive, and the Company shall pay, dividends on shares of the Series A Preferred Stock equal (on an as-if-converted-to-Common-Stock basis) to and in the same form as dividends actually paid on shares of the Common Stock when, as and if such dividends are paid on shares of the Common Stock. No other dividends shall be paid on shares of the Series A Preferred Stock. With respect to any vote with the class of Common Stock, each share of the Series A Preferred Stock shall entitle the Holder thereof to cast that number of votes per share as is equal to the number of shares of Common Stock into which it is then convertible. The Series A Preferred Stock shall rank (i) senior to all of the Common Stock; (ii) senior to any class or series of capital stock of the Company hereafter created specifically ranking by its terms junior to any Preferred Stock (“Junior Securities”); (iii) on parity with any class or series of capital stock of the Corporation created specifically ranking by its terms on parity with the Preferred Stock (“Parity Securities”); and (iv) junior to any class or series of capital stock of the Company hereafter created specifically ranking by its terms senior to any Preferred Stock (“Senior Securities”), in each case, as to dividends or distributions of assets upon liquidation, dissolution or winding up of the Company, whether voluntarily or involuntarily. Each share of the Series A Preferred Stock shall be convertible, at any time and from time to time from and after September 29, 2022 at the option of the Holder thereof, into that number of shares of Common Stock determined by dividing the Stated Value of such share of the Series A Preferred Stock ($1,000 as of September 29, 2022) by the Conversion Price. The conversion price for each share of the Series A Preferred Stock is the closing price of the Common Stock on September 29, 2022, which was $232.50. Common Stock The Company had 1,000,000,000 shares of common stock authorized with a par value of $0.0001 as of December 31, 2022. 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. 2022 Transactions During the year ended December 31, 2022, the Company issued an aggregate of 79,807 shares of common stock pursuant to the conversion of the FirstFire and Oasis Notes (see Note 7). In September 2022, the Company issued 30 shares of common stock pursuant to a consultant agreement at a fair value of $123,000. As part of the Sundry acquisition (see Note 4), the Company issued 3,636 shares of common stock to the Sundry Sellers at a fair value of $1,000,000. In connection with the December Notes, the Company issued 2,400 shares of common stock with a fair value of $264,000. Underwriting Agreements and Public Offerings On May 5, 2022, the Company entered into an underwriting agreement (the “Alexander Underwriting Agreement”) with Alexander Capital, L.P., acting as representative of the several underwriters named in the Alexander Underwriting Agreement (the “ Alexander Underwriters”), relating to the Company’s underwritten the offering pursuant to which the Company agreed to issue and sell 14,956 shares of the Company’s common stock. The shares were sold to the public at a combined public offering price of $625 per share and were purchased by the Underwriters from the Company at a price of $575 per share. The Company also granted the Alexander Underwriters a 45-day option to purchase up to an additional 2,243 shares of Common Stock at the same price, which expired and were not purchased. The shares were sold in the Offering pursuant to a Registration Statement on Form S-1, as amended (File No. 333-264347) (the “Registration Statement”), a Registration Statement on Form S-1 pursuant to 462(b) of the Securities Act of 1933, as amended (File No. 333-264775), and a related prospectus filed with the Securities and Exchange Commission. The public offering closed on May 10, 2022 and the Company sold 14,956 shares of common stock for total gross proceeds of $9.3 million. The Company received net proceeds of $8.1 million after deducting underwriters’ discounts and commissions of $0.7 million and direct offering expenses of $0.5 million. On November 29, 2022, the Company, entered into a Securities Purchase Agreement with investors pursuant to which the Company agreed to issue and sell, in an offering (i) an aggregate of 6,720 shares (the “Shares”) of the Company’s common stock, and accompanying Class B Warrants (the “Class B Warrants”) to purchase 6,720 shares of common stock and accompanying Class C Warrants (the “Class C Warrants”) to purchase 6,720 shares of Common Stock, at a combined public offering price of $137.50 per share and Class B Warrant and Class C Warrant, and (ii) 66,007 pre-funded warrants (the “Pre-Funded Warrants” and together with the Class B Warrants and the Class C Warrants, the “Warrants” and together with the Shares and the shares of common stock underlying the Warrants, the “Securities”) exercisable for 66,007 shares of Common Stock, and accompanying Class B Warrants to purchase 66,007 shares of Common Stock and Class C Warrants to purchase 66,007 shares of Common Stock, at a combined public offering price of $137.50, less the exercise price of $0.0001, per Pre-Funded Warrant and accompanying Class B Warrant and Class C Warrant, to the Investors, for aggregate gross proceeds from the offering of approximately $10 million before deducting placement agent fees and related offering expenses. As a result of the transaction, the Company issued 72,727 shares of common stock, including the 6,720 shares and the immediate exercise of 66,007 pre-funded warrants, for gross proceeds of $10.0 million. The Company received net proceeds of $9.0 million after deducting placement agent fees and offering expenses. 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 964 shares of common stock at a public offering price of $10,375 per share. Additionally, the Company issued warrants to purchase 1,111 shares, which includes 145 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 1,611 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 454 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 61 shares of common stock and recorded $233,184 in compensation expense for the shares issued in excess of accrued balances owed. In connection with the H&J and Stateside acquisitions, the Company issued 877 and 441 shares of common stock to the respective sellers. See Note 4. Pursuant to a consulting agreement, the Company issued 20 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. An additional 17 shares were issued upon settlement of the contingent liability. In May 2021, an aggregate of 13 warrants were exercised for shares of common stock for proceeds of $145,696. In July 2021, warrant holders exercised 142 warrants for proceeds of $1,622,350. On June 28, 2021, the Company’s underwriters purchased 145 shares of common stock at a public offering price of $10,375 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. In connection with the execution of the Oasis Capital EPA, the Company issued Oasis Capital 51 shares of common stock (the “Commitment Shares”). Upon nine months from the Execution Date, Oasis may return a portion of the Commitment Shares. As of December 31, 2021, the Company recorded the fair value of the Commitment Shares of $367,696 as deferred offering costs as no financings under the related EPA have occurred. In connection with the Second FirstFire Note, in November 2021 the Company issued (a) 12 additional shares of common stock to FirstFire and (b) 40 additional shares of common stock to Oasis Capital, as set forth in the waivers and consents (the “Waivers”), dated November 16, 2021 executed by each of FirstFire and Oasis Capital (collectively, the “Waiver Shares”). The Company recorded interest expense of $427,700 pertaining to the fair value of the Waiver Shares issued. In December 2021, the Company issued 60 shares of common stock pursuant to a consulting agreement. The fair value of $339,000 was based on the value of the Company’s common stock on the date of grant and is included in general and administrative expenses in the consolidated statements of operations. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
RELATED PARTY TRANSACTIONS | ||
RELATED PARTY TRANSACTIONS | NOTE 9: RELATED PARTY TRANSACTIONS During the six months ended June 30, 2023 and 2022, the Company made net repayments for amounts due to related parties totaling $57,427 and $172,036, respectively. As of June 30, 2023 and December 31, 2022, amounts due to related parties were $472,790 and $556,225 , respectively. The advances are unsecured, non-interest bearing and due on demand. Amounts due to related parties consist of current and former executives, and a board member. As of December 31, 2022, H&J had an outstanding note payable of $129,489 owned by the H&J Seller. The balance was $0 upon the H&J disposition in June 2023. | NOTE 9: RELATED PARTY TRANSACTIONS As of December 31, 2022 and 2021, due to related parties includes advances from the former officer, Mark Lynn, who also serves as a director, totaling $104,568 and $104,568 respectively, and accrued salary and expense reimbursements of $100,649 and $126,706, respectively, to current officers. Upon closing of the IPO, 1,003 shares of common stock were issued to directors as conversion of balances owed. In October 2022, the Company received advances from a director, Trevor Pettennude, totaling $325,000. The advances are unsecured, non-interest bearing and due on demand. As of December 31, 2022, the amounts were outstanding. 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, 5,091 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 consolidated statements of operations. As of December 31, 2022 and 2021, H&J had an outstanding note payable of $129,489 and $299,489, respectively, owned by the H&J Seller. The note matured on December 10, 2022 and bears interest at 12% per annum. The note is in technical default. The H&J note was classified in liabilities per discontinued operations. |
SHARE-BASED PAYMENTS
SHARE-BASED PAYMENTS | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
SHARE-BASED PAYMENTS | ||
SHARE-BASED PAYMENTS | NOTE 10: SHARE-BASED PAYMENTS Common Stock Warrants In connection with the January Private Placement, the Company granted 32,086 pre-funded warrants which were immediately exercised for shares of common stock. The Company also granted an additional 51,086 warrants as part of the offering. Each warrant has an exercise price of $95 per share, is immediately exercisable upon issuance and expires five years after issuance. The Company also granted the placement agent 3,831 warrants to purchase common stock at an exercise price of $3,050.35 per share, which is immediately exercisable upon issuance and expires five years In connection with merchant advances (Note 6), the Company granted 6,095 warrants to purchase common stock at an exercise price of $131.25. The warrants are immediately exercisable upon issuance and expire five years after issuance. The following is a summary of warrant activity: Common Weighted Stock Average Warrants Exercise Price Outstanding - December 31, 2022 176,733 $ 209 Granted 93,099 99.50 Exercised (32,086) 97.88 Forfeited — — Outstanding - June 30, 2023 237,746 $ 181.25 Exercisable at December 31, 2022 171,278 $ 210.50 Exercisable at June 30, 2023 237,745 $ 181.25 Stock Options As of June 30, 2023 and December 31, 2022, the Company had 1,558 stock options outstanding with a weighted average exercise price of $362.11 per share. As of June 30, 2023, there were 1,439 options exercisable. Stock-based compensation expense of $101,500 and $119,759 was recognized for the three months ended June 30, 2023 and 2022, respectively, and $207,094 and $258,852 was recognized for the six months June 30, 2023 and 2022, respectively. During the six months ended June 30, 2023 and 2022, $28,798 and $28,798 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, 2023 amounted to $370,907 and will be recognized over a weighted average period of 0.9 years. | NOTE 10: SHARE-BASED PAYMENTS Common Stock Warrants 2022 Transactions In connection with the April note agreement, the Company granted warrants to acquire 503 shares of common stock at an exercise price of $3,050.00 per share expiring in April 2027. On May 10, 2022, pursuant to the Underwriting Agreement, the Company issued the Underwriters’ Warrants to purchase up to an aggregate of 598 shares of common stock. The Underwriters’ Warrants may be exercised beginning on November 1, 2022 until May 5, 2027. The initial exercise price of each Underwriters’ Warrant is $812.50 per share, which represents 130% of the public offering price. In connection with the July 22 and July 28 notes, the Company issued an aggregate of 1,645 and 1,106 warrants to purchase common stock at an exercise price of $380 and $282.50 per share, respectively. The warrants expire in July 2027. In connection with the November public offering, the Company granted 66,007 pre-funded warrants which were immediately exercised for shares of common stock. The Company also granted an additional 72,727 Class B Warrants and 72,727 Class C Warrants as part of the offering. Each Class B Warrant has an exercise price of $131.25 per share, is immediately exercisable upon issuance and expires five years after issuance. Each Class C Warrant has an exercise price of $131.25 per share, is immediately exercisable upon issuance and expires thirteen months after issuance. The Company also granted the placement agent 5,455 warrants to purchase common stock at an exercise price of $172 per share, which are exercisable 180 days after issuance and expire in five years. In connection with the December Notes, the Company issued to the investors an aggregate of 18,779 warrants to purchase common stock at an exercise price equal to $106.50 for a fair value of $164,200. The warrants are immediately exercisable. The Company granted 1,760 warrants to purchase common stock at an exercise price of $125 to the lender in connection with its merchant advances. 2021 Transactions In connection with the IPO, the Company issued 964 warrants and an additional 145 warrants to purchase common stock per the over-allotment option. Each warrant will have an exercise price of $11,425 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 48 shares of common stock with an exercise price of $12,975 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 48 shares of common stock. The warrants have an exercise price of $10,375 per share and are exercisable immediately after issuance. In May 2021, an aggregate of 13 warrants were exercised for shares of common stock for proceeds of $145,696. In July 2021, warrant holders exercised 142 warrants for proceeds of $1,622,350. A summary of information related to common stock warrants for the years ended December 31, 2022 and 2021 is as follows: Common Weighted Stock Average Warrants Exercise Price Outstanding - December 31, 2020 366 $ 6,650 Granted 1,205 11,450 Conversion of preferred stock warrants upon IPO 21 19,150 Exercised (155) 11,425 Forfeited (4) 19,150 Outstanding - December 31, 2021 1,432 $ 10,300 Granted 241,308 140.36 Exercised (66,007) 131.25 Forfeited — — Outstanding - December 31, 2022 176,733 $ 209.23 Exercisable at December 31, 2021 1,432 $ 10,300 Exercisable at December 31, 2022 171,278 $ 210.41 Preferred Stock Warrants Upon the IPO, all outstanding preferred stock warrants converted into common stock warrants at a ratio of 39,075:1. Stock Options 2020 Incentive Stock Plan The Company has adopted a 2020 Omnibus Incentive Stock Plan (the “2020 Plan”). An aggregate of 33,000 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. During 2021, 1,093 options were granted to executives and directors at an exercise price from $9,625 to $10,375 per share. As of December 31, 2022, 31,907 options were available for future issuance. 2013 Incentive Stock Plan The Company has adopted the 2013 Stock Plan, as amended and restated (the “Plan”), which provides for the grant of shares of stock options, stock appreciation rights, and stock awards (performance shares) to employees, non-employee directors, and non-employee consultants. The number of shares authorized by the Plan was 479 shares as December 31, 2022 and 2021. The option exercise price generally may not be less than the underlying stock’s fair market value at the date of the grant and generally have a term often years. The amounts granted each calendar year to an employee or non-employee is limited depending on the type of award. Stock options comprise all of the awards granted since the Plan’s inception. Shares available for grant under the Plan amounted to 13 and as of December 31, 2022. Vesting generally occurs over a period of immediately to four years. A summary of information related to stock options under our 2013 and 2020 Stock Plan for the years ended December 31, 2022 and 2021 is as follows: Weighted Average Options Exercise Price Outstanding - December 31, 2020 485 $ 5,850 Granted 1,093 10,375 Exercised — — Forfeited — — Outstanding - December 31, 2021 1,558 $ 9,053 Granted — — Exercised — — Forfeited — — Outstanding - December 31, 2022 1,558 $ 9,053 Exercisable at December 31, 2021 1,266 $ 8,975 Exercisable at December 31, 2022 1,389 $ 10,125 Weighted average duration (years) to expiration of outstanding options at December 31, 2022 7.00 The assumptions utilized for option grants during the years ended December 31, 2022 and 2021 are as follows: Year Ended December 31, 2022 2021 Risk Free Interest Rate n/a 0.34% - 0.85 % Expected Dividend Yield n/a 0.00 % Expected Volatility n/a 58.00 % Expected Life (years) n/a 5.18 The total grant-date fair value of the options granted during the years ended December 31, 2021 was $4,696,605. During the year ended December 31, 2022 and 2021, $421,442 and $3,325,897 was recorded to general and administrative expenses, and $57,596 and $551,948 was recorded to sales and marketing expense in the consolidated statements of operations, all respectively. Total unrecognized compensation cost related to non-vested stock option awards as of December 31, 2022 amounted to $577,999 and will be recognized over a weighted average period of 1.56 years. |
LEASE OBLIGATIONS
LEASE OBLIGATIONS | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
LEASE OBLIGATIONS | ||
LEASE OBLIGATIONS | NOTE 11: LEASE OBLIGATIONS In January 2023, the Company entered into a lease agreement extension for its corporate office and distribution center in Vernon, California that expires on December 31, 2023. The lease has monthly base rent payments of $38,105. As a result of the extension, the Company recognized a right of use asset and liability of $467,738 using a discount rate of 8.0%. As of June 30, 2023, the Company has $949,071 in accounts payable for past rents due to the landlord pertaining to this lease. In May 2023, the Company entered into a lease agreement extension for a showroom space in Los Angeles, California that commences in March 2023 and expires in January 2025. The original lease began in April 2018 and terminated in May 2020, at which point the lease was month to month. The lease has a monthly base rent of $6,520 until January 31, 2025, at which point the base rent increases to $6,781 until the end of the lease. As a result of the extension, the Company recognized a right of use asset and liability of $125,397 using a discount rate of 8.0%. As of June 30, 2023, the Company has $214,626 in accounts payable for past rents due to the landlord pertaining to this lease. Stateside and Sundry utilize a lease for a showroom in Los Angeles, California which is month to month. Total rent expense for the three months ended June 30, 2023 and 2022 was $37,580 and $195,060, and $210,265 and $469,482 for the six months end June 30, 2023 and 2022, respectively. | NOTE 11: LEASE OBLIGATIONS In April 2021, the Company entered into a lease agreement for operating space in Los Angeles, California. The lease expires in June 2023 and has monthly base rent payments of $17,257. The lease required a $19,500 deposit. The Company adopted ASC 842 on January 1, 2021 and recognized a right of use asset and liability of $250,244 using a discount rate of 6.0%. Under ASC 842, the lease was classified as an operating lease. Stateside leases office and showroom facilities in Los Angeles, California. The leases expire at various dates through November 2022 with base rents ranging from $3,100 to $9,000. Total rent expense for the years ended December 31, 2022 and 2021 was $945,216 and $816,790, respectively. Rent is classified by function on the consolidated statements of operations either as general and administrative, sales and marketing, or cost of revenue. The Company determines whether an arrangement is or contains a lease at inception by evaluating potential lease agreements including services and operating agreements to determine whether an identified asset exists that the Company controls over the term of the arrangement. Lease commencement is determined to be when the lessor provides access to, and the right to control, the identified asset. The rental payments for the Company’s leases are typically structured as either fixed or variable payments. Fixed rent payments include stated minimum rent and stated minimum rent with stated increases. The Company considers lease payments that cannot be predicted with reasonable certainty upon lease commencement to be variable lease payments, which are recorded as incurred each period and are excluded from the calculation of lease liabilities. Management uses judgment in determining lease classification, including determination of the economic life and the fair market value of the identified asset. The fair market value of the identified asset is generally estimated based on comparable market data provided by third-party sources. |
CONTINGENCIES
CONTINGENCIES | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
CONTINGENCIES | ||
CONTINGENCIES | NOTE 12: CONTINGENCIES On March 21, 2023, a vendor filed a lawsuit against Digital Brands Group related to trade payables totaling approximately $43,501. Such amounts include interest due, and are included in accounts payable, net of payments made to date, in the accompanying consolidated balance sheets. The Company does not believe it is probable that the losses in excess of such trade payables will be incurred. On February 7, 2023, a vendor filed a lawsuit against Digital Brands Group related to trade payables totaling approximately $182,400. Such amounts include interest due, and are included in accounts payable, net of payments made to date, in the accompanying consolidated balance sheets. The Company does not believe it is probable that the losses in excess of such trade payables will be incurred. On November 9, 2022, a vendor filed a lawsuit against Digital Brand’s Group related to prior services rendered. The claims (including fines, fees, and legal expenses) total an aggregate of $50,190. The matter was settled in January 2023 and are on payment plans which will be paid off in April 2023. In August 2020 and March 2021, two lawsuits were filed against Bailey by third-party’s related to prior services rendered. The claims (including fines, fees, and legal expenses) total an aggregate of $96,900. Both matters were settled in February 2022 and are on payment plans which will be paid off in July and September of 2023. 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. A vendor filed a lawsuit against Bailey related to a retail store lease in the amount of $1.5 million. The Company is disputing the claim for damages and the matter is ongoing. The vendor has recently updated the claim to now be $450,968 after signing a long-term lease with another brand for this location. The Company is disputing this new amount after review of the lease. All claims above, to the extent management believes it will be liable, have been included in accounts payable and accrued expenses and other liabilities in the accompanying consolidated balance sheet as of June 30, 2023. 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. | NOTE 12: CONTINGENCIES On March 21, 2023, a vendor filed a lawsuit against Digital Brands Group related to trade payables totaling approximately $43,501. Such amounts include interest due, and are included in accounts payable, net of payments made to date, in the accompanying consolidated balance sheets. The Company does not believe it is probable that the losses in excess of such trade payables will be incurred. On February 7, 2023, a vendor filed a lawsuit against Digital Brands Group related to trade payables totaling approximately $182,400. Such amounts include interest due, and are included in accounts payable, net of payments made to date, in the accompanying consolidated balance sheets. The Company does not believe it is probable that the losses in excess of such trade payables will be incurred. On November 9, 2022, a vendor filed a lawsuit against Digital Brand's Group related to prior services rendered. The claims (including fines, fees, and legal expenses) total an aggregate of $50,190. The matter was settled in January 2023 and are on payment plans which will be paid off in April 2023. In August 2020 and March 2021, two lawsuits were filed against Bailey by third-party’s related to prior services rendered. The claims (including fines, fees, and legal expenses) total an aggregate of $96,900. Both matters were settled in February 2022 and are on payment plans which will be paid off in July and September of 2023 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. On September 24, 2020 a Bailey’s product vendor filed a lawsuit against Bailey for 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. In December 2021, the Company reached a settlement; however, the settlement terms were not met and the Company received a judgement of $496,000. The amount due has been paid, the lawsuit dismissed and there is no claim or amount due. A vendor filed a lawsuit against Bailey related to a retail store lease in the amount of $1.5 million. The Company is disputing the claim for damages and the matter is ongoing. The Company has been involved in a dispute with the former owners of H&J regarding its obligation to “true up” their ownership interest in our Company further to that membership interest purchase agreement dated May 18, 2021 whereby we acquired all of the outstanding membership interests of H&J (the “H&J Purchase Agreement”). Further to the H&J Purchase Agreement, we agreed that if, at May 18, 2022, the one year anniversary of the closing date of our initial public offering, the product of the number of shares of our common stock issued at the closing of such acquisition multiplied by the average closing price per share of our shares of common stock as quoted on the NasdaqCM for the thirty (30) day trading period immediately preceding such date plus the gross proceeds, if any, of shares of our stock issued to such sellers and sold by them during the one year period from the closing date of the offering does not exceed the sum of $9.1 million, less the value of any shares of common stock cancelled further to any indemnification claims or post-closing adjustments under the H&J Purchase Agreement, then we shall issue to the subject sellers an additional aggregate number of shares of common stock equal to any such valuation shortfall at a per share price equal to the then closing price per share of our common stock as quoted on the NasdaqCM. We did not honor our obligation to issue such shares and the former owner of H&J have claimed that they were damaged as a result. As part of a proposed settlement with such holders, the Company has tentatively agreed to the following: (i) to transfer all membership interests of H&J back to the original owners, (ii) to pay such owners the sum of $229,000, (iii) issue the former owners of H&J an aggregate of $1,400,000 worth of our common stock to be issued on May 16, 2023 based on the lower of (a) the stock closing price per share on May 15, 2023, and (b) the average common stock closing price based on the average of the 5 trading days preceding May 16, 2023, with the closing price on May 9, 2023. Such tentative terms are to be memorialized in definitive purchase agreements and as such there is no assurance that such arrangements will be finalized. As of the issuance date of these financial statements, the above terms and continued negotiations have been verbally approved by the Board. All claims above, to the extent management believes it will be liable, have been included in accounts payable and accrued expenses and other liabilities in the accompanying consolidated balance sheet as of December 31, 2022. 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 | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
INCOME TAXES | ||
INCOME TAXES | NOTE 13: INCOME TAXES The Company has historically calculated the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate for the full fiscal year to “ordinary” income or loss (pretax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period. The Company has used a discrete effective tax rate method to calculate taxes for the fiscal three and six month periods ended June 30, 2023. The Company determined that since small changes in estimated “ordinary” income would result in significant changes in the estimated annual effective tax rate, the historical method would not provide a reliable estimate for the fiscal three and six-month periods ended June 30, 2023. The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. The Company assessed the need for a valuation allowance against its net deferred tax assets and determined a full valuation allowance is required due, cumulative losses through June 30, 2023, and no history of generating taxable income. | NOTE 13: INCOME TAXES Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. The differences relate primarily to depreciable assets using accelerated depreciation methods for income tax purposes, share-based compensation expense, and for net operating loss carryforwards. As of December 31, 2022, and 2021, the Company had net deferred tax assets before valuation allowance of $16,733,582 and $13,103,268, respectively. The following table presents the deferred tax assets and liabilities by source: December 31, 2022 2021 Deferred tax assets: Net operating loss carryforwards $ 16,733,582 $ 13,108,371 Deferred tax liabilities: Depreciation timing differences — (5,103) Valuation allowance (16,733,582) (13,103,268) Net deferred tax assets $ — $ — The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. The Company assessed the need for a valuation allowance against its net deferred tax assets and determined a full valuation allowance is required due, cumulative losses through December 31, 2022, and no history of generating taxable income. Therefore, valuation allowances of $16,733,582 and $13,103,268 were recorded as of December 31, 2022 and 2021, respectively. Valuation allowance increased by $3,630,314 and $3,081,497 during the years ended December 31, 2022 and 2021, respectively. Deferred tax assets were calculated using the Company’s combined effective tax rate, which it estimated to be approximately 28.0%. The effective rate is reduced to 0% for 2022 and 2021 due to the full valuation allowance on its net deferred tax assets. The Company has permanent differences, consisting of non-deductible impairments of goodwill and intangible assets of $17.7 million and amortization of non-cash debt issuance costs of $6.5 million. The Company’s ability to utilize net operating loss carryforwards will depend on its ability to generate adequate future taxable income. At December 31, 2022 and 2021, the Company had net operating loss carryforwards available to offset future taxable income in the amounts of approximately $59,865,000 and $46,896,000, for which losses from 2018 forward can be carried forward indefinitely. As a result of prior operating losses, the Company has net operating loss, or “NOL,” carryforwards for federal income tax purposes. The ability to utilize NOL carryforwards to reduce taxable income in future years could become subject to significant limitations under Section 382 of the Internal Revenue Code if the Company undergoes an ownership change. The Company would undergo an ownership change if, among other things, the stockholders who own, directly or indirectly, 5% or more of our common stock, or are otherwise treated as “5% shareholders” under Section 382 of the U.S. Internal Revenue Code and the regulations promulgated thereunder, increase their aggregate percentage ownership of the Company’s stock by more than 50 percentage points over the lowest percentage of the stock owned by these stockholders at any time during the testing period, which is generally the three-year period preceding the potential ownership change. The Company has evaluated its income tax positions and has determined that it does not have any uncertain tax positions. The Company will recognize interest and penalties related to any uncertain tax positions through its income tax expense. The Company is not presently subject to any income tax audit in any taxing jurisdiction, though all tax years from 2018 on remain open to examination. The Company recorded a tax benefit of $1,100,120 for the year ended December 31, 2021 related to a full release of its valuation allowance pertaining to the acquisition of H&J (see Note 4). The acquisition of H&J created a deferred tax liability position, and those deferred tax liabilities can be used as a source of income for the Company’s existing deferred tax assets. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
SUBSEQUENT EVENTS | ||
SUBSEQUENT EVENTS | NOTE 14: SUBSEQUENT EVENTS On July 5, 2023, the Company and the Bailey sellers agreed to extend the maturity date of the Bailey Note to June 30, 2024. On August 21, 2023, the Company filed a Certificate of Amendment to our Certificate of Incorporation, as amended, to effect a one-for-twenty-five (1-for- 25 | NOTE 14: SUBSEQUENT EVENTS On January 11, 2023, the Company, entered into a Securities Purchase Agreement (the “Purchase Agreement”) with a certain accredited investor (the “Investor”), pursuant to which the Company agreed to issue and sell, in a private placement (the “Private Placement”), an aggregate of 19,000 shares (the “Shares”) of the Company’s common stock, par value $0.0001 per share (“Common Stock”), and accompanying warrants (the “Common Warrants”) to purchase 19,000 shares of Common Stock, at a combined purchase price of $97.875 per share and Common Warrant, and (ii) 32,086 pre-funded warrants (the “Pre-Funded Warrants” and together with the Common Warrants, the “Warrants” and together with the Shares and the shares of Common Stock underlying the Warrants, the “Securities”) exercisable for 32,086 shares of Common Stock, and accompanying Common Warrants to purchase 32,086 shares of Common Stock, at a combined purchase price of $97.875, less the exercise price of $0.0001, per Pre-Funded Warrant and accompanying Common Warrant, to the Investors, for aggregate gross proceeds from the Private Placement of approximately $5 million. Each Common Warrant has an exercise price of $95 per share, will be immediately exercisable upon issuance and will expire five years from the date of issuance. In February 2023, the Company fully repaid the December Notes for $4.0 million. In February 2023, the Company and the Sundry Sellers verbally agreed to extend the maturity date to December 31, 2023. On April 7, 2023, the Company and various purchasers executed a Securities Purchase Agreement (“April 2023 Notes”) whereby the investors purchased from the Company convertible promissory notes in the aggregate principal amount of $2,208,750, consisting of original issue discount of $408,750. The Company received net proceeds of $1,800,000. The April 2023 Notes are due and payable on September 30, 2023. If the April 2023 Notes are not repaid in full by the maturity date or if any other event of default occurs, (1) the face value of the April Notes will be automatically increased to 120%; (2) the April 2023 Notes will begin generating an annual interest rate of 20%, which will be paid in cash monthly until the default is cured; and (3) if such default continues for 14 or more calendar days, at the investors’ discretion, the April 2023 Notes shall become convertible at the option of the investors into shares of the Company’s common stock at a conversion price equal to the closing price of the Company’s common stock on the date of the note conversion. On June 21, 2023, the Company and the former owners of H&J executed a Settlement Agreement and Release (the “Settlement Agreement”) whereby contemporaneously with the parties’ execution of the Settlement Agreement (i) the Company agreed to make an aggregate cash payment of $229,000 to D. Jones Tailored Collection, Ltd. (“D. Jones”), (ii) the Company issued 78,103 shares of common stock to D. Jones, and (iii) the Company assigned and transferred one hundred percent (100%) of the Company’s membership interest in H&J to D. Jones. The total estimated value of the common stock was approximately $1.4 million. We accounted for the disposition as discontinued operations in the accompanying consolidated financial statements, and as a result, we retrospectively reflected certain adjustments to the years ended December 31, 2022 and 2021 in accordance with Accounting Standard Codification (ASC) 205-20 for reporting Discounting Operations. On August 21, 2023, the Company filed a Certificate of Amendment to our Certificate of Incorporation, as amended, to effect a one-for-twenty-five (1-for- 25 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
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”). | Basis of Presentation The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“GAAP”). |
Reverse Stock Split | Reverse Stock Split On October 21, 2022, the Board of Directors approved a one | |
Unaudited Interim Financial Information | Unaudited Interim Financial Information The accompanying unaudited condensed consolidated balance sheet as of June 30, 2023, the unaudited condensed consolidated statements of operations for the six and six months ended June 30, 2023 and 2022 and of cash flows for the six months ended June 30, 2023 and 2022 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 consolidated results for the interim periods presented and of the consolidated financial condition as of the date of the interim consolidated balance sheet. The results of operations are not necessarily indicative of the results expected for the year ended December 31, 2023. 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, 2022 included in the Company’s Annual Form 10-K filed with SEC on April 17, 2023. | |
Principles of Consolidation | Principles of Consolidation These condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries Bailey, H&J and Stateside from the dates of acquisition. All inter-company transactions and balances have been eliminated on consolidation. As of June 21, 2023, the Company no longer consolidated the assets, liabilities, revenues and expenses of H&J (see Note 4). | H&J Disposition On June 21, 2023, the Company and the former owners of H&J executed a Settlement Agreement and Release (the “Settlement Agreement”) whereby contemporaneously with the parties’ execution of the Settlement Agreement (i) the Company agreed to make an aggregate cash payment of $229,000 to D. Jones Tailored Collection, Ltd. (“D. Jones”), (ii) the Company issued 78,103 shares of common stock to D. Jones, and (iii) the Company assigned and transferred one hundred percent (100%) of the Company’s membership interest in H&J to D. Jones. This transaction is known as the “H&J Settlement”. The H&J Settlement was accounted for a business disposition in accordance with ASC 810-40-40-3A. In accordance with the provisions of ASC 205-20, the Company has excluded the results of discontinued operations from its results of continuing operations in the accompanying consolidated statements of operations for the three and six months ended June 30, 2023 and 2022 in it’s Form 10-Q Quarterly Report filed on August 21, 2023. Accordingly, the consolidated financial statements as of and for the years ended December 31, 2022 and 2021 have been adjusted retroactively to account for the discontinued operations classification of H&J. Principles of Consolidation These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries Bailey, H&J, Stateside and Sundry from the dates of acquisition. All inter-company transactions and balances have been eliminated on consolidation. H&J has been retroactively adjusted to be presented as discontinued operations (see above). |
Use of Estimates | Use of Estimates The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions reflected in these financial statements include, but are not limited to, inventory, impairment of long-lived assets, contingent consideration and derivative liabilities. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates when there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those 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. |
Reclassification of Previously Issued Financial Statements | Reclassification of Previously Issued Financial Statements Certain prior year accounts have been reclassified to conform with current year presentation pertaining to cost of net revenue and general and administrative expenses. The Company has reclassified $297,696 and $630,976 in general and administrative expenses per previously reported financial statements to cost of net revenues in the accompanying consolidated statements of operations for the three and six months ended June 30, 2022, respectively. The reclassified costs from general and administrative expense to cost of net revenues are primarily personnel and warehouse related costs. The reclassification had no effect on the reported results of operations. Certain prior year accounts have been reclassified to conform with current year presentation regarding income (loss) from discontinued operations. H&J’s assets and liabilities as of December 31, 2022 have also been reclassified on the consolidated balance sheet. See Note 4. | Restatement of Previously Issued Financial Statements Certain prior year accounts have been reclassified to conform with current year presentation pertaining to cost of net revenue and general and administrative expenses. The Company has reclassified The reclassified costs from general and administrative expense to cost of net revenues made in the fourth quarter of 2022 and 2021 are fixed in nature as they are personnel and warehouse related costs. The impact of the reclassification was approximately for each of the quarters ended March 31, 2022, June 30, 2022 and September 30, 2022. The impact of the reclassification was approximately |
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 six months to be cash equivalents. As of June 30, 2023 and December 31, 2022, 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. | 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 December 31, 2022 and 2021, 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 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, 2023 Using: Level 1 Level 2 Level 3 Total Liabilities: Contingent consideration $ — $ — $ — $ — $ — $ — $ — $ — Fair Value Measurements as of December 31, 2022 Using: Level 1 Level 2 Level 3 Total Liabilities: Contingent consideration $ — $ — $ 12,098,475 $ 12,098,475 $ — $ — $ 12,098,475 $ 12,098,475 Contingent Consideration The Company recorded a contingent consideration liability relating to stock price guarantees included in its acquisitions of Bailey44 and H&J. The estimated fair value of the contingent consideration was recorded using significant unobservable measures and other fair value inputs and was therefore classified as a Level 3 financial instrument. 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. Norwest Waiver On June 21, 2023, the Company, on the one hand, and Norwest Venture Partners XI, LP and Norwest Venture Partners XII, LP (together, the “Norwest Investors”), on the other hand, executed a Waiver and Amendment (the “Norwest Amendment”) whereby the Norwest Investors agreed to waive and terminate certain true up rights of the Norwest Investors under the Agreement and Plan of Merger, dated February 12, 2020 (the “Bailey Merger Agreement”), among the Company, Bailey 44, LLC, Norwest Venture Partners XI, LP, and Norwest Venture Partners XII, LP and Denim.LA Acquisition Corp. This transaction is known as the “Norwest Waiver”. As a result of the Norwest Waiver, the Company recorded a fair value of H&J Settlement Agreement On June 21, 2023, the Company and the former owners of H&J executed a Settlement Agreement and Release (the “Settlement Agreement”) whereby the Company transferred 100% of its membership interests in H&J to D. Jones (the “H&J Seller”). Pursuant to the Settlement Agreement, the Company agreed to make an aggregate cash payment of shares of common stock to the H&J Seller. In connection with the Settlement Agreement, the parties agreed that no further shares were owed to the H&J Seller resulting from the stock price guarantee pursuant to the May 2021 H&J acquisition. As a result, the Company recorded a fair value of The detail of contingent consideration by company is as follows: June 30, December 31, 2023 2022 Bailey $ — $ 10,698,475 Harper & Jones — 1,400,000 $ — $ 12,098,475 | 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, accounts receivable, due from factor, prepaid expenses, accounts payable, accrued expenses, deferred revenue, due to related parties, related party note payable, accrued interest, loan 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 December 31, 2022 Using: Level 1 Level 2 Level 3 Total Liabilities: Warrant liability $ — $ — $ — $ — Contingent consideration — — 12,098,475 12,098,475 Derivative liability — — — — $ — $ — $ 12,098,475 $ 12,098,475 Fair Value Measurements as of December 31, 2021 Using: Level 1 Level 2 Level 3 Total Liabilities: Warrant liability $ — $ 18,223 $ — $ 18,223 Contingent consideration — — 12,179,476 12,179,476 Derivative liability — — 2,294,720 2,294,720 $ — $ 18,223 $ 14,474,196 $ 14,492,419 Warrant Liability 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 years ended December 31, 2022 and 2021 are as follows: Warrant Liability Outstanding as of December 31, 2020 $ 6,265 Change in fair value 11,958 Outstanding as of December 31, 2021 18,223 Change in fair value (18,223) Outstanding as of December 31, 2022 $ — Contingent Consideration The Company records a contingent consideration liability 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 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. 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 years ended December 31, 2022 and 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 Conversion into shares (73,500) Change in fair value 8,764,460 Outstanding as of December 31, 2021 12,179,476 Repayments to Harper & Jones seller (645,304) Change in fair value 564,303 Outstanding as of December 31, 2022 $ 12,098,475 During the year ended December 31, 2022, the Company utilized the following inputs for the fair value of the contingent consideration: volatilities of 79.3% and 88.9%, risk-free rate of 0.25%, expected share increase of 5% per annum, and the guaranteed stock price of $828 for Bailey and $10,375 for Harper & Jones. The detail of contingent consideration by company is as follows: December 31, 2022 2021 Bailey $ 10,698,475 7,935,016 Harper & Jones 1,400,000 4,244,460 $ 12,098,475 $ 12,179,476 The contingent consideration liabilities were revalued for a final time as of May 18, 2022, the anniversary date of the Company’s initial public offering. As of the date of the issuance of these financial statements, the contingent consideration liabilities were not yet settled with shares. In December 2022, the Company paid $645,304 to the H&J Seller to partially reduce the contingent consideration balance owed. The Company and the H&J Seller are in the process of amending the May 2021 purchase agreement to determine the ultimate settlement of the Company’s common stock to the H&J Seller by May 16, 2023. Refer to Note 12. Derivative Liability In connection with the Company’s convertible notes, the Company recorded a derivative liability (see Note 7). The estimated fair value of the derivative liability 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 derivative liability is valued using a multinomial lattice model. The multinomial lattice inputs include the underlying stock price, volatility of common stock and remaining term of the convertible note. Changes in derivative liability during the years ended December 31, 2022 and 2021 are as follows: Derivative Liability Outstanding as of December 31, 2020 $ — Initial fair value on issuance of convertible note 3,204,924 Change in fair value (910,204) Outstanding as of December 31, 2021 2,294,720 Initial fair value on issuance of convertible note 559,957 Conversion of underlying notes into common stock (1,500,243) Change in fair value (1,354,434) Outstanding as of December 31, 2022 $ — During the year ended December 31, 2022, the Company utilized the following inputs for the fair value of the derivative liability: volatility of 70.9% - 96.7%, risk-free rate of 2.71% - 3.74%, and remaining term ranging from .08 years - 0.62 years. The change in fair value of the derivative liability is included in other non-operating income (expense), net in the consolidated statements of operations. |
Inventory | Inventory Inventory is stated at the lower of cost or net realizable value and accounted for using the weighted average cost method for DSTLD and first-in, first-out method for Bailey, Stateside and Sundry. The inventory balances as of June 30, 2023 and December 31, 2022 consist substantially of finished good products purchased or produced for resale, as well as any raw materials the Company purchased to modify the products and work in progress. Inventory consisted of the following: June 30, December 31, 2023 2022 Raw materials $ 1,508,416 $ 1,611,134 Work in process 653,412 888,643 Finished goods 2,609,443 2,725,505 Inventory $ 4,771,271 $ 5,225,282 | Inventory Inventory is stated at the lower of cost or net realizable value and accounted for using the weighted average cost method for DSTLD and H&J and first-in, first-out method for Bailey, Stateside and Sundry. The inventory balances as of December 31, 2022 and 2021 consist substantially of finished good products purchased or produced for resale, as well as any raw materials the Company purchased to modify the products and work in progress. Inventory consisted of the following: December 31, 2022 2021 Raw materials $ 1,508,416 $ 292,167 Work in process 888,643 242,673 Finished goods 2,725,505 2,220,519 Inventory $ 5,122,564 $ 2,660,203 |
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. | 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 fourth quarter every year. |
Annual Impairment | Annual Impairment At December 31, 2022, management determined that certain events and circumstances occurred that indicated that the carrying value of the Company’s brand name assets, and the carrying amount of the reporting units, pertaining to Bailey44 and Harper & Jones may not be recoverable. The qualitative assessment was primarily due to reduced or stagnant revenues of both entities as compared to the Company’s initial projections at the time of each respective acquisition, as well as the entities’ liabilities in excess of assets. As such, the Company compared the estimated fair value of the brand names with its carrying value and recorded an impairment loss of $3,667,000 in the consolidated statements of operations. Additionally, the Company compared the fair value of the reporting units to the carrying amounts and recorded an impairment loss of $11,872,332 | Annual Impairment Tests At December 31, 2021, management determined that certain events and circumstances occurred, primarily the continued reduction in revenues partially as a result of COVID-19, that indicated that the carrying value of the Company’s brand name asset pertaining to Bailey44 may not be recoverable. As such, the Company compared the estimated fair value of the brand name with its carrying value and recorded an impairment loss of $3,400,000 in the consolidated statements of operations. At December 31, 2022, management determined that certain events and circumstances occurred that indicated that the carrying value of the Company’s brand name assets, and the carrying amount of the reporting units, pertaining to Bailey44 and Harper & Jones may not be recoverable. The qualitative assessment was primarily due to reduced or stagnant revenues of both entities as compared to the Company’s initial projections at the time of each respective acquisition, as well as the entities’ liabilities in excess of assets. As such, the Company compared the estimated fair value of the brand names with its carrying value and recorded an impairment loss of $3,667,000 in the consolidated statements of operations. Additionally, the Company compared the fair value of the reporting units to the carrying amounts and recorded an impairment loss of $11,872,332 Year Ended December 31, 2022 2021 Bailey brand name (intangibles) $ 2,182,000 $ 3,400,000 Bailey goodwill 3,321,095 — Total impairment $ 5,503,095 $ 3,400,000 In determining the fair value of the respective reporting units, management estimated the price that would be received to sell the reporting unit as a whole in an orderly transaction between market participants at the measurement date. This includes reviewing market comparables such as revenue multipliers and assigning certain assets and liabilities to the reporting units, such as the respective working capital deficits of each entity and debt obligations that would need to be assumed by a market participant buyer in an orderly transaction. The Company calculated the carrying amounts of each reporting unit by utilizing the entities’ assets and liabilities at December 31, 2022, including the carrying value of the identifiable intangible assets and goodwill assigned to the respective reporting units. Refer to Note 12 for the related developments with H&J. |
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. The following table sets forth the computation of basic and diluted net income (loss) per share: Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Numerator: Net income (loss) from continuing operations $ 6,536,310 $ (9,482,520) $ 470,415 $ (17,200,792) Income (loss) from discontinued operations, net of tax (1,492,050) (51,404) (1,562,503) (166,074) Net income (loss) $ 5,044,260 $ (9,533,924) $ (1,092,088) $ (17,366,866) Denominator: Weighted average common shares outstanding - basic 246,809 14,329 236,824 9,836 Weighted average common shares outstanding - diluted 834,604 14,329 824,619 9,836 Net income (loss) from continuing operations per share - basic $ 26.48 $ (661.78) $ 1.99 $ (1,748.68) Net income (loss) from continuing operations per share - diluted $ 7.83 $ (661.78) $ 0.57 $ (1,748.68) Net income (loss) from discontinued operations per common share – basic $ (6.05) $ (3.59) $ (6.60) $ (16.88) Net income (loss) from discontinued operations per common share – diluted $ (6.05) $ (3.59) $ (6.60) $ (16.88) Net income (loss) per share – $ 20.44 $ (665.36) $ (4.61) $ (1,765.57) Net income (loss) per share – $ 6.04 $ (665.36) $ (4.61) $ (1,765.57) The following table sets forth the a) the dilutive items included in the weighted average common shares – diluted amount above as of June 30, 2023 and b) the number of potential common shares excluded from the calculations of net loss per diluted share because their inclusion would be anti-dilutive as of June 30, 2022: June 30, 2023 2022 — 18,496 Convertible notes 27,097 — Series A convertible preferred stock 321,395 — Series C convertible preferred stock 237,746 2,533 Common stock warrants 1,558 1,558 Stock options 587,795 22,588 The stock options and warrants above are out-of-the-money as of June 30, 2023 and 2022. | 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 December 31, 2022 and 2021, diluted net loss per share is the same as basic net loss per share for each year. Potentially dilutive items outstanding as of December 31, 2022 and 2021 are as follows: December 31, 2022 2021 Convertible notes 37,915 1,916 Series A convertible preferred stock 4,320 — Common stock warrants 176,733 1,432 Stock options 1,558 1,558 Total potentially dilutive shares 220,526 4,907 The potentially dilutive shares pertaining to the Company’s outstanding convertible notes were calculated based on the assumed conversion abilities as of December 31, 2022 and 2021. The ultimate number of shares for which the notes can convert into is indeterminable. The stock options and warrants above are out-of-the-money as of December 31, 2022 and 2021. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which amends and clarifies several provisions of Topic 326. In May 2019, the FASB issued ASU 2019-05, Financial Instruments-Credit Losses (Topic 326): Targeted Transition Relief, which amends Topic 326 to allow the fair value option to be elected for certain financial instruments upon adoption. ASU 2019-10 extended the effective date of ASU 2016-13 until December 15, 2022. The Company adopted this new guidance, including the subsequent updates to Topic 326, on January 1, 2023 and the adoption did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures. 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 | Recent Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02: Leases (Topic 842). 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. |
Unaudited Pro Forma Financial Information, Policy | Unaudited Pro Forma Financial Information The following unaudited pro forma financial information presents the Company’s financial results as if the Sundry acquisition had occurred as of January 1, 2022. 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, 2022 Net revenues $ 14,728,296 Net loss $ (16,907,152) Net loss per common share $ (1,718.83) | |
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 December 31, 2022 and 2021 consist of software with three (3) year lives, property and equipment with three (3) to ten (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 $75,126 and $92,213 for the years ended December 31, 2022 and 2021, respectively. | |
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 | |
Impairment | Impairment 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. | |
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 $307,725 and $33,933 as of December 31, 2022 and 2021, 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. Cost of revenues includes direct labor pertaining to our inventory production activities and an allocation of overhead costs including rent and insurance. Cost of revenues also includes inventory write-offs and reserves. | |
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 distribution costs. Total shipping and handling billed to customers as a component of net revenues was approximately $72,000 and $23,000 for the years ended December 31, 2022 and 2021, respectively. Total shipping and handling costs included in distribution costs were approximately $525,000 and $423,000, respectively. | |
Advertising and Promotion | Advertising and Promotion Advertising and promotional costs are expensed as incurred. Advertising and promotional expense for the years ended December 31, 2022 and 2021 amounted to approximately $1,178,000 and $240,000, respectively. The amounts are included in sales and marketing expense. | |
General and Administrative | General and Administrative General and administrative expenses consist primarily of compensation and benefits costs, professional services and information technology. General and administrative expenses also include payment processing fees, design and warehousing fees. | |
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 December 31, 2022 and 2021, 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. 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 simplified method is based on the average of the vesting tranches and the contractual life of each grant. For stock price volatility, the Company uses comparable public companies as a basis for its expected volatility to calculate the fair value of options grants. 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. The number of stock award forfeitures are recognized as incurred. | |
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 an expense over the employee’s requisite vesting period and over the nonemployee’s period of providing goods or services. The Company measures employee stock-based awards at grant-date fair value and recognizes employee compensation expense on a straight-line basis over the vesting period of the award. Determining the appropriate fair value of stock-based awards requires the input of subjective assumptions, including the fair value of the Company’s common stock, and for stock options, the expected life of the option, and expected stock price volatility. The Company used the Black-Scholes option pricing model to value its stock option awards. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and management uses different assumptions, stock-based compensation expense could be materially different for future awards. | |
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. As of December 31, 2021, the Company capitalized $367,696 in deferred offering costs pertaining to its equity line of credit agreement with Oasis (Note 8). In 2022, the Company wrote off these costs to general and administrative expenses in the consolidated statements of operations as the equity line of credit financing never occurred. | |
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 December 31, 2022 our operating segments included: DSTLD, Bailey, H&J, Stateside and Sundry. 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. | |
Concentrations | Concentrations The Company utilized three and two vendors that made up 30% and 40%, respectively, of all inventory purchases during the years ended December 31, 2022 and 2021. 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. | |
Leases | Leases On January 1, 2022, the Company adopted ASC 842, Leases The Company elected transitional practical expedients for existing leases which eliminated the requirements to reassess existing lease classification, initial direct costs, and whether contracts contain leases. Also, the Company elected to present the payments associated with short-term leases as an expense in statements of operations. Short-term leases are leases with a lease term of 12 months or less. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
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, 2023 Using: Level 1 Level 2 Level 3 Total Liabilities: Contingent consideration $ — $ — $ — $ — $ — $ — $ — $ — Fair Value Measurements as of December 31, 2022 Using: Level 1 Level 2 Level 3 Total Liabilities: Contingent consideration $ — $ — $ 12,098,475 $ 12,098,475 $ — $ — $ 12,098,475 $ 12,098,475 | Fair Value Measurements as of December 31, 2022 Using: Level 1 Level 2 Level 3 Total Liabilities: Warrant liability $ — $ — $ — $ — Contingent consideration — — 12,098,475 12,098,475 Derivative liability — — — — $ — $ — $ 12,098,475 $ 12,098,475 Fair Value Measurements as of December 31, 2021 Using: Level 1 Level 2 Level 3 Total Liabilities: Warrant liability $ — $ 18,223 $ — $ 18,223 Contingent consideration — — 12,179,476 12,179,476 Derivative liability — — 2,294,720 2,294,720 $ — $ 18,223 $ 14,474,196 $ 14,492,419 |
Summary of contingent consideration | June 30, December 31, 2023 2022 Bailey $ — $ 10,698,475 Harper & Jones — 1,400,000 $ — $ 12,098,475 | December 31, 2022 2021 Bailey $ 10,698,475 7,935,016 Harper & Jones 1,400,000 4,244,460 $ 12,098,475 $ 12,179,476 |
Schedule of inventory | June 30, December 31, 2023 2022 Raw materials $ 1,508,416 $ 1,611,134 Work in process 653,412 888,643 Finished goods 2,609,443 2,725,505 Inventory $ 4,771,271 $ 5,225,282 | December 31, 2022 2021 Raw materials $ 1,508,416 $ 292,167 Work in process 888,643 242,673 Finished goods 2,725,505 2,220,519 Inventory $ 5,122,564 $ 2,660,203 |
Schedule of the computation of basic and diluted net income (loss) per share | Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Numerator: Net income (loss) from continuing operations $ 6,536,310 $ (9,482,520) $ 470,415 $ (17,200,792) Income (loss) from discontinued operations, net of tax (1,492,050) (51,404) (1,562,503) (166,074) Net income (loss) $ 5,044,260 $ (9,533,924) $ (1,092,088) $ (17,366,866) Denominator: Weighted average common shares outstanding - basic 246,809 14,329 236,824 9,836 Weighted average common shares outstanding - diluted 834,604 14,329 824,619 9,836 Net income (loss) from continuing operations per share - basic $ 26.48 $ (661.78) $ 1.99 $ (1,748.68) Net income (loss) from continuing operations per share - diluted $ 7.83 $ (661.78) $ 0.57 $ (1,748.68) Net income (loss) from discontinued operations per common share – basic $ (6.05) $ (3.59) $ (6.60) $ (16.88) Net income (loss) from discontinued operations per common share – diluted $ (6.05) $ (3.59) $ (6.60) $ (16.88) Net income (loss) per share – $ 20.44 $ (665.36) $ (4.61) $ (1,765.57) Net income (loss) per share – $ 6.04 $ (665.36) $ (4.61) $ (1,765.57) | |
Schedule of potentially dilutive items outstanding | June 30, 2023 2022 — 18,496 Convertible notes 27,097 — Series A convertible preferred stock 321,395 — Series C convertible preferred stock 237,746 2,533 Common stock warrants 1,558 1,558 Stock options 587,795 22,588 | December 31, 2022 2021 Convertible notes 37,915 1,916 Series A convertible preferred stock 4,320 — Common stock warrants 176,733 1,432 Stock options 1,558 1,558 Total potentially dilutive shares 220,526 4,907 |
Schedule of business acquisition pro forma information | Year Ended December 31, 2022 2021 Net revenues $ 28,519,261 $ 34,635,426 Net loss $ (42,001,415) $ (33,171,473) Net loss per common share $ (1,361.50) $ (10,870.25) | |
Schedule of estimated useful lives of amortizable intangible assets | Customer relationships 3 years | |
Schedule of changes in common stock warrant liability | Warrant Liability Outstanding as of December 31, 2020 $ 6,265 Change in fair value 11,958 Outstanding as of December 31, 2021 18,223 Change in fair value (18,223) Outstanding as of December 31, 2022 $ — | |
Summary of goodwill and intangible impairment | Year Ended December 31, 2022 2021 Bailey brand name (intangibles) $ 2,182,000 $ 3,400,000 Bailey goodwill 3,321,095 — Total impairment $ 5,503,095 $ 3,400,000 |
DISCONTINUED OPERATIONS (Tables
DISCONTINUED OPERATIONS (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
DISCONTINUED OPERATIONS | ||
Schedule of components of disposition | Cash payment due to H&J Seller $ (229,000) Common shares issued to H&J Seller* (1,357,043) Total fair value of consideration received (given) $ (1,586,043) Carrying amount of assets and liabilities Cash and cash equivalents 18,192 Accounts receivable, net 55,782 Prepaid expenses and other current assets 25,115 Goodwill 1,130,311 Intangible assets, net 1,246,915 Deposits 4,416 Accounts payable (40,028) Accrued expenses and other liabilities (734,068) Deferred revenue (18,347) Due to related parties (1,008) Contingent consideration (1,400,000) Loan payable (219,894) Note payable - related party (129,489) Total carrying amount of assets and liabilities (62,103) Loss on disposition of business $ (1,523,940) * Represents the fair value of 78,103 shares of common stock issued to D. Jones. Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Net revenues $ 686,627 $ 1,089,569 $ 1,405,482 $ 1,892,849 Cost of net revenues 292,107 328,915 565,621 605,413 Gross profit 394,520 760,654 839,861 1,287,436 Operating expenses: General and administrative 189,751 449,508 520,582 896,873 Sales and marketing 169,875 332,723 346,167 515,775 Distribution — — — — Change in fair value of contingent consideration — — — — Total operating expenses 359,626 782,231 866,749 1,412,648 Income (loss) from operations 34,894 (21,577) (26,888) (125,212) Other income (expense): Interest expense (3,003) (29,828) (11,675) (40,862) Loss on disposition of business (1,523,940) — (1,523,940) — Other non-operating income (expenses) — — — — Total other income (expense), net (1,526,944) (29,828) (1,535,615) (40,862) Income tax benefit (provision) — — — — Net income (loss) from discontinued operations $ (1,492,050) $ (51,404) $ (1,562,503) $ (166,074) Weighted average common shares outstanding - basic 246,809 14,329 236,824 9,836 Weighted average common shares outstanding - diluted 834,604 14,329 824,619 9,836 Net income (loss) from discontinued operations per common share - basic $ (6.05) $ (3.59) $ (6.60) $ (16.88) Net income (loss) from discontinued operations per common share - diluted $ (6.05) $ (3.59) $ (6.60) $ (16.88) | |
Schedule of due to/ from factor | June 30, December 31, 2023 2022 Outstanding receivables: Without recourse $ 787,542 $ 1,680,042 With recourse 50,979 65,411 Matured funds and deposits 88,516 81,055 Advances (478,753) (632,826) Credits due customers (10,142) (354,282) $ 438,142 $ 839,400 | December 31, 2022 2021 Outstanding receivables: Without recourse $ 564,548 $ 579,295 With recourse 352,379 361,584 Advances 118,521 121,617 Credits due customers (196,048) (77,208) $ 839,400 $ 985,288 |
DUE FROM FACTOR (Tables)
DUE FROM FACTOR (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
DUE FROM FACTOR | ||
Schedule of due to/ from factor | June 30, December 31, 2023 2022 Outstanding receivables: Without recourse $ 787,542 $ 1,680,042 With recourse 50,979 65,411 Matured funds and deposits 88,516 81,055 Advances (478,753) (632,826) Credits due customers (10,142) (354,282) $ 438,142 $ 839,400 | December 31, 2022 2021 Outstanding receivables: Without recourse $ 564,548 $ 579,295 With recourse 352,379 361,584 Advances 118,521 121,617 Credits due customers (196,048) (77,208) $ 839,400 $ 985,288 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
GOODWILL AND INTANGIBLE ASSETS | |
Summary of amortized and indefinite-lived intangible assets | Gross Accumulated Carrying Amount Amortization Value Amortized: Customer relationships $ 9,734,560 $ (4,155,129) $ 5,579,431 $ 9,734,560 $ (4,155,129) $ 5,579,431 Indefinite-lived: Brand name $ 5,841,880 — 5,841,880 $ 15,576,440 $ (4,155,129) $ 11,421,311 |
Schedule of goodwill attributable to each business combination | June 30, December 31, 2023 2022 Bailey $ 3,158,123 $ 3,158,123 Stateside 2,104,056 2,104,056 Sundry 3,711,322 3,711,322 $ 8,973,501 $ 10,103,812 |
LIABILITIES AND DEBT (Tables)
LIABILITIES AND DEBT (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
LIABILITIES AND DEBT | ||
Schedule of accrued expenses and other liabilities | June 30, December 31, 2023 2022 Accrued expenses $ 503,927 $ 668,714 Reserve for returns — 307,725 Payroll related liabilities 4,009,812 2,618,870 Sales tax liability 277,800 262,765 Other liabilities 247,398 78,845 $ 5,038,937 $ 3,936,920 | December 31, 2022 2021 Accrued expenses $ 668,714 $ 178,819 Reserve for returns 307,725 33,933 Payroll related liabilities 2,618,870 1,183,598 Sales tax liability 262,765 225,804 Due to seller — 396,320 Other liabilities 78,845 59,613 $ 3,936,920 $ 2,078,087 |
Summary of the convertible notes | Unamortized Convertible Note Principal Debt Discount Payable, Net Balance, December 31, 2022 $ 4,100,000 $ (1,378,200) $ 2,721,800 Repayments of notes (4,000,000) — (4,000,000) Amortization of debt discount — 689,100 689,100 Loss on extinguishment of debt — 689,100 689,100 Balance, June 30, 2023 $ 100,000 $ — $ 100,000 | Unamortized Convertible Note Principal Debt Discount Payable, Net Balance, December 31, 2020 $ 100,000 $ — $ 100,000 Issuance of Oasis note, net of issuance costs 5,265,000 (715,000) 4,550,000 Issuance of FirstFire First note, net of issuance costs 1,575,000 (315,000) 1,260,000 Issuance of Second FirstFire note, net of issuance costs 2,625,000 (530,000) 2,095,000 Derivative liability in connection with notes — (3,204,924) (3,204,924) Amortization of debt discount — 801,538 801,538 Balance, December 31, 2021 9,565,000 (3,963,386) 5,601,614 Proceeds from issuance of notes 8,943,750 (1,992,500) 6,951,250 Repayments of notes (4,943,750) — (4,943,750) Conversion of notes into common stock (9,465,000) — (9,465,000) Warrant and common shares issued with convertible notes — (1,368,741) (1,368,741) Derivative liability in connection with notes — (559,957) (559,957) Amortization of debt discount — 6,506,384 6,506,384 Balance, December 31, 2022 $ 4,100,000 $ (1,378,200) $ 2,721,800 |
summary of promissory notes payable, net | June 30, December 31, 2023 2022 Bailey Note $ 3,500,000 $ 3,500,000 Sundry Note — 5,500,000 March 2023 Notes - principal 2,458,750 — March 2023 Notes - unamortized debt discount (344,911) — Promissory note payable, net $ 5,613,839 $ 9,000,000 |
SHARE-BASED PAYMENTS (Tables)
SHARE-BASED PAYMENTS (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
SHARE-BASED PAYMENTS | ||
Summary of information related to common stock and preferred stock warrants | Common Weighted Stock Average Warrants Exercise Price Outstanding - December 31, 2022 176,733 $ 209 Granted 93,099 99.50 Exercised (32,086) 97.88 Forfeited — — Outstanding - June 30, 2023 237,746 $ 181.25 Exercisable at December 31, 2022 171,278 $ 210.50 Exercisable at June 30, 2023 237,745 $ 181.25 | Common Weighted Stock Average Warrants Exercise Price Outstanding - December 31, 2020 366 $ 6,650 Granted 1,205 11,450 Conversion of preferred stock warrants upon IPO 21 19,150 Exercised (155) 11,425 Forfeited (4) 19,150 Outstanding - December 31, 2021 1,432 $ 10,300 Granted 241,308 140.36 Exercised (66,007) 131.25 Forfeited — — Outstanding - December 31, 2022 176,733 $ 209.23 Exercisable at December 31, 2021 1,432 $ 10,300 Exercisable at December 31, 2022 171,278 $ 210.41 |
Summary of information related to stock options under stock plan | Weighted Average Options Exercise Price Outstanding - December 31, 2020 485 $ 5,850 Granted 1,093 10,375 Exercised — — Forfeited — — Outstanding - December 31, 2021 1,558 $ 9,053 Granted — — Exercised — — Forfeited — — Outstanding - December 31, 2022 1,558 $ 9,053 Exercisable at December 31, 2021 1,266 $ 8,975 Exercisable at December 31, 2022 1,389 $ 10,125 Weighted average duration (years) to expiration of outstanding options at December 31, 2022 7.00 | |
Schedule of assumptions utilized for option grants | Year Ended December 31, 2022 2021 Risk Free Interest Rate n/a 0.34% - 0.85 % Expected Dividend Yield n/a 0.00 % Expected Volatility n/a 58.00 % Expected Life (years) n/a 5.18 |
NATURE OF OPERATIONS (Details)
NATURE OF OPERATIONS (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |||||
Jun. 21, 2023 | May 13, 2021 | Jun. 30, 2023 | Dec. 31, 2022 | Dec. 30, 2022 | Aug. 30, 2021 | May 18, 2021 | |
NATURE OF OPERATIONS | |||||||
Aggregate net proceeds from the IPO, inclusive of the proceeds from the over-allotment exercise | $ 8,100,000 | ||||||
Aggregate cash payment agreed to pay | $ 229,000 | ||||||
D.Jones (H&J Seller) | H&J Settlement Agreement | |||||||
NATURE OF OPERATIONS | |||||||
Aggregate cash payment agreed to pay | $ 229,000 | ||||||
Issuance of common stock pursuant to disposition (in shares) | 78,103 | 78,103 | |||||
Percentage of membership interest transferred | 100% | ||||||
D.Jones (H&J Seller) | Harper & Jones, LLC | H&J Settlement Agreement | |||||||
NATURE OF OPERATIONS | |||||||
Aggregate cash payment agreed to pay | $ 229,000 | ||||||
Issuance of common stock pursuant to disposition (in shares) | 78,103 | ||||||
D.Jones (H&J Seller) | Disposal group, Disposed by sale | Harper & Jones, LLC | H&J Settlement Agreement | |||||||
NATURE OF OPERATIONS | |||||||
Aggregate cash payment agreed to pay | $ 229,000 | ||||||
Issuance of common stock pursuant to disposition (in shares) | 78,103 | ||||||
Percentage of membership interest transferred | 100% | ||||||
IPO | |||||||
NATURE OF OPERATIONS | |||||||
Underwriting discounts and commissions | $ 800,000 | ||||||
Estimated offering expenses | 600,000 | ||||||
Additional offering costs | $ 600,000 | ||||||
Share issued price | $ 10,375 | $ 625 | |||||
Aggregate net proceeds from the IPO, inclusive of the proceeds from the over-allotment exercise | $ 8,600,000 | ||||||
Harper & Jones | |||||||
NATURE OF OPERATIONS | |||||||
Percentage of equity acquired | 100% | ||||||
Stateside | |||||||
NATURE OF OPERATIONS | |||||||
Percentage of equity acquired | 100% | ||||||
Sundry | |||||||
NATURE OF OPERATIONS | |||||||
Percentage of equity acquired | 100% |
GOING CONCERN (Details)
GOING CONCERN (Details) - USD ($) | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
GOING CONCERN | ||||
Net loss | $ 1,092,088 | $ 17,366,866 | $ 38,043,362 | $ 32,357,957 |
Working capital deficit | $ 16,037,518 | $ 32,064,398 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||
Jun. 21, 2023 USD ($) shares | Oct. 21, 2022 | May 18, 2021 | May 12, 2021 | Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2023 USD ($) shares | Jun. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||||||
Reverse stock split conversion ratio | 0.01 | 1 | 0.064 | |||||||
Reclassification adjustment | $ 297,696 | $ 630,976 | ||||||||
Cash and cash equivalents in bank deposit | $ 250,000 | $ 250,000 | $ 250,000 | |||||||
Fair value of contingent consideration | 12,098,475 | $ 12,179,476 | ||||||||
Gain in the change in fair value of contingent consideration | $ (10,698,475) | $ 5,920,919 | $ (10,698,475) | $ 7,121,240 | 564,303 | 8,764,460 | ||||
Aggregate cash payment agreed to pay | $ 229,000 | |||||||||
Bailey LLC | ||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||||||
Fair value of contingent consideration | 10,698,475 | 7,935,016 | ||||||||
Harper & Jones, LLC | ||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||||||
Fair value of contingent consideration | $ 1,400,000 | $ 4,244,460 | ||||||||
Norwest investors | Norwest waiver | Bailey LLC | ||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||||||
Fair value of contingent consideration | 0 | |||||||||
Gain in the change in fair value of contingent consideration | 10,698,475 | |||||||||
D.Jones (H&J Seller) | H&J Settlement Agreement | ||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||||||
Fair value of contingent consideration | 0 | |||||||||
Gain in the change in fair value of contingent consideration | $ 1,400,000 | |||||||||
Percentage of membership interest transferred | 100% | |||||||||
Aggregate cash payment agreed to pay | $ 229,000 | |||||||||
Issuance of common stock pursuant to disposition (in shares) | shares | 78,103 | 78,103 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fair Value of Financial Instruments (Details) | 12 Months Ended | |
Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Liabilities: | ||
Fair value of contingent consideration | $ 12,098,475 | $ 12,179,476 |
Total | 12,098,475 | |
Outstanding as of Opening balance | 18,223 | 6,265 |
Warrant liability | 14,492,419 | |
Outstanding as of Ending balance | 18,223 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||
Initial recognition in connection with acquisition of Harper & Jones | 3,421,516 | |
Stock price guarantee per consulting agreement | 67,000 | |
Conversion into shares | (73,500) | |
Repayments to Harper & Jones seller | (645,304) | |
Harper & Jones, LLC | ||
Liabilities: | ||
Fair value of contingent consideration | 1,400,000 | 4,244,460 |
Bailey LLC | ||
Liabilities: | ||
Fair value of contingent consideration | $ 10,698,475 | 7,935,016 |
Expected Volatility | Minimum | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||
Fair value of the contingent consideration | 0.793 | |
Expected Volatility | Maximum | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||
Fair value of the contingent consideration | 0.889 | |
Risk Free Interest Rate | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||
Fair value of the contingent consideration | 0.0025 | |
Expected share | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||
Fair value of the contingent consideration | 0.05 | |
Stock price | Harper & Jones, LLC | ||
Liabilities: | ||
Fair value of contingent consideration | $ 10,375,000 | |
Stock price | Bailey LLC | ||
Liabilities: | ||
Fair value of contingent consideration | 828,000 | |
Level 2 | ||
Liabilities: | ||
Warrant liability | 18,223 | |
Level 3 | ||
Liabilities: | ||
Fair value of contingent consideration | 12,098,475 | 12,179,476 |
Total | $ 12,098,475 | |
Warrant liability | $ 14,474,196 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Deferred Offering Costs (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2020 | |
Restructuring Cost and Reserve | ||
Deferred offering costs | $ 214,647 | |
Harper & Jones, LLC | ||
Restructuring Cost and Reserve | ||
Repayments of notes | $ 645,304 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Inventory (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Raw materials | $ 1,508,416 | $ 1,611,134 | $ 292,167 |
Work in process | 653,412 | 888,643 | 242,673 |
Finished goods | 2,609,443 | 2,725,505 | 2,220,519 |
Inventory | $ 4,771,271 | $ 5,225,282 | $ 2,660,203 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Impairment (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Indefinite-lived Intangible Assets | |
Impairment loss of consolidated statements of operations | $ 3,667,000 |
Impairment of goodwill | 3,321,095 |
Bailey Goodwill | |
Indefinite-lived Intangible Assets | |
Impairment of goodwill | $ 3,321,095 |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Net Loss per Share Computation (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Numerator: | ||||||||
Net income (loss) from continuing operations | $ 6,536,310 | $ (9,482,520) | $ 470,415 | $ (17,200,792) | $ (27,114,719) | $ (31,334,084) | ||
Income (loss) from discontinued operations, net of tax | (1,492,050) | (51,404) | (1,562,503) | (166,074) | (10,928,643) | (1,023,873) | ||
Net income (loss) | $ 5,044,260 | $ (6,136,349) | $ (9,533,924) | $ (7,832,942) | $ (1,092,088) | $ (17,366,866) | $ (38,043,362) | $ (32,357,957) |
Denominator: | ||||||||
Weighted average common shares outstanding - basic | 246,809 | 14,329 | 236,824 | 9,836 | 30,852 | 3,052 | ||
Weighted average common shares outstanding -diluted | 834,604 | 14,329 | 824,619 | 9,836 | 30,852 | 3,052 | ||
Net income (loss) from continuing per common share - basic | $ 26.48 | $ (661.78) | $ 1.99 | $ (1,748.68) | $ (878.87) | $ (10,268.22) | ||
Net income (loss) from continuing per common share - diluted | 7.83 | (661.78) | 0.57 | (1,748.68) | $ (878.87) | $ (10,268.22) | ||
Net income (loss) from discontinued operations per common share - basic | (6.05) | (3.59) | (6.60) | (16.88) | ||||
Net income (loss) from discontinued operations per common share - diluted | (6.05) | (3.59) | (6.60) | (16.88) | ||||
Net income (loss) per share - basic | 20.44 | (665.36) | (4.61) | (1,765.57) | ||||
Net income (loss) per share - diluted | $ 6.04 | $ (665.36) | $ (4.61) | $ (1,765.57) |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Net Loss per Share (Details) - shares | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Potentially dilutive items outstanding | ||||
Total potentially dilutive shares | 587,795 | 22,588 | 220,526 | 4,907 |
Stock options | ||||
Potentially dilutive items outstanding | ||||
Total potentially dilutive shares | 1,558 | 1,558 | 1,558 | 1,558 |
Convertible notes | ||||
Potentially dilutive items outstanding | ||||
Total potentially dilutive shares | 18,496 | 37,915 | 1,916 | |
Series A convertible preferred stock | ||||
Potentially dilutive items outstanding | ||||
Total potentially dilutive shares | 27,097 | 4,320 | ||
Series C convertible preferred stock | ||||
Potentially dilutive items outstanding | ||||
Total potentially dilutive shares | 321,395 | |||
Common stock warrants | ||||
Potentially dilutive items outstanding | ||||
Total potentially dilutive shares | 237,746 | 2,533 | 176,733 | 1,432 |
SUMMARY OF SIGNIFICANT ACCOU_11
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Unaudited Pro Forma Financial Information (Details) - USD ($) | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
Net revenues | $ 14,728,296 | $ 28,519,261 | $ 34,635,426 | |
Net loss | $ (16,907,152) | $ (42,001,415) | $ (33,171,473) | |
Net loss per common share , Basic | $ (1,718.83) | $ (1,361.50) | $ (10,870.25) | |
Net loss per common share , Diluted | $ (1,718.83) |
DISCONTINUED OPERATIONS - Busin
DISCONTINUED OPERATIONS - Business disposition (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |
Jun. 21, 2023 | Jun. 30, 2023 | Jun. 30, 2023 | |
DISCONTINUED OPERATIONS | |||
Cash payment due to H&J Seller | $ (229,000) | ||
Common shares issued to H&J Seller* | (1,357,043) | $ (1,357,043) | |
Total fair value of consideration received (given) | (1,586,043) | ||
Carrying amount of assets and liabilities | |||
Cash and cash equivalents | 18,192 | ||
Accounts receivable, net | 55,782 | ||
Prepaid expenses and other current assets | 25,115 | ||
Goodwill | 1,130,311 | ||
Intangible assets, net | 1,246,915 | ||
Deposits | 4,416 | ||
Accounts payable | (40,028) | ||
Accrued expenses and other liabilities | (734,068) | ||
Deferred revenue | (18,347) | ||
Due to related parties | (1,008) | ||
Contingent consideration | (1,400,000) | ||
Loan payable | (219,894) | ||
Note payable - related party | (129,489) | ||
Total carrying amount of assets and liabilities | 62,103 | ||
Loss on disposition of business | (1,523,940) | $ (1,523,940) | |
Disposal group, Disposed by sale | |||
Carrying amount of assets and liabilities | |||
Loss on disposition of business | $ 1,523,940 | ||
Harper & Jones, LLC | Disposal group, Disposed by sale | |||
Carrying amount of assets and liabilities | |||
Goodwill | 1,130,311 | 1,130,311 | |
Intangible assets, net | $ 1,246,915 | $ 1,246,915 |
DISCONTINUED OPERATIONS - Addit
DISCONTINUED OPERATIONS - Additional information (Details) - USD ($) | 6 Months Ended | |
Jun. 21, 2023 | Jun. 30, 2023 | |
DISCONTINUED OPERATIONS | ||
Aggregate cash payment agreed to pay | $ 229,000 | |
Loss on disposition of business | (1,523,940) | $ (1,523,940) |
H&J Settlement Agreement | D.Jones (H&J Seller) | ||
DISCONTINUED OPERATIONS | ||
Aggregate cash payment agreed to pay | $ 229,000 | |
Percentage of membership interest transferred | 100% | |
Issuance of common stock pursuant to disposition (in shares) | 78,103 | 78,103 |
Disposal group, Disposed by sale | ||
DISCONTINUED OPERATIONS | ||
Loss on disposition of business | $ 1,523,940 | |
Harper & Jones, LLC | H&J Settlement Agreement | D.Jones (H&J Seller) | ||
DISCONTINUED OPERATIONS | ||
Aggregate cash payment agreed to pay | $ 229,000 | |
Issuance of common stock pursuant to disposition (in shares) | 78,103 | |
Harper & Jones, LLC | Disposal group, Disposed by sale | H&J Settlement Agreement | D.Jones (H&J Seller) | ||
DISCONTINUED OPERATIONS | ||
Aggregate cash payment agreed to pay | $ 229,000 | |
Percentage of membership interest transferred | 100% | |
Issuance of common stock pursuant to disposition (in shares) | 78,103 | |
Payments made | $ 150,000 | |
Remaining consideration payable | $ 79,000 |
DISCONTINUED OPERATIONS - Conso
DISCONTINUED OPERATIONS - Consolidated statements of operations of discontinued operations of HJ (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
DISCONTINUED OPERATIONS | ||||||
Net revenues | $ 4,493,424 | $ 2,649,432 | $ 8,869,803 | $ 5,278,562 | $ 10,333,558 | $ 5,764,963 |
Cost of net revenues | 2,157,349 | 1,536,703 | 4,540,488 | 3,552,396 | 6,789,314 | 3,828,496 |
Gross profit | 2,336,075 | 1,112,729 | 4,329,315 | 1,726,166 | 3,544,244 | 1,936,467 |
Operating expenses: | ||||||
General and administrative | 4,074,051 | 4,243,031 | 8,380,063 | 8,073,621 | 14,067,681 | 16,149,510 |
Sales and marketing | 1,097,326 | 1,372,568 | 2,036,677 | 2,230,087 | 4,018,985 | 3,269,710 |
Distribution | 242,214 | 221,925 | 512,399 | 424,773 | 611,569 | 489,371 |
Change in fair value of contingent consideration | (10,698,475) | 5,920,919 | (10,698,475) | 7,121,240 | 564,303 | 8,764,460 |
Total operating expenses | (5,284,884) | 11,758,443 | 230,664 | 17,849,721 | 24,765,633 | 32,073,050 |
Income (loss) from operations | 7,620,959 | (10,645,714) | 4,098,651 | (16,123,555) | (21,221,389) | (30,136,583) |
Other income (expense): | ||||||
Interest expense | (1,086,889) | (2,173,769) | (2,951,487) | (3,730,612) | (8,961,410) | (3,619,093) |
Other non-operating income (expenses) | 2,240 | 3,336,963 | (676,749) | 2,653,375 | 3,068,080 | 1,321,472 |
Total other income (expense), net | (1,084,649) | 1,163,194 | (3,628,236) | (1,077,237) | (5,893,330) | (2,297,621) |
Income tax benefit (provision) | 1,100,120 | |||||
Net income (loss) from discontinued operations | $ (1,492,050) | $ (51,404) | $ (1,562,503) | $ (166,074) | $ (10,928,643) | $ (1,023,873) |
Weighted average common shares outstanding - basic | 246,809 | 14,329 | 236,824 | 9,836 | 30,852 | 3,052 |
Weighted average common shares outstanding -diluted | 834,604 | 14,329 | 824,619 | 9,836 | 30,852 | 3,052 |
Net income (loss) from discontinued operations per common share - basic | $ (6.05) | $ (3.59) | $ (6.60) | $ (16.88) | ||
Net income (loss) from discontinued operations per common share - diluted | $ (6.05) | $ (3.59) | $ (6.60) | $ (16.88) | ||
Harper & Jones, LLC | ||||||
DISCONTINUED OPERATIONS | ||||||
Net revenues | $ 686,627 | $ 1,089,569 | $ 1,405,482 | $ 1,892,849 | ||
Cost of net revenues | 292,107 | 328,915 | 565,621 | 605,413 | ||
Gross profit | 394,520 | 760,654 | 839,861 | 1,287,436 | ||
Operating expenses: | ||||||
General and administrative | 189,751 | 449,508 | 520,582 | 896,873 | ||
Sales and marketing | 169,875 | 332,723 | 346,167 | 515,775 | ||
Total operating expenses | 359,626 | 782,231 | 866,749 | 1,412,648 | ||
Income (loss) from operations | 34,894 | (21,577) | (26,888) | (125,212) | ||
Other income (expense): | ||||||
Interest expense | (3,003) | (29,828) | (11,675) | (40,862) | ||
Loss on disposition of business | (1,523,940) | (1,523,940) | ||||
Total other income (expense), net | (1,526,944) | (29,828) | (1,535,615) | (40,862) | ||
Income tax benefit (provision) | 0 | 0 | ||||
Net income (loss) from discontinued operations | $ (1,492,050) | $ (51,404) | $ (1,562,503) | $ (166,074) | ||
Weighted average common shares outstanding - basic | 246,809 | 14,329 | 236,824 | 9,836 | ||
Weighted average common shares outstanding -diluted | 834,604 | 14,329 | 824,619 | 9,836 | ||
Net income (loss) from discontinued operations per common share - basic | $ (6.05) | $ (3.59) | $ (6.60) | $ (16.88) | ||
Net income (loss) from discontinued operations per common share - diluted | $ (6.05) | $ (3.59) | $ (6.60) | $ (16.88) |
DUE FROM FACTOR (Details)
DUE FROM FACTOR (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Outstanding receivables: | |||
Without recourse, Current | $ 787,542 | $ 1,680,042 | $ 579,295 |
With recourse, Current | 50,979 | 65,411 | 361,584 |
Matured funds and deposits | 88,516 | 81,055 | |
Advances | 478,753 | 632,826 | |
Credits due customers, Current | (10,142) | (354,282) | (77,208) |
Due from factor | $ 438,142 | $ 839,400 | $ 985,288 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS - Summary of goodwill by entity (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Aug. 30, 2021 | Dec. 31, 2020 |
GOODWILL AND INTANGIBLE ASSETS | |||||
Goodwill | $ 8,973,501 | $ 10,103,812 | $ 8,583,274 | $ 6,479,218 | |
Bailey | |||||
GOODWILL AND INTANGIBLE ASSETS | |||||
Goodwill | 3,158,123 | 3,158,123 | 6,479,218 | $ 6,479,218 | |
Stateside | |||||
GOODWILL AND INTANGIBLE ASSETS | |||||
Goodwill | 2,104,056 | 2,104,056 | $ 2,104,056 | $ 2,104,056 | |
Sundry | |||||
GOODWILL AND INTANGIBLE ASSETS | |||||
Goodwill | $ 3,711,322 | $ 3,711,322 |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Jun. 21, 2023 | |
Indefinite-lived Intangible Assets | |||||||
Gross Amount | $ 9,734,560 | $ 9,734,560 | $ 9,734,560 | $ 4,736,080 | |||
Accumulated Amortization | (4,155,129) | (4,155,129) | (2,670,202) | (1,091,509) | |||
Carrying Value | 5,579,431 | 5,579,431 | 7,064,358 | 3,644,571 | |||
Indefinite-lived | 15,576,440 | 15,576,440 | 15,576,440 | 10,354,640 | |||
Intangible assets, net | 11,421,311 | 11,421,311 | 12,906,238 | 9,263,131 | |||
Amortization expense | 804,924 | $ 537,812 | 1,759,277 | $ 1,075,625 | 1,653,819 | 1,128,524 | |
Goodwill | $ 1,130,311 | ||||||
Intangible assets, net | $ 1,246,915 | ||||||
Harper & Jones, LLC | Disposal group, Disposed by sale | |||||||
Indefinite-lived Intangible Assets | |||||||
Goodwill | 1,130,311 | 1,130,311 | |||||
Intangible assets, net | 1,246,915 | 1,246,915 | |||||
Customer relationships | |||||||
Indefinite-lived Intangible Assets | |||||||
Gross Amount | 9,734,560 | 9,734,560 | 9,734,560 | 4,736,080 | |||
Accumulated Amortization | (4,155,129) | (4,155,129) | (2,670,202) | (1,091,509) | |||
Carrying Value | 5,579,431 | 5,579,431 | 7,064,358 | 3,644,571 | |||
Brand name | |||||||
Indefinite-lived Intangible Assets | |||||||
Indefinite-lived | $ 5,841,880 | $ 5,841,880 | 5,618,560 | ||||
Intangible assets, net | $ 5,841,880 | $ 5,618,560 |
LIABILITIES AND DEBT - Accrued
LIABILITIES AND DEBT - Accrued Expenses and Other Liabilities (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
LIABILITIES AND DEBT | |||
Accrued expenses | $ 503,927 | $ 668,714 | $ 178,819 |
Reserve for returns | 307,725 | 33,933 | |
Payroll related liabilities | 4,009,812 | 2,618,870 | 1,183,598 |
Sales tax liability | 277,800 | 262,765 | 225,804 |
Other liabilities | 247,398 | 78,845 | 59,613 |
Accrued expenses and other liabilities, Total | 5,038,937 | 3,936,920 | 2,078,087 |
Estimated penalties associated with accrued payroll taxes | 1,288,048 | 1,074,316 | |
Accrued expenses included in accrued common stock | 535,000 | $ 535,000 | |
Accrued expenses included in accrued common stock issuances owned to sundry executives | $ 500,000 | ||
Number of common shares owed per the agreement | 5,000 | 200 | |
Due to seller | $ 396,320 | ||
DBG | |||
LIABILITIES AND DEBT | |||
Sales tax liability | $ 620,400 | $ 539,839 | |
Bailey | |||
LIABILITIES AND DEBT | |||
Sales tax liability | $ 667,648 | $ 534,477 |
LIABILITIES AND DEBT - Converti
LIABILITIES AND DEBT - Convertible Debt (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2019 | Jun. 30, 2023 | Dec. 31, 2022 | |
Convertible Debt 2020 Regulation CF Offering | ||||
LIABILITIES AND DEBT | ||||
Outstanding principal and accrued interest upon closing of IPO | $ 16,942 | |||
Conversion of shares | 12,786 | |||
Convertible Debt 2020 Regulation CF Offering | Convertible Debt | ||||
LIABILITIES AND DEBT | ||||
Issuance costs | $ 69,627 | |||
Convertible Debt 2020 Regulation D Offering | ||||
LIABILITIES AND DEBT | ||||
Outstanding principal and accrued interest upon closing of IPO | 100,000 | $ 100,000 | $ 100,000 | |
Default interest expense | 132,609 | |||
Convertible Debt 2020 Regulation D Offering | IPO | ||||
LIABILITIES AND DEBT | ||||
Outstanding principal and accrued interest upon closing of IPO | $ 185,000 | |||
Convertible Debt 2020 Regulation D Offering | Convertible Debt | ||||
LIABILITIES AND DEBT | ||||
Debt instrument term | 9 months | |||
Convertible Debt 2019 Regulation D Offering | Convertible Debt | ||||
LIABILITIES AND DEBT | ||||
Debt instrument term | 36 months |
LIABILITIES AND DEBT - Conver_2
LIABILITIES AND DEBT - Convertible Promissory Note (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||||||||
May 30, 2023 | Dec. 29, 2022 | Apr. 08, 2022 | Feb. 28, 2023 | Jan. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | May 31, 2022 | Nov. 30, 2021 | Mar. 31, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Nov. 16, 2021 | Oct. 01, 2021 | Aug. 27, 2021 | |
LIABILITIES AND DEBT | |||||||||||||||||
Repayments of debt | $ 6,604,552 | $ 3,068,750 | $ 7,350,276 | $ 2,006,628 | |||||||||||||
Exercise price of warrants | $ 95 | ||||||||||||||||
Outstanding principal amount converted | $ 888,930 | ||||||||||||||||
Number of shares issued | 30 | 50,890 | |||||||||||||||
Value of shares issued | $ 25,000 | $ 5,000,003 | |||||||||||||||
Loss on extinguishment of debt | $ (689,100) | ||||||||||||||||
Promissory note | |||||||||||||||||
LIABILITIES AND DEBT | |||||||||||||||||
Number of shares issued | 4,400 | ||||||||||||||||
Value of shares issued | $ 322,300 | ||||||||||||||||
Promissory note | |||||||||||||||||
LIABILITIES AND DEBT | |||||||||||||||||
Principal, beginning balance | 4,100,000 | 4,100,000 | 4,100,000 | 9,565,000 | 9,565,000 | 100,000 | |||||||||||
Unamortized Debt Discount, beginning balance | 1,378,200 | 1,378,200 | 1,378,200 | 3,963,386 | 3,963,386 | ||||||||||||
Convertible Note Payable, Net beginning balance | 2,721,800 | 2,721,800 | 2,721,800 | $ 5,601,614 | 5,601,614 | 100,000 | |||||||||||
Shares issued to notes payable holders | 350 | ||||||||||||||||
Outstanding principal amount converted | $ 888,930 | ||||||||||||||||
Amortization of debt discount | 689,100 | 1,724,291 | 6,506,384 | 801,538 | |||||||||||||
Principal, ending balance | $ 4,100,000 | 4,100,000 | 9,565,000 | ||||||||||||||
Unamortized Debt Discount, ending balance | 1,378,200 | 1,378,200 | 3,963,386 | ||||||||||||||
Convertible Note Payable, Net ending balance | 2,721,800 | 2,721,800 | 5,601,614 | ||||||||||||||
Oasis Note | |||||||||||||||||
LIABILITIES AND DEBT | |||||||||||||||||
Aggregate principal amount | 5,265,000 | 5,265,000 | $ 5,265,000 | ||||||||||||||
Number of shares issued | 40 | ||||||||||||||||
Amortization of debt discount | 6,506,384 | 801,538 | |||||||||||||||
Oasis Note | Promissory note | |||||||||||||||||
LIABILITIES AND DEBT | |||||||||||||||||
Principal, beginning balance | 5,265,000 | 5,265,000 | |||||||||||||||
Unamortized Debt Discount, beginning balance | 715,000 | 715,000 | |||||||||||||||
Principal, ending balance | 5,265,000 | ||||||||||||||||
Unamortized Debt Discount, ending balance | 715,000 | ||||||||||||||||
First Fire First Note | |||||||||||||||||
LIABILITIES AND DEBT | |||||||||||||||||
Aggregate principal amount | $ 1,575,000 | ||||||||||||||||
First Fire First Note | Promissory note | |||||||||||||||||
LIABILITIES AND DEBT | |||||||||||||||||
Principal, beginning balance | 1,575,000 | 1,575,000 | |||||||||||||||
Unamortized Debt Discount, beginning balance | 315,000 | 315,000 | |||||||||||||||
Principal, ending balance | 1,575,000 | ||||||||||||||||
Unamortized Debt Discount, ending balance | 315,000 | ||||||||||||||||
Second First Fire Note | |||||||||||||||||
LIABILITIES AND DEBT | |||||||||||||||||
Aggregate principal amount | $ 2,625,000 | ||||||||||||||||
Second First Fire Note | Promissory note | |||||||||||||||||
LIABILITIES AND DEBT | |||||||||||||||||
Principal, beginning balance | 2,625,000 | 2,625,000 | |||||||||||||||
Unamortized Debt Discount, beginning balance | 530,000 | 530,000 | |||||||||||||||
Principal, ending balance | 2,625,000 | ||||||||||||||||
Unamortized Debt Discount, ending balance | 530,000 | ||||||||||||||||
Oasis and FirstFire Notes | |||||||||||||||||
LIABILITIES AND DEBT | |||||||||||||||||
Principal, beginning balance | 9,465,000 | $ 9,465,000 | |||||||||||||||
Shares issued to notes payable holders | 79,807 | ||||||||||||||||
Outstanding principal amount converted | $ 9,465,000 | ||||||||||||||||
Principal, ending balance | 9,465,000 | ||||||||||||||||
Derivative liability | Promissory note | |||||||||||||||||
LIABILITIES AND DEBT | |||||||||||||||||
Unamortized Debt Discount, beginning balance | 559,957 | 559,957 | 559,957 | $ 3,204,924 | 3,204,924 | ||||||||||||
Unamortized Debt Discount, ending balance | 559,957 | 559,957 | 3,204,924 | ||||||||||||||
Proceeds from issuance of notes | Promissory note | |||||||||||||||||
LIABILITIES AND DEBT | |||||||||||||||||
Principal, beginning balance | 8,943,750 | 8,943,750 | 8,943,750 | ||||||||||||||
Unamortized Debt Discount, beginning balance | 1,992,500 | 1,992,500 | 1,992,500 | ||||||||||||||
Principal, ending balance | 8,943,750 | 8,943,750 | |||||||||||||||
Unamortized Debt Discount, ending balance | 1,992,500 | 1,992,500 | |||||||||||||||
Repayments of notes | |||||||||||||||||
LIABILITIES AND DEBT | |||||||||||||||||
Repayments of notes | (4,000,000) | ||||||||||||||||
Repayments of notes | Promissory note | |||||||||||||||||
LIABILITIES AND DEBT | |||||||||||||||||
Repayments of notes | (4,943,750) | ||||||||||||||||
Warrant and common shares issued with convertible notes | Promissory note | |||||||||||||||||
LIABILITIES AND DEBT | |||||||||||||||||
Unamortized Debt Discount, beginning balance | 1,368,741 | 1,368,741 | 1,368,741 | ||||||||||||||
Unamortized Debt Discount, ending balance | 1,368,741 | 1,368,741 | |||||||||||||||
PPP Loan | |||||||||||||||||
LIABILITIES AND DEBT | |||||||||||||||||
Aggregate principal amount | $ 203,994 | ||||||||||||||||
April Notes | Securities purchase agreement | |||||||||||||||||
LIABILITIES AND DEBT | |||||||||||||||||
Aggregate principal amount | $ 3,068,750 | ||||||||||||||||
Original issue discount | 613,750 | ||||||||||||||||
Net proceeds | $ 2,313,750 | ||||||||||||||||
Repayments of debt | $ 3,068,750 | ||||||||||||||||
Number of warrants issued to purchase common stock | 503 | ||||||||||||||||
Exercise price of warrants | $ 3,050 | ||||||||||||||||
Debt discount for the fair value of the warrants | $ 98,241 | ||||||||||||||||
Unamortized Debt Discount, ending balance | $ 755,000 | ||||||||||||||||
July Notes | Securities purchase agreement | |||||||||||||||||
LIABILITIES AND DEBT | |||||||||||||||||
Aggregate principal amount | 1,875,000 | 1,875,000 | |||||||||||||||
Original issue discount | 375,000 | 375,000 | |||||||||||||||
Net proceeds | $ 1,450,000 | ||||||||||||||||
Repayments of debt | $ 1,875,000 | ||||||||||||||||
July 22 Notes | Securities purchase agreement | |||||||||||||||||
LIABILITIES AND DEBT | |||||||||||||||||
Number of warrants issued to purchase common stock | 1,645 | 1,645 | |||||||||||||||
Exercise price of warrants | $ 380 | $ 380 | |||||||||||||||
July 28 Notes | Securities purchase agreement | |||||||||||||||||
LIABILITIES AND DEBT | |||||||||||||||||
Number of warrants issued to purchase common stock | 1,106 | 1,106 | |||||||||||||||
Exercise price of warrants | $ 282.50 | $ 282.50 | |||||||||||||||
Debt discount for the fair value of the warrants | $ 692,299 | $ 692,299 | |||||||||||||||
December Notes | |||||||||||||||||
LIABILITIES AND DEBT | |||||||||||||||||
Principal, beginning balance | 4,000,000 | 4,000,000 | 4,000,000 | ||||||||||||||
Unamortized Debt Discount, beginning balance | 1,278,200 | 1,278,200 | $ 1,278,200 | ||||||||||||||
Number of shares issued | 2,400 | ||||||||||||||||
Principal, ending balance | 4,000,000 | $ 4,000,000 | |||||||||||||||
Unamortized Debt Discount, ending balance | $ 1,278,200 | $ 1,278,200 | |||||||||||||||
December Notes | Securities purchase agreement | |||||||||||||||||
LIABILITIES AND DEBT | |||||||||||||||||
Aggregate principal amount | $ 4,000,000 | ||||||||||||||||
Original issue discount | 800,000 | ||||||||||||||||
Net proceeds | $ 3,000,000 | ||||||||||||||||
Percentage of increase in face value | 120% | ||||||||||||||||
Percentage of annual interest rate | 20% | ||||||||||||||||
Repayments of debt | $ 4,000,000 | ||||||||||||||||
Number of warrants issued to purchase common stock | 18,779 | 18,779 | 18,779 | ||||||||||||||
Exercise price of warrants | $ 106.50 | $ 106.50 | $ 106.50 | ||||||||||||||
Debt discount for the fair value of the warrants | $ 428,200 | $ 428,200 | $ 428,200 | ||||||||||||||
Number of shares issued | 2,400 | 2,400 | |||||||||||||||
Amortization of debt discount | 689,100 | ||||||||||||||||
Loss on extinguishment of debt | $ 689,100 | ||||||||||||||||
Unamortized Debt Discount, ending balance | $ 1,378,200 | ||||||||||||||||
Convertible Promissory Note | |||||||||||||||||
LIABILITIES AND DEBT | |||||||||||||||||
Principal, beginning balance | 4,100,000 | 4,100,000 | 4,100,000 | ||||||||||||||
Unamortized Debt Discount, beginning balance | 1,378,200 | 1,378,200 | 1,378,200 | ||||||||||||||
Convertible Note Payable, Net beginning balance | $ 2,721,800 | $ 2,721,800 | 2,721,800 | ||||||||||||||
Amortization of debt discount | 689,100 | ||||||||||||||||
Loss on extinguishment of debt | 689,100 | ||||||||||||||||
Principal, ending balance | 4,100,000 | 100,000 | $ 4,100,000 | ||||||||||||||
Unamortized Debt Discount, ending balance | 1,378,200 | 1,378,200 | |||||||||||||||
Convertible Note Payable, Net ending balance | $ 2,721,800 | $ 100,000 | $ 2,721,800 | ||||||||||||||
July 22 notes | Securities purchase agreement | |||||||||||||||||
LIABILITIES AND DEBT | |||||||||||||||||
Exercise price of warrants | $ 380 | $ 380 | |||||||||||||||
July 28 notes | Securities purchase agreement | |||||||||||||||||
LIABILITIES AND DEBT | |||||||||||||||||
Exercise price of warrants | $ 282.50 | $ 282.50 |
LIABILITIES AND DEBT - Loan Pay
LIABILITIES AND DEBT - Loan Payable - PPP and SBA Loan (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Apr. 30, 2022 | Dec. 31, 2022 | Jun. 30, 2023 | Dec. 31, 2021 | |
H&J | ||||
LIABILITIES AND DEBT | ||||
Note payable - related party | $ 129,489 | $ 299,489 | ||
Aggregate of principal amount | 73,187 | $ 72,269 | ||
Proceeds from loan originations | $ 140,000 | |||
Interest rates of notes | 12% | |||
PPP Loan | Bailey LLC | ||||
LIABILITIES AND DEBT | ||||
Convertible Note Payable, Net | $ 933,295 | $ 933,295 | ||
1st PPP loan | Bailey LLC | ||||
LIABILITIES AND DEBT | ||||
Loan forgiveness amount | $ 413,705 | |||
2nd PPP loan | Bailey LLC | ||||
LIABILITIES AND DEBT | ||||
Loan forgiveness amount | $ 1,347,050 |
LIABILITIES AND DEBT- Merchant
LIABILITIES AND DEBT- Merchant Advances (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
LIABILITIES AND DEBT | ||
Exercise price per share | $ 95 | |
Merchant Advance from Shopify Capital | ||
LIABILITIES AND DEBT | ||
Secured Debt | $ 293,635 | |
Proceeds from debt | 502,051 | |
Repayments | 208,416 | |
Merchant Advances | ||
LIABILITIES AND DEBT | ||
Secured Debt | 257,110 | $ 896,334 |
Net proceeds | 1,692,748 | 1,335,360 |
Repayments of debt | $ 2,331,972 | $ 1,078,385 |
Warrants issued | 6,095 | |
Exercise price per share | $ 131.25 |
LIABILITIES AND DEBT - Promisso
LIABILITIES AND DEBT - Promissory Note Payable (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||
Jun. 21, 2023 $ / shares shares | Mar. 31, 2023 USD ($) $ / shares | Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2023 USD ($) shares | Jun. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Feb. 15, 2023 USD ($) | Apr. 30, 2021 USD ($) | Feb. 28, 2021 USD ($) | |
Debt Instrument | |||||||||||
Issue price per share | $ / shares | $ 4.20 | ||||||||||
Debt Discount Cost | $ 263,958 | ||||||||||
Net proceeds | 3,280,360 | $ 2,779,910 | |||||||||
Promissory note payable, net | $ 5,613,839 | $ 5,613,839 | 9,000,000 | 3,500,000 | |||||||
Common Stock | |||||||||||
Debt Instrument | |||||||||||
Shares issued to notes payable holders | shares | 350 | ||||||||||
Bailey LLC | |||||||||||
Debt Instrument | |||||||||||
Aggregate principal amount | $ 5,500,000 | ||||||||||
Promissory note, annual interest rate (as a percent) | 8% | ||||||||||
Securities purchase agreement | Series C convertible preferred stock | |||||||||||
Debt Instrument | |||||||||||
Shares issued to notes payable holders | shares | 5,761 | ||||||||||
Issue price per share | $ / shares | $ 1,000 | ||||||||||
Promissory note payable | |||||||||||
Debt Instrument | |||||||||||
Aggregate principal amount | 3,500,000 | $ 1,000,000 | |||||||||
Debt discount | $ 73,958 | ||||||||||
Promissory note payable | Secondary Public Offering | |||||||||||
Debt Instrument | |||||||||||
Percentage of outstanding principal | 10 | ||||||||||
Promissory note payable | Secondary Public Offering | Maximum | |||||||||||
Debt Instrument | |||||||||||
Aggregate principal amount | $ 4,000,000 | ||||||||||
Promissory note payable | Secondary Public Offering | Minimum | |||||||||||
Debt Instrument | |||||||||||
Aggregate principal amount | 2,000,000 | ||||||||||
Promissory note payable | Bailey LLC | |||||||||||
Debt Instrument | |||||||||||
Aggregate principal amount | 4,500,000 | ||||||||||
Promissory note payable | Notes Payable to Banks | |||||||||||
Debt Instrument | |||||||||||
Interest expense | $ 420,000 | 494,000 | |||||||||
Promissory note, annual interest rate (as a percent) | 12% | ||||||||||
PPP Loan | |||||||||||
Debt Instrument | |||||||||||
Aggregate principal amount | 203,994 | ||||||||||
PPP Loan | Bailey LLC | |||||||||||
Debt Instrument | |||||||||||
Aggregate principal amount | $ 204,000 | $ 407,994 | |||||||||
Bailey Note | |||||||||||
Debt Instrument | |||||||||||
Aggregate principal amount | 3,500,000 | $ 3,500,000 | $ 3,500,000 | ||||||||
Interest expense | 105,000 | $ 105,000 | 210,000 | $ 210,000 | |||||||
Promissory note payable, net | 3,500,000 | 3,500,000 | 3,500,000 | ||||||||
Sundry Note | |||||||||||
Debt Instrument | |||||||||||
Interest expense | 149,177 | 259,177 | |||||||||
Promissory note, annual interest rate (as a percent) | 8% | ||||||||||
Promissory note payable, net | 5,500,000 | 5,500,000 | $ 5,500,000 | ||||||||
Sundry Note | Securities purchase agreement | |||||||||||
Debt Instrument | |||||||||||
Cancellation of principal amount | 5,500,000 | ||||||||||
Accrued interest converted | 259,177 | ||||||||||
Sundry Note | Securities purchase agreement | Series C convertible preferred stock | |||||||||||
Debt Instrument | |||||||||||
Shares issued to notes payable holders | shares | 5,761 | ||||||||||
Issue price per share | $ / shares | $ 1,000 | ||||||||||
March 2023 Notes | |||||||||||
Debt Instrument | |||||||||||
Debt discount | $ 608,750 | $ 608,750 | |||||||||
Original issue discount | $ 608,750 | ||||||||||
Net proceeds | 1,850,000 | ||||||||||
Prepayment penalty | 0% | 0% | |||||||||
Percentage of notes to be repaid, if the Company completes a debt or equity financing of less than the threshold amount | $ 7,500,000 | ||||||||||
Percentage of notes to be repaid, if the Company completes a debt or equity financing of amount equal to or greater than the threshold amount | 100% | 100% | |||||||||
Penalty percentage on notes to be repaid, if the Company completes a debt or equity financing of amount equal to or greater than the threshold amount | 0% | 0% | |||||||||
Additional interest percentage | 0% | 0% | |||||||||
Original interest discount percentage | 20% | 20% | |||||||||
Amortization of debt discount | $ 263,839 | ||||||||||
Debt discount | $ (344,911) | (344,911) | |||||||||
Promissory note payable, net | $ 2,458,750 | $ 2,458,750 | $ 2,458,750 | ||||||||
Percentage of notes to be repaid, if the Company completes a debt or equity financing of less than the threshold amount | 50% | 50% |
STOCKHOLDERS' DEFICIT (Details)
STOCKHOLDERS' DEFICIT (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||||||||||||
Jun. 21, 2023 | May 30, 2023 | Jan. 11, 2023 | Nov. 29, 2022 | Nov. 16, 2021 | Jun. 28, 2021 | May 18, 2021 | May 13, 2021 | Mar. 31, 2023 | Jan. 31, 2023 | Sep. 30, 2022 | Dec. 31, 2021 | Nov. 30, 2021 | Jul. 31, 2021 | May 31, 2021 | Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Class of Stock | ||||||||||||||||||||
Number of shares issued | 30 | 50,890 | ||||||||||||||||||
Value of shares issued | $ 25,000 | $ 5,000,003 | ||||||||||||||||||
Stock issued (in shares) | 4,756 | |||||||||||||||||||
Stock issued | $ 499,338 | $ 499,338 | ||||||||||||||||||
Issue price (in dollars per share) | $ 4.20 | $ 4.20 | ||||||||||||||||||
Issuance of common stock pursuant to disposition | $ 1,357,043 | $ 1,357,043 | ||||||||||||||||||
Converted outstanding principal | $ 888,930 | |||||||||||||||||||
Percentage of affirmative votes required to remove directors from the Board | 66.3333% | |||||||||||||||||||
Reverse stock split approved | 1-for-15.625 | |||||||||||||||||||
voting rights | one vote per share | |||||||||||||||||||
Common stock issued pursuant to consulting agreement | $ 123,000 | $ 123,000 | $ 595,500 | |||||||||||||||||
Proceeds from issuance of common stock | 8,100,000 | |||||||||||||||||||
Net proceeds of after deducting underwriting discounts and commissions | 700,000 | |||||||||||||||||||
Direct offering expenses | 500,000 | |||||||||||||||||||
Exercise of warrants | 1,768,046 | |||||||||||||||||||
Deferred offering costs | $ 367,696 | 104,512 | 367,696 | |||||||||||||||||
Interest expense | $ 427,700 | $ 573,455 | $ 825,219 | |||||||||||||||||
Promissory note | ||||||||||||||||||||
Class of Stock | ||||||||||||||||||||
Number of shares issued | 4,400 | |||||||||||||||||||
Value of shares issued | $ 322,300 | |||||||||||||||||||
Common Stock | ||||||||||||||||||||
Class of Stock | ||||||||||||||||||||
Number of shares issued | 50,890 | |||||||||||||||||||
Value of shares issued | $ 5 | |||||||||||||||||||
Stock issued (in shares) | 4,756 | |||||||||||||||||||
Number of shares resulting from conversion | 350 | |||||||||||||||||||
Gross proceeds | $ 5,000,000 | |||||||||||||||||||
Net proceeds | $ 4,300,000 | |||||||||||||||||||
Issuance of common stock pursuant to disposition (in shares) | 78,103 | |||||||||||||||||||
Issuance of common stock pursuant to disposition | $ 8 | |||||||||||||||||||
Warrants were exercised | 142 | 13 | ||||||||||||||||||
Exercise of warrants | $ 1,622,350 | $ 145,696 | ||||||||||||||||||
Common stock issued pursuant to consulting agreement (in shares) | 30 | 97 | ||||||||||||||||||
Common Warrant | ||||||||||||||||||||
Class of Stock | ||||||||||||||||||||
Warrants issued | 19,000 | |||||||||||||||||||
Volume-Weighted Average | $ 97.875 | |||||||||||||||||||
Number of shares resulting from conversion | 32,086 | |||||||||||||||||||
Common Warrant | Common Stock | ||||||||||||||||||||
Class of Stock | ||||||||||||||||||||
Number of shares issued | 19,000 | |||||||||||||||||||
Pre-funded warrants | ||||||||||||||||||||
Class of Stock | ||||||||||||||||||||
Number of shares issued | 32,086 | |||||||||||||||||||
Warrants issued | 32,086 | |||||||||||||||||||
Volume-Weighted Average | $ 97.875 | |||||||||||||||||||
Number of shares resulting from conversion | 32,086 | |||||||||||||||||||
Securities purchase agreement | ||||||||||||||||||||
Class of Stock | ||||||||||||||||||||
Gross proceeds | $ 10,000,000 | |||||||||||||||||||
Securities purchase agreement | Common Stock | ||||||||||||||||||||
Class of Stock | ||||||||||||||||||||
Number of shares issued | 72,727 | |||||||||||||||||||
Warrants issued | 6,720 | |||||||||||||||||||
Proceeds from issuance of common stock | $ 9,000,000 | |||||||||||||||||||
Securities purchase agreement | Pre-funded warrants | ||||||||||||||||||||
Class of Stock | ||||||||||||||||||||
Warrants issued | 66,007 | |||||||||||||||||||
H&J Settlement Agreement | D.Jones (H&J Seller) | ||||||||||||||||||||
Class of Stock | ||||||||||||||||||||
Issuance of common stock pursuant to disposition (in shares) | 78,103 | 78,103 | ||||||||||||||||||
Issuance of common stock pursuant to disposition | $ 1,400,000 | $ 1,357,043 | ||||||||||||||||||
FirstFire | ||||||||||||||||||||
Class of Stock | ||||||||||||||||||||
Number of shares issued | 12 | |||||||||||||||||||
Oasis and FirstFire Notes | ||||||||||||||||||||
Class of Stock | ||||||||||||||||||||
Number of shares resulting from conversion | 79,807 | |||||||||||||||||||
Converted outstanding principal | $ 9,465,000 | |||||||||||||||||||
Private Placement | ||||||||||||||||||||
Class of Stock | ||||||||||||||||||||
Number of shares issued | 19,000 | |||||||||||||||||||
Aggregate amount issued to investor | $ 5,000,000 | |||||||||||||||||||
IPO | ||||||||||||||||||||
Class of Stock | ||||||||||||||||||||
Number of shares issued | 964 | 14,956 | ||||||||||||||||||
Issue price (in dollars per share) | $ 575 | |||||||||||||||||||
Warrants issued | 1,111 | |||||||||||||||||||
Converted outstanding principal | $ 2,680,289 | |||||||||||||||||||
Number of shares agreed to issued and sell | 14,956 | |||||||||||||||||||
Number of option days granted to purchase an additional shares | 45 days | |||||||||||||||||||
Gross proceeds from the offering | $ 9,300,000 | |||||||||||||||||||
Proceeds from issuance of common stock | $ 8,600,000 | |||||||||||||||||||
Maximum number of additional shares allowed to purchase within 45 option days | 2,243 | |||||||||||||||||||
Aggregate net proceeds | 8,600,000 | |||||||||||||||||||
Underwriting commissions | 800,000 | |||||||||||||||||||
Direct offering expenses | $ 600,000 | |||||||||||||||||||
Underwriting discounts and commissions | $ 800,000 | |||||||||||||||||||
Share issued price | $ 10,375 | $ 625 | ||||||||||||||||||
IPO | Common Stock | ||||||||||||||||||||
Class of Stock | ||||||||||||||||||||
Number of shares issued | 964 | |||||||||||||||||||
Issue price (in dollars per share) | $ 10,375 | |||||||||||||||||||
Number of shares resulting from conversion | 454 | |||||||||||||||||||
Over-allotment option | ||||||||||||||||||||
Class of Stock | ||||||||||||||||||||
Warrants issued | 145 | |||||||||||||||||||
Over-allotment option | Common Stock | ||||||||||||||||||||
Class of Stock | ||||||||||||||||||||
Number of shares issued | 145 | |||||||||||||||||||
Issue price (in dollars per share) | $ 10,375 | |||||||||||||||||||
Aggregate net proceeds | $ 1,400,000 | |||||||||||||||||||
Underwriting discounts and commissions | $ 100,000 | |||||||||||||||||||
Consulting agreement | ||||||||||||||||||||
Class of Stock | ||||||||||||||||||||
Number of shares issued | 20 | |||||||||||||||||||
Value of shares issued | $ 60 | |||||||||||||||||||
Guaranteed equity value of shares issued | $ 250,000 | |||||||||||||||||||
Issued upon settlement of contingent liability | 17 |
STOCKHOLDERS' DEFICIT - Series
STOCKHOLDERS' DEFICIT - Series B Preferred Stock (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
May 30, 2023 | Sep. 30, 2022 | Mar. 31, 2023 | Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Class of Stock | ||||||
Number of shares issued | 30 | 50,890 | ||||
Value of shares issued | $ 25,000 | $ 5,000,003 | ||||
Common stock par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Consideration upon redemption | $ 25,000 | |||||
Series A preferred stock | ||||||
Class of Stock | ||||||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||
Series B Preferred Stock | ||||||
Class of Stock | ||||||
Preferred stock, par value (in dollars per share) | $ 0.0001 | |||||
Number of votes per share | 250,000,000 | |||||
Series B Preferred Stock | Subscription Agreement | John Hilburn Davis IV | ||||||
Class of Stock | ||||||
Preferred stock, par value (in dollars per share) | $ 0.0001 |
STOCKHOLDERS' DEFICIT - Serie_2
STOCKHOLDERS' DEFICIT - Series C Convertible Preferred Stock (Details) - USD ($) | Jun. 21, 2023 | Jun. 20, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 |
Class of Stock | |||||
Issue price (in dollars per share) | $ 4.20 | ||||
Series C convertible preferred stock | |||||
Class of Stock | |||||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | |||
Redemption percentage | 112% | ||||
Series C convertible preferred stock | Securities purchase agreement | |||||
Class of Stock | |||||
Number of shares resulting from conversion | 5,761 | ||||
Preferred stock, par value (in dollars per share) | $ 0.0001 | ||||
Issue price (in dollars per share) | $ 1,000 | ||||
Convertible preferred stock value | $ 1,000 | ||||
Conversion price (in dollars per share) | $ 17.925 | ||||
Number of trading days | 5 days | 5 days |
RELATED PARTY TRANSACTIONS - (D
RELATED PARTY TRANSACTIONS - (Details) - USD ($) | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 10, 2022 | |
RELATED PARTY TRANSACTIONS | ||||
Repayments from related parties | $ 57,427 | $ 172,036 | ||
Due to related parties | $ 472,790 | $ 556,225 | ||
John Hilburn Davis IV | ||||
RELATED PARTY TRANSACTIONS | ||||
Additional stock compensation expense | 233,184 | |||
Interest rate | 12% | |||
Notes Payable, Other Payables | ||||
RELATED PARTY TRANSACTIONS | ||||
Interest rate | 0% | |||
Notes Payable, Other Payables | H&J | ||||
RELATED PARTY TRANSACTIONS | ||||
Aggregate principal amount | $ 129,489 |
SHARE-BASED PAYMENTS - Common S
SHARE-BASED PAYMENTS - Common Stock Warrants - General Information (Details) - USD ($) | 1 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||
May 10, 2022 | May 13, 2021 | Jul. 31, 2021 | May 31, 2021 | Apr. 30, 2021 | Jun. 30, 2023 | Sep. 30, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Jan. 11, 2023 | Nov. 29, 2022 | Dec. 31, 2020 | |
SHARE-BASED PAYMENTS | ||||||||||||
Exercise price per share | $ 95 | |||||||||||
Aggregate shares of stock options granted | 51,086 | 1,093 | ||||||||||
Option outstanding exercise price (in dollars per share) | $ 362.11 | $ 362.11 | $ 9,053 | $ 5,850 | ||||||||
Option outstanding exercise price | $ 362.11 | $ 362.11 | $ 9,053 | $ 5,850 | ||||||||
Weighted average duration (Years) | 5 years | 7 years | ||||||||||
Class of warrant or right, warrants issued | 142 | 13 | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 51,086 | 1,093 | ||||||||||
Warrants value | $ 1,622,350 | $ 145,696 | ||||||||||
IPO | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Warrants issued | 1,111 | |||||||||||
Over-Allotment Option [Member] | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Warrants issued | 145 | |||||||||||
July 22 notes | Securities purchase agreement | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Exercise price per share | $ 380 | |||||||||||
July 28 notes | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Warrants issued | 1,106 | |||||||||||
July 28 notes | Securities purchase agreement | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Exercise price per share | $ 282.50 | |||||||||||
Underwriters Warrants | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Warrants issued | 598 | |||||||||||
Exercise price per share | $ 812.50 | |||||||||||
Percentage of initial exercise price representing the public offering price | 130% | |||||||||||
Pre-funded warrants | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Warrants issued | 32,086 | |||||||||||
Aggregate shares of stock options granted | 32,086 | 66,007 | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 32,086 | 66,007 | ||||||||||
Pre-funded warrants | Securities purchase agreement | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Warrants issued | 66,007 | |||||||||||
Class B Warrants | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Aggregate shares of stock options granted | 72,727 | |||||||||||
Option outstanding exercise price (in dollars per share) | $ 131.25 | |||||||||||
Option outstanding exercise price | $ 131.25 | |||||||||||
Weighted average duration (Years) | 5 years | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 72,727 | |||||||||||
Class C Warrants | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Aggregate shares of stock options granted | 72,727 | |||||||||||
Option outstanding exercise price (in dollars per share) | $ 131.25 | |||||||||||
Option outstanding exercise price | $ 131.25 | |||||||||||
Weighted average duration (Years) | 13 months | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 72,727 | |||||||||||
Placement Agent Warrant | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Exercise price per share | $ 3,050.35 | $ 172 | ||||||||||
Aggregate shares of stock options granted | 3,831 | 5,455 | ||||||||||
Weighted average duration (Years) | 5 years | 5 years | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 3,831 | 5,455 | ||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercisable Contractual Term | 180 days | |||||||||||
Aggregate Warrant | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Warrants issued | 6,095 | 18,779 | ||||||||||
Exercise price of additional units | $ 131.25 | $ 106.50 | ||||||||||
Warrant to purchase common stock fair value | $ 164,200 | |||||||||||
Merchant Cash Advance | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Warrants issued | 1,760 | |||||||||||
Exercise price of additional units | $ 125 | |||||||||||
Common stock | July 22 notes | Securities purchase agreement | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Warrants issued | 1,645 | |||||||||||
Common stock warrants | IPO | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Exercise price per share | $ 12,975 | $ 11,425 | ||||||||||
Class of warrant or right, warrants issued | 48 | 964 | ||||||||||
Percentage of warrants exercise price | 110% | |||||||||||
Warrants expiration term | 5 years | 5 years | ||||||||||
Common stock warrants | Over-Allotment Option [Member] | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Class of warrant or right, warrants issued | 145 | |||||||||||
Common stock warrants | April notes | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Warrants issued | 503 | |||||||||||
Exercise price per share | $ 3,050 | |||||||||||
Common Stock Warrants, Venture Debt Lender | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Exercise price per share | $ 10,375 | |||||||||||
Class of warrant or right, warrants issued | 48 |
SHARE-BASED PAYMENTS - Warrants
SHARE-BASED PAYMENTS - Warrants Roll Forward (Details) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2023 $ / shares shares | Dec. 31, 2022 $ / shares shares | Dec. 31, 2021 $ / shares shares | |
SHARE-BASED PAYMENTS | |||
Debt Instrument, Convertible, Conversion Ratio | 39,075 | ||
Common stock warrants | |||
SHARE-BASED PAYMENTS | |||
Warrant Outstanding Beginning Balance | shares | 176,733 | 1,432 | 366 |
Granted | shares | 93,099 | 241,308 | 1,205 |
Conversion of stock warrants upon IPO | shares | 21 | ||
Exercised | shares | (32,086) | (66,007) | (155) |
Forfeited | shares | (4) | ||
Warrant Outstanding Ending Balance | shares | 237,746 | 176,733 | 1,432 |
Common Stock Warrants Exercisable | shares | 237,745 | 171,278 | 1,432 |
Weighted Average Exercise Price Outstanding Beginning Balance | $ 209 | $ 10,300 | $ 6,650 |
Granted | 99.50 | 140.36 | $ 11,450 |
Conversion of stock warrants upon IPO | 19,150 | ||
Weighted Average Exercise Price Outstanding Ending Balance | 181.25 | 209 | $ 10,300 |
Weighted Average Exercise Price Exercisable | 181.25 | 210.50 | |
Exercised | 97.88 | 131.25 | 11,425 |
Forfeited | 19,150 | ||
Weighted Average Exercise Price Outstanding Beginning Balance | $ 181.25 | $ 209 | $ 10,300 |
SHARE-BASED PAYMENTS - Stock Op
SHARE-BASED PAYMENTS - Stock Options - Activity (Details) - $ / shares | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
SHARE-BASED PAYMENTS | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Beginning Balance | 1,558 | 1,558 | 485 |
Granted | 51,086 | 1,093 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance | 1,558 | 1,558 | 1,558 |
SHARE-BASED PAYMENTS | |||
Granted | $ 10,375 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Ending Balance | $ 362.11 | $ 362.11 | $ 9,053 |
SHARE-BASED PAYMENTS | |||
Share-based Compensation Arrangement by Share-based Option Exercisable | 1,439 | 1,389 | 1,266 |
Share-based Compensation Arrangement by Weighted Average Exercise Price at December 31, 2021 | $ 10,125 | $ 8,975 |
SHARE-BASED PAYMENTS - Stock-ba
SHARE-BASED PAYMENTS - Stock-based Compensation - Stock options granted (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
SHARE-BASED PAYMENTS | ||||||
Total grant-date fair value of the options granted | $ 4,696,605 | |||||
Stock-based compensation expense | $ 101,500 | $ 119,759 | $ 207,094 | $ 258,852 | ||
Unrecognized compensation cost related to non-vested stock option | 370,907 | $ 370,907 | $ 577,999 | |||
Share-based arrangement, non-vested weighted average period | 10 months 24 days | 1 year 6 months 21 days | ||||
Sales and marketing expense | ||||||
SHARE-BASED PAYMENTS | ||||||
Stock-based compensation expense | $ 28,798 | $ 28,798 | $ 57,596 | $ 551,948 | ||
General and administrative expenses | ||||||
SHARE-BASED PAYMENTS | ||||||
Stock-based compensation expense | $ 421,442 | $ 3,325,897 |
LEASE OBLIGATIONS (Details)
LEASE OBLIGATIONS (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
May 31, 2023 | Jan. 31, 2023 | Apr. 30, 2021 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Operating lease agreements | |||||||||
Rent expense | $ 17,257 | $ 37,580 | $ 195,060 | $ 210,265 | $ 469,482 | $ 945,216 | $ 816,790 | ||
Right of use asset | 339,085 | 339,085 | 102,349 | ||||||
Security deposit | 19,500 | ||||||||
Corporate office and distribution center | |||||||||
Operating lease agreements | |||||||||
Rent expense | $ 38,105 | ||||||||
Right of use asset | $ 467,738 | ||||||||
Discount rate | 8% | ||||||||
Operating lease accounts payable past rent due to landlord | 949,071 | 949,071 | |||||||
Showroom Space | |||||||||
Operating lease agreements | |||||||||
Rent expense | $ 6,520 | ||||||||
Right of use asset | $ 125,397 | ||||||||
Discount rate | 8% | ||||||||
Operating lease accounts payable past rent due to landlord | $ 214,626 | $ 214,626 | |||||||
Base rent increases | $ 6,781 | ||||||||
Accounting Standards Update 2016-02 | |||||||||
Operating lease agreements | |||||||||
Right of use asset | $ 250,244 | ||||||||
Discount rate | 6% | ||||||||
Stateside | |||||||||
Operating lease agreements | |||||||||
Maximum Rent base | 9,000 | ||||||||
Minimum Rent base | $ 3,100 |
CONTINGENCIES (Details)
CONTINGENCIES (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||||||||
May 30, 2023 USD ($) | May 16, 2023 | Mar. 21, 2023 USD ($) | Feb. 07, 2023 USD ($) | May 18, 2022 USD ($) | May 18, 2021 USD ($) | Dec. 21, 2020 USD ($) | Sep. 24, 2020 USD ($) | Mar. 31, 2021 USD ($) item | Aug. 31, 2020 USD ($) item | Mar. 31, 2023 USD ($) | Jun. 30, 2023 USD ($) | Nov. 09, 2023 USD ($) | Nov. 09, 2022 USD ($) | |
Litigation Matters | ||||||||||||||
Settlement amount payable to vendor | $ 50,190 | $ 50,190 | ||||||||||||
Claims settled after signing long-term lease | $ 450,968 | |||||||||||||
Trading day immediately preceding period | 30 days | |||||||||||||
Gross proceeds from common stock indemnification claims | $ 9,100,000 | |||||||||||||
Value of shares issued | $ 25,000 | $ 5,000,003 | ||||||||||||
Common Stock | ||||||||||||||
Litigation Matters | ||||||||||||||
Value of shares issued | $ 5 | |||||||||||||
H&J Purchase Agreement | ||||||||||||||
Litigation Matters | ||||||||||||||
Trading day immediately preceding period | 30 days | |||||||||||||
Gross proceeds from common stock indemnification claims | $ 9,100,000 | |||||||||||||
Transfer of membership interests | 229,000 | |||||||||||||
Value of shares issued | $ 1,400,000 | |||||||||||||
H&J Purchase Agreement | Common Stock | Subsequent events | ||||||||||||||
Litigation Matters | ||||||||||||||
Trading day immediately preceding period | 5 days | |||||||||||||
Lawsuits filed related to prior services rendered | ||||||||||||||
Litigation Matters | ||||||||||||||
Damages sought | $ 100,000 | $ 96,900 | $ 96,900 | |||||||||||
Number of lawsuit settled | item | 2 | 2 | ||||||||||||
lawsuit against Bailey 44 related to a retail store lease | ||||||||||||||
Litigation Matters | ||||||||||||||
Damages sought | $ 1,500,000 | $ 1,500,000 | ||||||||||||
Non-payment of trade payables | ||||||||||||||
Litigation Matters | ||||||||||||||
Damages sought | $ 43,501 | $ 182,400 | ||||||||||||
Non-payment of trade payables | Subsequent events | ||||||||||||||
Litigation Matters | ||||||||||||||
Damages sought | $ 43,501 | $ 182,400 | ||||||||||||
Non-payment of trade payables | Lawsuits filed related to prior services rendered | ||||||||||||||
Litigation Matters | ||||||||||||||
Damages sought | 481,000 | |||||||||||||
Additional damages sought | $ 296,000 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) | Aug. 21, 2023 | Oct. 21, 2022 | May 18, 2021 | May 12, 2021 |
SUBSEQUENT EVENTS | ||||
Reverse stock split conversion ratio | 0.01 | 1 | 0.064 | |
Subsequent events | ||||
SUBSEQUENT EVENTS | ||||
Reverse stock split conversion ratio | 0.04 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | |||
Cash and cash equivalents | $ 335,470 | $ 1,275,616 | $ 515,796 |
Accounts receivable, net | 196,919 | 583,368 | 67,384 |
Due from factor, net | 438,142 | 839,400 | 985,288 |
Inventory | 4,771,271 | 5,122,564 | 2,660,203 |
Prepaid expenses and other current assets | 872,142 | 766,901 | 288,474 |
Total current assets | 6,613,944 | 8,829,394 | 4,776,334 |
Deferred offering costs | 104,512 | 367,696 | |
Property, equipment and software, net | 98,170 | 104,512 | 69,367 |
Goodwill | 8,973,501 | 10,103,812 | 8,583,274 |
Intangible assets, net | 11,421,311 | 12,906,238 | 9,263,131 |
Deposits | 106,547 | 193,926 | 133,378 |
Right of use asset, net | 339,085 | 102,349 | |
Total assets | 27,552,558 | 33,738,056 | 36,485,224 |
Current liabilities: | |||
Accounts payable | 8,143,991 | 8,016,173 | 6,507,709 |
Accrued expenses and other liabilities | 5,038,937 | 3,936,920 | 2,078,087 |
Due to related parties | 472,790 | 555,217 | 256,274 |
Contingent consideration liability | 12,098,475 | 12,179,476 | |
Convertible note payable, net | 100,000 | 2,721,800 | 100,000 |
Accrued interest payable | 1,779,274 | 1,561,795 | 1,110,679 |
Venture debt, net of discount | 6,001,755 | ||
Loan payable, current | 1,190,405 | 1,829,629 | 2,279,768 |
Promissory note payable | 5,613,839 | 9,000,000 | 3,500,000 |
Right of use liability, current portion | 312,226 | 40,893,791 | |
Total current liabilities | 22,651,462 | 40,893,792 | 35,047,266 |
Convertible note payable, net | 150,000 | 5,723,846 | |
Loans payable, net of current portion | 443,635 | 150,000 | 342,050 |
Derivative liability | 0 | 2,294,720 | |
Warrant liability | 18,223 | ||
Total liabilities | 23,128,598 | 41,191,230 | 43,575,005 |
Commitments and contingencies | |||
Stockholders' deficit: | |||
Additional paid-in capital | 96,294,123 | 58,614,160 | |
Accumulated deficit | (104,839,404) | (103,747,316) | (65,703,954) |
Total stockholders' deficit | 4,423,960 | (7,453,174) | (7,089,781) |
Total liabilities and stockholders' deficit | 27,552,558 | 33,738,056 | 36,485,224 |
Undesignated preferred stock | |||
Stockholders' deficit: | |||
Preferred stock | |||
Series A preferred stock | |||
Stockholders' deficit: | |||
Preferred stock | |||
Series A Convertible Preferred Stock | |||
Stockholders' deficit: | |||
Preferred stock | 1 | 1 | |
Common stock | |||
Stockholders' deficit: | |||
Common stock, $0.0001 par, 1,000,000,000 shares authorized, 4,468,939 and 130,018 shares issued and outstanding as of December 31, 2022 and 2021, respectively | 31 | 18 | $ 13 |
Additional paid-in capital | $ 109,263,332 | $ 96,294,123 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Common stock par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Common stock, share authorized (in shares) | 1,000,000,000 | 1,000,000,000 | 1,000,000,000 |
Common stock, share issued (in shares) | 316,906 | 178,758 | 5,201 |
Common stock, shares outstanding (in shares) | 316,906 | 178,758 | 5,201 |
Undesignated preferred stock | |||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 | 0 |
Series A preferred stock | |||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 1 | 1 | 1 |
Preferred stock, shares issued (in shares) | 0 | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 | 0 |
Series A Convertible Preferred Stock | |||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 6,800 | 6,800 | 0 |
Preferred stock, shares issued (in shares) | 6,300 | 6,300 | |
Preferred stock, shares outstanding (in shares) | 6,300 | 6,300 | 0 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
Net revenues | $ 4,493,424 | $ 2,649,432 | $ 8,869,803 | $ 5,278,562 | $ 10,333,558 | $ 5,764,963 | ||
Cost of net revenues | 2,157,349 | 1,536,703 | 4,540,488 | 3,552,396 | 6,789,314 | 3,828,496 | ||
Gross profit | 2,336,075 | 1,112,729 | 4,329,315 | 1,726,166 | 3,544,244 | 1,936,467 | ||
Operating expenses: | ||||||||
General and administrative | 4,074,051 | 4,243,031 | 8,380,063 | 8,073,621 | 14,067,681 | 16,149,510 | ||
Sales and marketing | 1,097,326 | 1,372,568 | 2,036,677 | 2,230,087 | 4,018,985 | 3,269,710 | ||
Distribution | 242,214 | 221,925 | 512,399 | 424,773 | 611,569 | 489,371 | ||
Impairment | 5,503,095 | 3,400,000 | ||||||
Gain in the change in fair value of contingent consideration | (10,698,475) | 5,920,919 | (10,698,475) | 7,121,240 | 564,303 | 8,764,460 | ||
Total operating expenses | (5,284,884) | 11,758,443 | 230,664 | 17,849,721 | 24,765,633 | 32,073,050 | ||
Income (loss) from operations | 7,620,959 | (10,645,714) | 4,098,651 | (16,123,555) | (21,221,389) | (30,136,583) | ||
Other income (expense): | ||||||||
Interest expense | (1,086,889) | (2,173,769) | (2,951,487) | (3,730,612) | (8,961,410) | (3,619,093) | ||
Other non-operating income (expenses) | 2,240 | 3,336,963 | (676,749) | 2,653,375 | 3,068,080 | 1,321,472 | ||
Total other income (expense), net | (1,084,649) | 1,163,194 | (3,628,236) | (1,077,237) | (5,893,330) | (2,297,621) | ||
Income tax benefit (provision) | 1,100,120 | |||||||
Net income (loss) | $ 5,044,260 | $ (6,136,349) | $ (9,533,924) | $ (7,832,942) | $ (1,092,088) | $ (17,366,866) | $ (38,043,362) | $ (32,357,957) |
Weighted average common shares outstanding - basic | 246,809 | 14,329 | 236,824 | 9,836 | 30,852 | 3,052 | ||
Weighted average common shares outstanding - diluted | 834,604 | 14,329 | 824,619 | 9,836 | 30,852 | 3,052 | ||
Net loss per common share - basic | $ 26.48 | $ (661.78) | $ 1.99 | $ (1,748.68) | $ (878.87) | $ (10,268.22) | ||
Net loss per common share - diluted | $ 7.83 | $ (661.78) | $ 0.57 | $ (1,748.68) | $ (878.87) | $ (10,268.22) |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - USD ($) | Preferred Stock Series Seed Preferred Stock [Member] | Preferred Stock Series A Preferred Stock [Member] | Preferred Stock Series A2 Convertible Preferred Stock [Member] | Preferred Stock Series A3 Convertible Preferred Stock [Member] | Preferred Stock Series CF Convertible Preferred Stock [Member] | Preferred Stock Series B Preferred Stock [Member] | Preferred Stock Series A Convertible Preferred Stock [Member] | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Beginning balance (in shares) at Dec. 31, 2020 | 20,714,518 | 5,654,072 | 5,932,742 | 9,032,330 | 836,331 | 20,754,717 | 266 | ||||
Beginning balance at Dec. 31, 2020 | $ 2,071 | $ 565 | $ 593 | $ 904 | $ 83 | $ 2,075 | $ 0 | $ 0 | $ 27,482,061 | $ (33,345,997) | $ (5,857,645) |
Conversion of preferred stock into common stock | $ (2,071) | $ (565) | $ (593) | $ (904) | $ (83) | $ (2,075) | 6,291 | 6,291 | |||
Conversion of preferred stock into common stock (shares) | (20,714,518) | (5,654,072) | (5,932,742) | (9,032,330) | (836,331) | (20,754,717) | 1,611 | ||||
Issuance of common stock in public offering | 10,000,002 | 10,000,002 | |||||||||
Issuance of common stock in public offering (in shares) | 964 | ||||||||||
Offering costs | (2,116,957) | (2,116,957) | |||||||||
Exercise of over-allotment option, net of offering costs | 1,364,997 | 1,364,997 | |||||||||
Exercise of over-allotment option, net of offering costs (in shares) | 145 | ||||||||||
Conversion of debt into common stock | 2,680,289 | 2,680,289 | |||||||||
Conversion of debt into common stock (In shares) | 454 | ||||||||||
Conversion of related party notes and payables into common stock | 257,515 | 257,515 | |||||||||
Conversion of related party notes and payables into common stock (in shares) | 61 | ||||||||||
Common stock issued in connection with business combination | 11,428,738 | 11,428,738 | |||||||||
Common stock issued in connection with business combination (in shares) | 1,318 | ||||||||||
Exercise of warrants | 1,768,046 | 1,768,046 | |||||||||
Exercise of warrants (in shares) | 155 | ||||||||||
Common stock issued pursuant to consulting agreement | 595,500 | 595,500 | |||||||||
Common stock issued pursuant to consulting agreement (in shares) | 97 | ||||||||||
Issuance of common stock pursuant to equity line of credit | 367,696 | 367,696 | |||||||||
Issuance of common stock pursuant to equity line of credit (in shares) | 51 | ||||||||||
Common stock and warrants issued in connection with notes | 501,658 | 501,658 | |||||||||
Common stock and warrants issued in connection with notes (in shares) | 52 | ||||||||||
Stock-based compensation | 4,278,337 | 4,278,337 | |||||||||
Stock-based compensation (Shares) | 29 | ||||||||||
Net loss | (32,357,957) | (32,357,957) | |||||||||
Ending balance at Dec. 31, 2021 | $ 0 | 58,614,173 | (65,703,954) | (7,089,781) | |||||||
Ending balance (in shares) at Dec. 31, 2021 | 521 | ||||||||||
Stock-based compensation | 139,093 | 139,093 | |||||||||
Net loss | (7,832,942) | (7,832,942) | |||||||||
Ending balance at Mar. 31, 2022 | $ 0 | 59,954,848 | (73,536,896) | (13,582,048) | |||||||
Ending balance (in shares) at Mar. 31, 2022 | 870 | ||||||||||
Beginning balance (in shares) at Dec. 31, 2021 | 521 | ||||||||||
Beginning balance at Dec. 31, 2021 | $ 0 | 58,614,173 | (65,703,954) | (7,089,781) | |||||||
Conversion of debt into common stock | 1,802,372 | ||||||||||
Net loss | (17,366,866) | ||||||||||
Ending balance at Jun. 30, 2022 | $ 2 | 68,190,600 | (83,070,820) | (14,880,218) | |||||||
Ending balance (in shares) at Jun. 30, 2022 | 16,470 | ||||||||||
Beginning balance (in shares) at Dec. 31, 2021 | 521 | ||||||||||
Beginning balance at Dec. 31, 2021 | $ 0 | 58,614,173 | (65,703,954) | (7,089,781) | |||||||
Issuance of common stock in public offering | $ 1 | 9,347,449 | 9,347,450 | ||||||||
Issuance of common stock in public offering (in shares) | 14,956 | ||||||||||
Issuance of common stock and exercise of pre-funded warrants in public offering (in shares) | 72,727 | ||||||||||
Issuance of common stock and exercise of pre-funded warrants in public offering | $ 7 | 9,999,989 | 9,999,996 | ||||||||
Offering costs | (2,921,646) | (2,921,646) | |||||||||
Conversion of debt into common stock | 11,983,389 | ||||||||||
Common stock issued in connection with business combination | 1,000,000 | 1,000,000 | |||||||||
Common stock issued in connection with business combination (in shares) | 3,636 | ||||||||||
Common stock issued pursuant to consulting agreement | 123,000 | 123,000 | |||||||||
Common stock issued pursuant to consulting agreement (in shares) | 30 | ||||||||||
Stock-based compensation | 479,038 | 479,038 | |||||||||
Net loss | (38,043,362) | (38,043,362) | |||||||||
Conversion of notes and derivative liability into common stock | $ 8 | 11,983,381 | 11,983,389 | ||||||||
Conversion of notes and derivative liability into common stock (in shares) | 79,807 | ||||||||||
Warrant and common shares issued with notes | 1,368,741 | 1,368,741 | |||||||||
Warrant and common shares issued with notes (in shares) | 2,400 | ||||||||||
Conversion of venture debt into Series A convertible preferred stock | $ 1 | 6,299,999 | 6,300,000 | ||||||||
Conversion of venture debt into Series A convertible preferred stock (in shares) | 6,300 | ||||||||||
Ending balance at Dec. 31, 2022 | $ 1 | $ 18 | 96,294,123 | (103,747,316) | (7,453,174) | ||||||
Ending balance (in shares) at Dec. 31, 2022 | 6,300 | 178,758 | |||||||||
Beginning balance (in shares) at Mar. 31, 2022 | 870 | ||||||||||
Beginning balance at Mar. 31, 2022 | $ 0 | 59,954,848 | (73,536,896) | (13,582,048) | |||||||
Issuance of common stock in public offering | $ 1 | 9,347,449 | 9,347,450 | ||||||||
Issuance of common stock in public offering (in shares) | 14,956 | ||||||||||
Offering costs | (1,930,486) | (1,930,486) | |||||||||
Common stock and warrants issued in connection with notes | 98,241 | 98,241 | |||||||||
Stock-based compensation | 119,759 | 119,759 | |||||||||
Net loss | (9,533,924) | (9,533,924) | |||||||||
Conversion of notes and derivative liability into common stock | 600,790 | 600,790 | |||||||||
Conversion of notes and derivative liability into common stock (in shares) | 644 | ||||||||||
Ending balance at Jun. 30, 2022 | $ 2 | 68,190,600 | (83,070,820) | (14,880,218) | |||||||
Ending balance (in shares) at Jun. 30, 2022 | 16,470 | ||||||||||
Beginning balance (in shares) at Dec. 31, 2022 | 6,300 | 178,758 | |||||||||
Beginning balance at Dec. 31, 2022 | $ 1 | $ 18 | 96,294,123 | (103,747,316) | (7,453,174) | ||||||
Offering costs | (536,927) | (536,927) | |||||||||
Stock-based compensation | 105,594 | 105,594 | |||||||||
Net loss | (6,136,349) | (6,136,349) | |||||||||
Ending balance at Mar. 31, 2023 | $ 1 | $ 23 | 102,020,620 | (109,883,665) | (7,863,022) | ||||||
Ending balance (in shares) at Mar. 31, 2023 | 6,300 | 238,803 | |||||||||
Beginning balance (in shares) at Dec. 31, 2022 | 6,300 | 178,758 | |||||||||
Beginning balance at Dec. 31, 2022 | $ 1 | $ 18 | 96,294,123 | (103,747,316) | (7,453,174) | ||||||
Net loss | (1,092,088) | ||||||||||
Ending balance at Jun. 30, 2023 | $ 1 | $ 31 | 109,263,332 | (104,839,404) | 4,423,960 | ||||||
Ending balance (in shares) at Jun. 30, 2023 | 1 | 6,300 | 316,906 | ||||||||
Beginning balance (in shares) at Mar. 31, 2023 | 6,300 | 238,803 | |||||||||
Beginning balance at Mar. 31, 2023 | $ 1 | $ 23 | 102,020,620 | (109,883,665) | (7,863,022) | ||||||
Stock-based compensation | 101,500 | 101,500 | |||||||||
Net loss | 5,044,260 | 5,044,260 | |||||||||
Ending balance at Jun. 30, 2023 | $ 1 | $ 31 | $ 109,263,332 | $ (104,839,404) | $ 4,423,960 | ||||||
Ending balance (in shares) at Jun. 30, 2023 | 1 | 6,300 | 316,906 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS | 12 Months Ended | |
Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Cash flows from operating activities: | ||
Net loss | $ (38,043,362) | $ (32,357,957) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 1,653,819 | 862,888 |
Amortization of loan discount and fees | 6,506,384 | 1,382,222 |
Stock-based compensation | 602,038 | 4,800,337 |
Fees incurred in connection with debt financings | 568,149 | 560,309 |
Change in fair value of warrant liability | (18,223) | 11,958 |
Change in fair value of derivative liability | (1,354,434) | (910,204) |
Gain in the change in fair value of contingent consideration | 564,303 | 8,764,460 |
Impairment of goodwill and intangible assets | 5,503,095 | 3,400,000 |
Forgiveness of Payroll Protection Program | (1,760,755) | (407,994) |
Change in credit reserve | (118,840) | 36,893 |
Deferred offering costs | 367,696 | |
Loss from discontinued operations, net of tax | 10,928,643 | 1,023,873 |
Deferred offering costs | 104,512 | 367,696 |
Deferred income tax benefit | (1,100,120) | |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (452,030) | 150,288 |
Due from factor, net | 655,708 | (399,701) |
Inventory | 479,394 | (911,293) |
Prepaid expenses and other current assets | (445,798) | (151,917) |
Accounts payable | 892,120 | 456,690 |
Accrued expenses and other liabilities | 1,631,512 | 834,489 |
Deferred revenue | 4,882 | |
Due to related parties | 298,943 | (63,550) |
Accrued interest | 984,358 | 461,113 |
Assets and liabilities of discontinued operations | (210,426) | (678,623) |
Net cash used in operating activities | (10,767,706) | (14,230,957) |
Cash flows from investing activities: | ||
Cash acquired (consideration) pursuant to business combination | (7,247,303) | (5,936,757) |
Net cash provided by (used in) investing activities | (7,369,137) | (6,011,053) |
Cash flows from financing activities: | ||
Advances (repayments) from factor | (3,096) | (41,200) |
Repayment of contingent consideration | (645,304) | |
Proceeds from venture debt | 237,500 | |
Repayments of convertible notes and loans payable | (7,350,276) | (2,006,628) |
Issuance of convertible notes payable | 3,280,360 | 2,779,910 |
Proceeds from public offering | 19,347,446 | 10,000,002 |
Proceeds from Issuance Initial Public Offering | 19,347,446 | 10,000,002 |
Exercise of over-allotment option with public offering, net | (1,364,997) | |
Exercise of warrants | 1,768,046 | |
Offering costs | (2,921,216) | (2,116,957) |
Net cash provided by financing activities | 18,896,664 | 20,181,820 |
Net change in cash and cash equivalents | 759,820 | (60,190) |
Cash and cash equivalents at beginning of period | 515,796 | 575,986 |
Cash and cash equivalents at end of period | 1,275,616 | 515,796 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 734,869 | 902,089 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Conversion of notes into common stock | 11,983,389 | 2,680,289 |
Warrant and common shares issued with notes | 1,368,741 | |
Derivative liability in connection with convertible note | 559,957 | 3,204,924 |
Conversion of venture debt into preferred stock | $ 6,300,000 | |
Conversion of related party notes and payables into preferred and common stock | 257,515 | |
Conversion of preferred stock into common stock | 6,291 | |
Conversion of contingent consideration into common stock | 73,500 | |
Common shares issued pursuant to equity line of credit | $ 367,696 |
NATURE OF OPERATIONS_2
NATURE OF OPERATIONS | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
NATURE OF OPERATIONS | ||
NATURE OF OPERATIONS | NOTE 1: NATURE OF OPERATIONS Digital Brands Group, 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). The Company is a curated collection of lifestyle brands, including Bailey, DSTLD, Harper & Jones, Stateside and ACE Studios, that offers a variety of apparel products through direct-to-consumer and wholesale distribution. 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, LLC became a wholly owned subsidiary of the Company. 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. On August 30, 2021, the Company closed its acquisition of Mosbest, LLC dba Stateside (“Stateside”) pursuant to its Membership Interest Purchase Agreement with Moise Emquies to purchase 100% of the issued and outstanding equity of Stateside. On the acquisition date, Stateside became a wholly owned subsidiary of the Company. On December 30, 2022, the Company closed its previously announced acquisition of Sunnyside, LLC dba Sundry (“Sundry”) pursuant to its Second Amended and Restated Membership Interest Purchase Agreement with Moise Emquies to purchase 100% of the issued and outstanding equity of Sundry. On the acquisition date, Sundry became a wholly owned subsidiary of the Company. On June 21, 2023, the Company and the former owners of H&J executed a Settlement Agreement and Release (the “Settlement Agreement”) whereby contemporaneously with the parties’ execution of the Settlement Agreement (i) the Company agreed to make an aggregate cash payment of $229,000 to D. Jones Tailored Collection, Ltd. (“D. Jones”), (ii) the Company issued 78,103 shares of common stock to D. Jones, and (iii) the Company assigned and transferred one hundred percent (100%) of the Company’s membership interest in H&J to D. Jones. The H&J Settlement was accounted for a business disposition. | NOTE 1: NATURE OF OPERATIONS Digital Brands Group, 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 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. On August 30, 2021, the Company closed its acquisition of Mosbest, LLC dba Stateside (“Stateside”) pursuant to its Membership Interest Purchase Agreement with Moise Emquies to purchase 100% of the issued and outstanding equity of Stateside. On the acquisition date, Stateside became a wholly owned subsidiary of the Company. See Note 4. On December 30, 2022, the Company closed its previously announced acquisition of Sunnyside, LLC dba Sundry (“Sundry”) pursuant to its Second Amended and Restated Membership Interest Purchase Agreement with Moise Emquies to purchase 100% of the issued and outstanding equity of Sundry. On the acquisition date, Sundry became a wholly owned subsidiary of the Company. See Note 4. Reverse Stock Split On May 12, 2021, the Board of Directors approved a one On October 21, 2022, 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 964 shares of common stock at a public offering price of $10,375 per share. Additionally, the Company issued warrants to purchase 1,111 shares, which includes 145 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_2
GOING CONCERN | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
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 $1,092,088 and $17,366,866 for the six months ended June 30, 2023 and 2022, respectively, and has incurred negative cash flows from operations for the six months ended June 30, 2023 and 2022. The Company has historically lacked liquidity to satisfy obligations as they come due and as of June 30, 2023, and the Company had a working capital deficit of $16,037,518. These factors, among others, arise 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. The accompanying consolidated financial statements do not include any adjustments as a result of this uncertainty. The Company’s ability to continue as a going concern for the next 12 months from the date the financial statements were available to be issued is dependent upon its ability to generate sufficient cash flows from operations to meet its obligations, which it has not been able to accomplish to date, and/or to obtain additional capital financing. Through the date the financial statements were available to be issued, the Company has been primarily financed through the issuance of capital stock and debt. In the event that the Company cannot generate sufficient revenue to sustain its operations, the Company will need to reduce expenses or obtain financing through the sale of debt and/or equity securities. The issuance of additional equity would result in dilution to existing shareholders. If the Company is unable to obtain additional funds when they are needed or if such funds cannot be obtained on terms acceptable to the Company, the Company would be unable to execute upon the business plan or pay costs and expenses as they are incurred, which would have a material, adverse effect on the business, financial condition and results of operations. No assurance can be given that the Company will be successful in these efforts. | NOTE 2: GOING CONCERN The accompanying 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 $38,043,362 and $32,357,957 for the years ended December 31, 2022 and 2021, respectively, and has incurred negative cash flows from operations for the years ended December 31, 2022 and 2021. The Company has historically lacked liquidity to satisfy obligations as they come due and as of December 31, 2022, and the Company had a working capital deficit of $32,064,398. These factors, among others, arise 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. The accompanying consolidated financial statements do not include any adjustments as a result of this uncertainty. The Company’s ability to continue as a going concern for the next 12 months from the date the financial statements were available to be issued is dependent upon its ability to generate sufficient cash flows from operations to meet its obligations, which it has not been able to accomplish to date, and/or to obtain additional capital financing. Through the date the financial statements were available to be issued, the Company has been primarily financed through the issuance of capital stock and debt. In the event that the Company cannot generate sufficient revenue to sustain its operations, the Company will need to reduce expenses or obtain financing through the sale of debt and/or equity securities. The issuance of additional equity would result in dilution to existing shareholders. If the Company is unable to obtain additional funds when they are needed or if such funds cannot be obtained on terms acceptable to the Company, the Company would be unable to execute upon the business plan or pay costs and expenses as they are incurred, which would have a material, adverse effect on the business, financial condition and results of operations. No assurance can be given that the Company will be successful in these efforts. |
SUMMARY OF SIGNIFICANT ACCOU_12
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
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”). Reverse Stock Split On October 21, 2022, the Board of Directors approved a one Unaudited Interim Financial Information The accompanying unaudited condensed consolidated balance sheet as of June 30, 2023, the unaudited condensed consolidated statements of operations for the six and six months ended June 30, 2023 and 2022 and of cash flows for the six months ended June 30, 2023 and 2022 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 consolidated results for the interim periods presented and of the consolidated financial condition as of the date of the interim consolidated balance sheet. The results of operations are not necessarily indicative of the results expected for the year ended December 31, 2023. 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, 2022 included in the Company’s Annual Form 10-K filed with SEC on April 17, 2023. Principles of Consolidation These condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries Bailey, H&J and Stateside from the dates of acquisition. All inter-company transactions and balances have been eliminated on consolidation. As of June 21, 2023, the Company no longer consolidated the assets, liabilities, revenues and expenses of H&J (see Note 4). Use of Estimates The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions reflected in these financial statements include, but are not limited to, inventory, impairment of long-lived assets, contingent consideration and derivative liabilities. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates when there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates. Reclassification of Previously Issued Financial Statements Certain prior year accounts have been reclassified to conform with current year presentation pertaining to cost of net revenue and general and administrative expenses. The Company has reclassified $297,696 and $630,976 in general and administrative expenses per previously reported financial statements to cost of net revenues in the accompanying consolidated statements of operations for the three and six months ended June 30, 2022, respectively. The reclassified costs from general and administrative expense to cost of net revenues are primarily personnel and warehouse related costs. The reclassification had no effect on the reported results of operations. Certain prior year accounts have been reclassified to conform with current year presentation regarding income (loss) from discontinued operations. H&J’s assets and liabilities as of December 31, 2022 have also been reclassified on the consolidated balance sheet. See Note 4. Cash and Equivalents and Concentration of Credit Risk The Company considers all highly liquid securities with an original maturity of less than six months to be cash equivalents. As of June 30, 2023 and December 31, 2022, 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 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, 2023 Using: Level 1 Level 2 Level 3 Total Liabilities: Contingent consideration $ — $ — $ — $ — $ — $ — $ — $ — Fair Value Measurements as of December 31, 2022 Using: Level 1 Level 2 Level 3 Total Liabilities: Contingent consideration $ — $ — $ 12,098,475 $ 12,098,475 $ — $ — $ 12,098,475 $ 12,098,475 Contingent Consideration The Company recorded a contingent consideration liability relating to stock price guarantees included in its acquisitions of Bailey44 and H&J. The estimated fair value of the contingent consideration was recorded using significant unobservable measures and other fair value inputs and was therefore classified as a Level 3 financial instrument. 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. Norwest Waiver On June 21, 2023, the Company, on the one hand, and Norwest Venture Partners XI, LP and Norwest Venture Partners XII, LP (together, the “Norwest Investors”), on the other hand, executed a Waiver and Amendment (the “Norwest Amendment”) whereby the Norwest Investors agreed to waive and terminate certain true up rights of the Norwest Investors under the Agreement and Plan of Merger, dated February 12, 2020 (the “Bailey Merger Agreement”), among the Company, Bailey 44, LLC, Norwest Venture Partners XI, LP, and Norwest Venture Partners XII, LP and Denim.LA Acquisition Corp. This transaction is known as the “Norwest Waiver”. As a result of the Norwest Waiver, the Company recorded a fair value of H&J Settlement Agreement On June 21, 2023, the Company and the former owners of H&J executed a Settlement Agreement and Release (the “Settlement Agreement”) whereby the Company transferred 100% of its membership interests in H&J to D. Jones (the “H&J Seller”). Pursuant to the Settlement Agreement, the Company agreed to make an aggregate cash payment of shares of common stock to the H&J Seller. In connection with the Settlement Agreement, the parties agreed that no further shares were owed to the H&J Seller resulting from the stock price guarantee pursuant to the May 2021 H&J acquisition. As a result, the Company recorded a fair value of The detail of contingent consideration by company is as follows: June 30, December 31, 2023 2022 Bailey $ — $ 10,698,475 Harper & Jones — 1,400,000 $ — $ 12,098,475 Inventory Inventory is stated at the lower of cost or net realizable value and accounted for using the weighted average cost method for DSTLD and first-in, first-out method for Bailey, Stateside and Sundry. The inventory balances as of June 30, 2023 and December 31, 2022 consist substantially of finished good products purchased or produced for resale, as well as any raw materials the Company purchased to modify the products and work in progress. Inventory consisted of the following: June 30, December 31, 2023 2022 Raw materials $ 1,508,416 $ 1,611,134 Work in process 653,412 888,643 Finished goods 2,609,443 2,725,505 Inventory $ 4,771,271 $ 5,225,282 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. Annual Impairment At December 31, 2022, management determined that certain events and circumstances occurred that indicated that the carrying value of the Company’s brand name assets, and the carrying amount of the reporting units, pertaining to Bailey44 and Harper & Jones may not be recoverable. The qualitative assessment was primarily due to reduced or stagnant revenues of both entities as compared to the Company’s initial projections at the time of each respective acquisition, as well as the entities’ liabilities in excess of assets. As such, the Company compared the estimated fair value of the brand names with its carrying value and recorded an impairment loss of $3,667,000 in the consolidated statements of operations. Additionally, the Company compared the fair value of the reporting units to the carrying amounts and recorded an impairment loss of $11,872,332 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. The following table sets forth the computation of basic and diluted net income (loss) per share: Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Numerator: Net income (loss) from continuing operations $ 6,536,310 $ (9,482,520) $ 470,415 $ (17,200,792) Income (loss) from discontinued operations, net of tax (1,492,050) (51,404) (1,562,503) (166,074) Net income (loss) $ 5,044,260 $ (9,533,924) $ (1,092,088) $ (17,366,866) Denominator: Weighted average common shares outstanding - basic 246,809 14,329 236,824 9,836 Weighted average common shares outstanding - diluted 834,604 14,329 824,619 9,836 Net income (loss) from continuing operations per share - basic $ 26.48 $ (661.78) $ 1.99 $ (1,748.68) Net income (loss) from continuing operations per share - diluted $ 7.83 $ (661.78) $ 0.57 $ (1,748.68) Net income (loss) from discontinued operations per common share – basic $ (6.05) $ (3.59) $ (6.60) $ (16.88) Net income (loss) from discontinued operations per common share – diluted $ (6.05) $ (3.59) $ (6.60) $ (16.88) Net income (loss) per share – $ 20.44 $ (665.36) $ (4.61) $ (1,765.57) Net income (loss) per share – $ 6.04 $ (665.36) $ (4.61) $ (1,765.57) The following table sets forth the a) the dilutive items included in the weighted average common shares – diluted amount above as of June 30, 2023 and b) the number of potential common shares excluded from the calculations of net loss per diluted share because their inclusion would be anti-dilutive as of June 30, 2022: June 30, 2023 2022 — 18,496 Convertible notes 27,097 — Series A convertible preferred stock 321,395 — Series C convertible preferred stock 237,746 2,533 Common stock warrants 1,558 1,558 Stock options 587,795 22,588 The stock options and warrants above are out-of-the-money as of June 30, 2023 and 2022. Recent Accounting Pronouncements In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which amends and clarifies several provisions of Topic 326. In May 2019, the FASB issued ASU 2019-05, Financial Instruments-Credit Losses (Topic 326): Targeted Transition Relief, which amends Topic 326 to allow the fair value option to be elected for certain financial instruments upon adoption. ASU 2019-10 extended the effective date of ASU 2016-13 until December 15, 2022. The Company adopted this new guidance, including the subsequent updates to Topic 326, on January 1, 2023 and the adoption did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures. 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 Unaudited Pro Forma Financial Information The following unaudited pro forma financial information presents the Company’s financial results as if the Sundry acquisition had occurred as of January 1, 2022. 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, 2022 Net revenues $ 14,728,296 Net loss $ (16,907,152) Net loss per common share $ (1,718.83) | 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”). H&J Disposition On June 21, 2023, the Company and the former owners of H&J executed a Settlement Agreement and Release (the “Settlement Agreement”) whereby contemporaneously with the parties’ execution of the Settlement Agreement (i) the Company agreed to make an aggregate cash payment of $229,000 to D. Jones Tailored Collection, Ltd. (“D. Jones”), (ii) the Company issued 78,103 shares of common stock to D. Jones, and (iii) the Company assigned and transferred one hundred percent (100%) of the Company’s membership interest in H&J to D. Jones. This transaction is known as the “H&J Settlement”. The H&J Settlement was accounted for a business disposition in accordance with ASC 810-40-40-3A. In accordance with the provisions of ASC 205-20, the Company has excluded the results of discontinued operations from its results of continuing operations in the accompanying consolidated statements of operations for the three and six months ended June 30, 2023 and 2022 in it’s Form 10-Q Quarterly Report filed on August 21, 2023. Accordingly, the consolidated financial statements as of and for the years ended December 31, 2022 and 2021 have been adjusted retroactively to account for the discontinued operations classification of H&J. Principles of Consolidation These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries Bailey, H&J, Stateside and Sundry from the dates of acquisition. All inter-company transactions and balances have been eliminated on consolidation. H&J has been retroactively adjusted to be presented as discontinued operations (see above). 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. Restatement of Previously Issued Financial Statements Certain prior year accounts have been reclassified to conform with current year presentation pertaining to cost of net revenue and general and administrative expenses. The Company has reclassified The reclassified costs from general and administrative expense to cost of net revenues made in the fourth quarter of 2022 and 2021 are fixed in nature as they are personnel and warehouse related costs. The impact of the reclassification was approximately for each of the quarters ended March 31, 2022, June 30, 2022 and September 30, 2022. The impact of the reclassification was approximately 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 December 31, 2022 and 2021, 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, accounts receivable, due from factor, prepaid expenses, accounts payable, accrued expenses, deferred revenue, due to related parties, related party note payable, accrued interest, loan 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 December 31, 2022 Using: Level 1 Level 2 Level 3 Total Liabilities: Warrant liability $ — $ — $ — $ — Contingent consideration — — 12,098,475 12,098,475 Derivative liability — — — — $ — $ — $ 12,098,475 $ 12,098,475 Fair Value Measurements as of December 31, 2021 Using: Level 1 Level 2 Level 3 Total Liabilities: Warrant liability $ — $ 18,223 $ — $ 18,223 Contingent consideration — — 12,179,476 12,179,476 Derivative liability — — 2,294,720 2,294,720 $ — $ 18,223 $ 14,474,196 $ 14,492,419 Warrant Liability 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 years ended December 31, 2022 and 2021 are as follows: Warrant Liability Outstanding as of December 31, 2020 $ 6,265 Change in fair value 11,958 Outstanding as of December 31, 2021 18,223 Change in fair value (18,223) Outstanding as of December 31, 2022 $ — Contingent Consideration The Company records a contingent consideration liability 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 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. 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 years ended December 31, 2022 and 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 Conversion into shares (73,500) Change in fair value 8,764,460 Outstanding as of December 31, 2021 12,179,476 Repayments to Harper & Jones seller (645,304) Change in fair value 564,303 Outstanding as of December 31, 2022 $ 12,098,475 During the year ended December 31, 2022, the Company utilized the following inputs for the fair value of the contingent consideration: volatilities of 79.3% and 88.9%, risk-free rate of 0.25%, expected share increase of 5% per annum, and the guaranteed stock price of $828 for Bailey and $10,375 for Harper & Jones. The detail of contingent consideration by company is as follows: December 31, 2022 2021 Bailey $ 10,698,475 7,935,016 Harper & Jones 1,400,000 4,244,460 $ 12,098,475 $ 12,179,476 The contingent consideration liabilities were revalued for a final time as of May 18, 2022, the anniversary date of the Company’s initial public offering. As of the date of the issuance of these financial statements, the contingent consideration liabilities were not yet settled with shares. In December 2022, the Company paid $645,304 to the H&J Seller to partially reduce the contingent consideration balance owed. The Company and the H&J Seller are in the process of amending the May 2021 purchase agreement to determine the ultimate settlement of the Company’s common stock to the H&J Seller by May 16, 2023. Refer to Note 12. Derivative Liability In connection with the Company’s convertible notes, the Company recorded a derivative liability (see Note 7). The estimated fair value of the derivative liability 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 derivative liability is valued using a multinomial lattice model. The multinomial lattice inputs include the underlying stock price, volatility of common stock and remaining term of the convertible note. Changes in derivative liability during the years ended December 31, 2022 and 2021 are as follows: Derivative Liability Outstanding as of December 31, 2020 $ — Initial fair value on issuance of convertible note 3,204,924 Change in fair value (910,204) Outstanding as of December 31, 2021 2,294,720 Initial fair value on issuance of convertible note 559,957 Conversion of underlying notes into common stock (1,500,243) Change in fair value (1,354,434) Outstanding as of December 31, 2022 $ — During the year ended December 31, 2022, the Company utilized the following inputs for the fair value of the derivative liability: volatility of 70.9% - 96.7%, risk-free rate of 2.71% - 3.74%, and remaining term ranging from .08 years - 0.62 years. The change in fair value of the derivative liability is included in other non-operating income (expense), net in the consolidated statements of operations. Inventory Inventory is stated at the lower of cost or net realizable value and accounted for using the weighted average cost method for DSTLD and H&J and first-in, first-out method for Bailey, Stateside and Sundry. The inventory balances as of December 31, 2022 and 2021 consist substantially of finished good products purchased or produced for resale, as well as any raw materials the Company purchased to modify the products and work in progress. Inventory consisted of the following: December 31, 2022 2021 Raw materials $ 1,508,416 $ 292,167 Work in process 888,643 242,673 Finished goods 2,725,505 2,220,519 Inventory $ 5,122,564 $ 2,660,203 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 December 31, 2022 and 2021 consist of software with three (3) year lives, property and equipment with three (3) to ten (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 $75,126 and $92,213 for the years ended December 31, 2022 and 2021, respectively. 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 Impairment 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 fourth quarter every year. 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. Annual Impairment Tests At December 31, 2021, management determined that certain events and circumstances occurred, primarily the continued reduction in revenues partially as a result of COVID-19, that indicated that the carrying value of the Company’s brand name asset pertaining to Bailey44 may not be recoverable. As such, the Company compared the estimated fair value of the brand name with its carrying value and recorded an impairment loss of $3,400,000 in the consolidated statements of operations. At December 31, 2022, management determined that certain events and circumstances occurred that indicated that the carrying value of the Company’s brand name assets, and the carrying amount of the reporting units, pertaining to Bailey44 and Harper & Jones may not be recoverable. The qualitative assessment was primarily due to reduced or stagnant revenues of both entities as compared to the Company’s initial projections at the time of each respective acquisition, as well as the entities’ liabilities in excess of assets. As such, the Company compared the estimated fair value of the brand names with its carrying value and recorded an impairment loss of $3,667,000 in the consolidated statements of operations. Additionally, the Company compared the fair value of the reporting units to the carrying amounts and recorded an impairment loss of $11,872,332 Year Ended December 31, 2022 2021 Bailey brand name (intangibles) $ 2,182,000 $ 3,400,000 Bailey goodwill 3,321,095 — Total impairment $ 5,503,095 $ 3,400,000 In determining the fair value of the respective reporting units, management estimated the price that would be received to sell the reporting unit as a whole in an orderly transaction between market participants at the measurement date. This includes reviewing market comparables such as revenue multipliers and assigning certain assets and liabilities to the reporting units, such as the respective working capital deficits of each entity and debt obligations that would need to be assumed by a market participant buyer in an orderly transaction. The Company calculated the carrying amounts of each reporting unit by utilizing the entities’ assets and liabilities at December 31, 2022, including the carrying value of the identifiable intangible assets and goodwill assigned to the respective reporting units. Refer to Note 12 for the related developments with H&J. 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 $307,725 and $33,933 as of December 31, 2022 and 2021, 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. Cost of revenues includes direct labor pertaining to our inventory production activities and an allocation of overhead costs including rent and insurance. Cost of revenues also includes inventory write-offs and reserves. 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 distribution costs. Total shipping and handling billed to customers as a component of net revenues was approximately $72,000 and $23,000 for the years ended December 31, 2022 and 2021, respectively. Total shipping and handling costs included in distribution costs were approximately $525,000 and $423,000, respectively. Advertising and Promotion Advertising and promotional costs are expensed as incurred. Advertising and promotional expense for the years ended December 31, 2022 and 2021 amounted to approximately $1,178,000 and $240,000, respectively. The amounts are included in sales and marketing expense. General and Administrative General and administrative expenses consist primarily of compensation and benefits costs, professional services and information technology. General and administrative expenses also include payment processing fees, design and warehousing fees. 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 December 31, 2022 and 2021, 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. 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 simplified method is based on the average of the vesting tranches and the contractual life of each grant. For stock price volatility, the Company uses comparable public companies as a basis for its expected volatility to calculate the fair value of options grants. 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. The number of stock award forfeitures are recognized as incurred. 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 an expense over the employee’s requisite vesting period and over the nonemployee’s period of providing goods or services. The Company measures employee stock-based awards at grant-date fair value and recognizes employee compensation expense on a straight-line basis over the vesting period of the award. Determining the appropriate fair value of stock-based awards requires the input of subjective assumptions, including the fair value of the Company’s common stock, and for stock options, the expected life of the option, and expected stock price volatility. The Company used the Black-Scholes option pricing model to value its stock option awards. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and management uses different assumptions, stock-based compensation expense could be materially different for future awards. 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. As of December 31, 2021, the Company capitalized $367,696 in deferred offering costs pertaining to its equity line of credit agreement with Oasis (Note 8). In 2022, the Company wrote off these costs to general and administrative expenses in the consolidated statements of operations as the equity line of credit financing never occurred. 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 December 31, 2022 our operating segments included: DSTLD, Bailey, H&J, Stateside and Sundry. 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 wher |
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS | 12 Months Ended |
Dec. 31, 2022 | |
BUSINESS COMBINATIONS | |
BUSINESS COMBINATIONS | NOTE 4: BUSINESS COMBINATIONS AND DISPOSITION 2022 Acquisition Sundry On December 30, 2022, the Company completed its previously announced acquisition (the “ Sundry Acquisition”) of all of the issued and outstanding membership interests of Sunnyside, LLC, a California limited liability company (“Sundry”), pursuant to that certain Second Amended and Restated Membership Interest Purchase Agreement (the “ Sundry Agreement”), dated October 13, 2022, by and among Moise Emquies, George Levy, Matthieu Leblan and Carol Ann Emquies (“ Sundry Sellers”), George Levy as the Sundry Sellers’ representative, the Company as Buyer, and Sundry. Pursuant to the Agreement, Sellers, as the holders of all of the outstanding membership interests of Sundry, exchanged all of such membership interests for (i) $7.5 million in cash, (ii) $5.5 million in promissory notes of the Company (the “Sundry Notes”), and (iii) a number of shares of common stock of the Company equal to $1.0 million (the “Sundry Shares”), calculated in accordance with the terms of the Agreement, which consideration was paid or delivered to the Sellers, Jenny Murphy and Elodie Crichi. Each Sundry Note bears interest at eight percent (8%) per annum and matured on February 15, 2023 (see Note 7). The Company issued 3,636 shares of common stock to the Sundry Sellers on December 30, 2022 at a fair value of $1,000,000. The Company evaluated the acquisition of Sundry 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 $ 7,500,000 Promissory notes payable 5,500,000 Common stock 1,000,000 Purchase price consideration $ 14,000,000 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 $ 252,697 Accounts receivable, net 63,956 Due from factor, net 387,884 Inventory 2,941,755 Prepaid expenses and other current assets 32,629 Property, equipment and software, net 48,985 Goodwill 3,711,322 Intangible assets 7,403,800 Accounts payable (615,706) Accrued expenses and other liabilities (227,321) Purchase price consideration $ 14,000,000 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 relief of royalty and income 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 results of Sundry have been included in the consolidated financial statements since the date of acquisition. Previous Acquisitions Bailey 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. The total purchase price consideration was $15,500,000. 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. As of December 31, 2022 and 2021, the Company has a contingent consideration liability of $10,698,475 and $7,935,016, respectively, 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 87,711 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, exchanged 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 Due from factor, net — Inventory 77,159 Prepaid expenses and other current assets 69,715 Property, equipment and software, net 83,986 Goodwill 9,681,548 Intangible assets 3,936,030 Accounts payable (51,927) Accrued expenses and other liabilities (107,957) Purchase price consideration $ 11,947,058 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 relief 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 December 31, 2022 and 2021, the H&J contingent consideration was valued at $1,400,000 and $4,244,460, respectively. See Note 3. The results of H&J have been included in the consolidated financial statements since the date of acquisition. H&J’s 2021 net revenue and net loss included in the consolidated financial statements since the acquisition date were approximately $1,860,000 and $390,000, respectively. June 2023 Disposition On June 21, 2023, the Company and the former owners of H&J executed a Settlement Agreement and Release (the “Settlement Agreement”) whereby contemporaneously with the parties’ execution of the Settlement Agreement (i) the Company agreed to make an aggregate cash payment of $229,000 to D. Jones Tailored Collection, Ltd. (“D. Jones”), (ii) the Company issued 78,103 shares of common stock to D. Jones, and (iii) the Company assigned and transferred one hundred percent (100%) of the Company’s membership interest in H&J to D. Jones. This transaction is known as the “H&J Settlement”. The H&J Settlement was accounted for a business disposition in accordance with ASC 810-40-40-3A. In accordance with the provisions of ASC 205-20, the Company has excluded the results of discontinued operations from its results of continuing operations in the accompanying consolidated statements of operations for the three and six months ended June 30, 2023 and 2022 in its Form 10-Q Quarterly Report filed on August 21, 2023. Accordingly, the consolidated financial statements as of and for the years ended December 31, 2022 and 2021 have been adjusted retroactively to account for the discontinued operations classification of H&J. Significant components of H&J’s assets and liabilities consist of the following: December 31, 2022 2021 Cash and cash equivalents $ 7,666 $ 12,598 Inventory 102,718 95,155 Accounts receivable, net 45,018 22,010 Goodwill 1,130,310 9,681,548 Intangible assets, net 1,521,265 3,578,182 Other current and non-current assets 62,703 161,740 Accounts payable 81,991 54,981 Accrued expenses and other liabilities 520,195 381,290 Deferred revenue 202,129 276,397 Due to related parties 1,008 21,361 Note payable - related party 129,489 299,489 Loan payable 284,059 148,900 The results of the discontinued operations of H&J for the years ended December 31, 2022 and 2021 consist of the following: Year Ended December 31, 2022 2021 Net revenues $ 3,637,620 $ 1,819,896 Cost of net revenues 1,241,594 1,888,091 Gross profit (loss) 2,396,026 (68,195) Operating expenses: General and administrative 2,303,854 603,007 Sales and marketing 931,650 540,873 Impairment 10,036,238 — Total operating expenses 13,271,742 1,143,880 Loss from operations (10,875,716) (1,212,075) Other income (expense): Interest expense (52,927) (44,828) Other non-operating income (expenses) — 233,030 Total other income (expense), net (52,927) 188,202 Income tax benefit (provision) — — Net loss from discontinued operations $ (10,928,643) $ (1,023,873) Weighted average common shares outstanding - basic and diluted 30,852 3,052 Net loss from discontinued operations per common share - basic $ (354.23) $ (335.52) Stateside On August 30, 2021, the Company entered into a Membership Interest Purchase Agreement (the “MIPA”) with Moise Emquies pursuant to which the Company acquired all of the issued and outstanding membership interests of MOSBEST, LLC, a California limited liability company (“Stateside” and such transaction, the “Stateside Acquisition”). Pursuant to the MIPA, Moise Emquies, as the holder of all of the outstanding membership interests of Stateside, exchanged all of such membership interests for $5.0 million in cash and 44,062 shares of the Company’s common stock (the “Shares”), which number of Shares was calculated in accordance with the terms of the MIPA. Of such amount, $375,000 in cash and a number of Shares equal to $375,000, or 3,305 shares (calculated in accordance with the terms of the MIPA), is held in escrow to secure any working capital adjustments and indemnification claims. The MIPA contains customary representations, warranties and covenants by Moise Emquies. The Company evaluated the acquisition of Stateside 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 $ 5,000,000 Common stock 3,403,196 Purchase price consideration $ 8,403,196 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 32,700 Accounts receivable, net 154,678 Due from factor, net 371,247 Inventory 603,625 Prepaid expenses and other current assets 7,970 Deposits 9,595 Property, equipment and software, net — Goodwill 2,104,056 Intangible assets 5,939,140 Accounts payable (374,443) Accrued expenses and other liabilities (445,372) $ 8,403,196 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 relief of royalty and income 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. Per the terms of the MIPA, a working capital adjustment of $493,791 was recorded during the fourth quarter. Net amounts due to the seller are $396,320 at December 31, 2021 (Note 7). The results of Stateside have been included in the consolidated financial statements since the date of acquisition. Stateside’s 2021 net revenue and net loss included in the consolidated financial statements since the acquisition date were approximately $1,695,000 and $285,000, respectively. Unaudited Pro Forma Financial Information The following unaudited pro forma financial information presents the Company’s financial results as if the Bailey, H&J, Stateside and Sundry acquisitions had occurred as of January 1, 2021. 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 unaudited pro forma information does not give effect to any estimated and potential cost savings or other operating efficiencies that could result from the acquisition: Year Ended December 31, 2022 2021 Net revenues $ 28,519,261 $ 34,635,426 Net loss $ (42,001,415) $ (33,171,473) Net loss per common share $ (1,361.50) $ (10,870.25) |
DUE FROM FACTOR_2
DUE FROM FACTOR | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
DUE FROM FACTOR | ||
DUE FROM FACTOR | NOTE 5: DUE FROM FACTOR Due to/from factor consist of the following: June 30, December 31, 2023 2022 Outstanding receivables: Without recourse $ 787,542 $ 1,680,042 With recourse 50,979 65,411 Matured funds and deposits 88,516 81,055 Advances (478,753) (632,826) Credits due customers (10,142) (354,282) $ 438,142 $ 839,400 | NOTE 5: DUE FROM FACTOR The Company, via its subsidiaries, Bailey, Stateside and Sundry, assigns a portion of its trade accounts receivable to third- party factoring companies, 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 based on the terms of one of our agreements that terminated in 2021. The factor charges a commission on the net sales factored for credit and collection services. For one factoring company, interest on advances is charged as of the last day of each month at a rate equal to the LIBOR rate plus 2.5% for Bailey. For Stateside and Sundry, should total commission and fees payable be less than $30,000 in a single year, then the factor shall charge the difference between the actual fees in said year and $30,000 to the Company. Interest on advances is charged as of the last day of each month at a rate equal to the greater of either, (a) the Chase Prime Rate + (2.0)% or (b) (4.0)% per annum. For another factoring company, interest is charged at one-thirty- third Advances are collateralized by a security interest in substantially all of the companies’ assets. Due to/from factor consist of the following: December 31, 2022 2021 Outstanding receivables: Without recourse $ 564,548 $ 579,295 With recourse 352,379 361,584 Advances 118,521 121,617 Credits due customers (196,048) (77,208) $ 839,400 $ 985,288 |
GOODWILL AND INTANGIBLE ASSET_4
GOODWILL AND INTANGIBLE ASSETS | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
GOODWILL AND INTANGIBLE ASSETS | ||
GOODWILL AND INTANGIBLE ASSETS | NOTE 6: GOODWILL AND INTANGIBLE ASSETS The following is a summary of goodwill attributable to each business combination: June 30, December 31, 2023 2022 Bailey $ 3,158,123 $ 3,158,123 Stateside 2,104,056 2,104,056 Sundry 3,711,322 3,711,322 $ 8,973,501 $ 10,103,812 In connection with the H&J disposition, the Company derecognized $1,130,311 in goodwill. The following table summarizes information relating to the Company’s identifiable intangible assets as of June 30, 2023: Gross Accumulated Carrying Amount Amortization Value Amortized: Customer relationships $ 9,734,560 $ (4,155,129) $ 5,579,431 $ 9,734,560 $ (4,155,129) $ 5,579,431 Indefinite-lived: Brand name $ 5,841,880 — 5,841,880 $ 15,576,440 $ (4,155,129) $ 11,421,311 In connection with the H&J disposition, the Company derecognized $1,246,915 in intangible assets. The Company recorded amortization expense of $804,924 and $537,812 during the three months ended June 30, 2023 and 2022, and $1,759,277 and $1,075,625 during the six months ended June 30, 2023 and 2022, respectively, which is included in general and administrative expenses in the consolidated statements of operations. | NOTE 6: GOODWILL AND INTANGIBLE ASSETS Goodwill The Company recorded goodwill from each of its business combinations. The following is a summary of goodwill by entity for the years ended December 31, 2022 and 2021: Bailey Stateside Sundry Total Balances at December 31, 2020 $ 6,479,218 $ — $ — $ 6,479,218 Business combination — 2,104,056 — 2,104,056 Impairment — — — — Balances at December 31, 2021 6,479,218 2,104,056 — 8,583,274 Business combination — — 3,711,322 3,711,322 Impairment (3,321,095) — — (3,321,095) Balances at December 31, 2022 $ 3,158,123 $ 2,104,056 $ 3,711,322 $ 8,973,501 Refer to Note 3 for discussion on the goodwill impairment recorded in 2022. As of December 31, 2022, there was approximately $3.2 million for Bailey in goodwill that relates to liabilities in excess of assets. Intangible Assets The following table summarizes information relating to the Company’s identifiable intangible assets as of December 31, 2022 and 2021: Gross Accumulated Carrying December 31, 2022 Amount Amortization Value Amortized: Customer relationships $ 9,734,560 (2,670,202) $ 7,064,358 9,734,560 (2,670,202) 7,064,358 Indefinite-lived: Brand name $ 5,841,880 — 5,841,880 $ 15,576,440 $ (2,670,202) $ 12,906,238 Gross Accumulated Carrying December 31, 2021 Amount Amortization Value Amortized: Customer relationships $ 4,736,080 (1,091,509) $ 3,644,571 4,736,080 (1,091,509) 3,644,571 Indefinite-lived: Brand name $ 5,618,560 — 5,618,560 $ 10,354,640 $ (1,091,509) $ 9,263,131 Due to the effects of COVID-19 and revenue levels not recovering as quickly as anticipated and related uncertainty which affected Bailey’s results and near-term demand for its products, the Company determined that there were indications for further impairment analysis in both 2022 and 2021. Due to Harper’s revenue levels lower as compared to initial projects, the Company determined that there were indications for further impairment analysis in 2022. Refer to Note 3 for discussion on the intangible asset impairment recorded in 2022 and 2021. Management determined circumstances existed that indicated the carrying value may not be recoverable. The impairment analysis was based on the relief from royalty method using projected revenue estimates and discounts rates believed to be appropriate. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates and market factors. The discount rate, revenue assumptions and terminal growth rate of our reporting unit were the material assumptions utilized in the model used to estimate the fair value of the Bailey unit. The analysis requires estimates, assumptions and judgments about future events. Our analysis uses our internally generated long-range plan. The long-range plan reflects management judgment, which includes observation of expected industry trends. The Company recorded amortization expense of $1,653,819 and $1,128,524 during the years ended December 31, 2022 and 2021, respectively, which is included in general and administrative expenses in the consolidated statements of operations. Future amortization expense at December 31, 2022 is as follows: Year Ending December 31, 2023 2,924,020 2024 2,474,178 2025 1,666,160 $ 7,064,358 |
LIABILITIES AND DEBT_2
LIABILITIES AND DEBT | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
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, 2023 and December 31,2022: June 30, December 31, 2023 2022 Accrued expenses $ 503,927 $ 668,714 Reserve for returns — 307,725 Payroll related liabilities 4,009,812 2,618,870 Sales tax liability 277,800 262,765 Other liabilities 247,398 78,845 $ 5,038,937 $ 3,936,920 As of June 30, 2023, payroll liabilities included an aggregate of $1,288,048 in payroll taxes due to remit to federal and state authorities. Of this amount, $620,400 pertained to DBG and $667,648 pertained to Bailey44. The amounts are subject to further penalties and interest. The amounts are subject to further penalties and interest. As of June 30, 2023 and December 31, 2022, accrued expenses included $535,000 in accrued common stock issuances pursuant to an advisory agreement for services performed in 2022. The 5,000 shares of common stock owed per the agreement are expected to be issued in the third quarter of 2023. At June 30, 2023, accrued expenses also includes owed to Sundry executives based on their employment agreements with the Company, which is expected to be issued in the third quarter of 2023. Convertible Debt 2020 Regulation D Offering As of June 30, 2023 and December 31, 2022, there was $100,000 remaining in outstanding principal that was not converted into equity. Convertible Promissory Note On December 29, 2022, the Company and various purchasers executed a Securities Purchase Agreement (“December Notes”) whereby the investors purchased from the Company convertible promissory notes in the aggregate principal amount of $4,000,000, consisting of original issue discount of $800,000. The Company received net proceeds of $3,000,000. The December Notes were due and payable on February 15, 2023. If the December Notes are not repaid in full by the maturity date or if any other event of default occurs, (1) the face value of the December Notes will be automatically increased to 120%; (2) the Notes will begin generating an annual interest rate of 20%, which will be paid in cash monthly until the default is cured; and (3) if such default continues for 14 or more calendar days, at the investors’ discretion, the December Notes shall become convertible at the option of the investors into shares of the Company’s common stock at a conversion price equal to the closing price of the Company’s common stock on the date of the note conversion. In connection with the December Notes, the Company issued to the investors an aggregate of 18,779 warrants to purchase common stock at an exercise price equal to $106.50, and 2,400 shares of common stock. The Company recognized $428,200 as a debt discount for the fair value of the warrants and common shares using the Black-Scholes option model, resulting in a total debt discount of $1,378,200. In February 2023, the principal of $4,000,000 of the December Notes were fully repaid. The Company amortized $689,100 of debt discount up until the repayment date, and then recognized a loss on extinguishment of debt of $689,100 which is included in other non-operating income (expenses) on the consolidated statements of operations. The following is a summary of the convertible notes for the six months ended June 30, 2023: Unamortized Convertible Note Principal Debt Discount Payable, Net Balance, December 31, 2022 $ 4,100,000 $ (1,378,200) $ 2,721,800 Repayments of notes (4,000,000) — (4,000,000) Amortization of debt discount — 689,100 689,100 Loss on extinguishment of debt — 689,100 689,100 Balance, June 30, 2023 $ 100,000 $ — $ 100,000 During the six months ended June 30, 2022, the Company converted an aggregate of $888,930 in outstanding principal into 350 shares of common stock. During the six months ended June 30, 2023 and 2022, the Company amortized $689,100 and $1,724,291, respectively of debt discount to interest expense pertaining to convertible notes. In January 2023, the Company issued 4,400 shares of common stock at a fair value of $322,300 to a former convertible noteholder pursuant to default provisions. The amount was included in interest expense in the consolidated statements of operations. Loan Payable — PPP and SBA Loan As of both June 30, 2023 and December 31, 2022, Bailey had an outstanding PPP Loan balance of $933,295 and matures in 2026. Merchant Advances In 2022, the Company obtained several merchant advances. These advances are, for the most part, secured by expected future sales transactions of the Company with expected payments on a weekly basis. As of December 31, 2022, $896,334 remained outstanding. During the six months ended June 30, 2023, the Company received additional proceeds totaling $1,692,748 and made repayments totaling $2,331,972. As of June 30, 2023, the remaining principal outstanding was $257,110. In connection with these advances, the Company granted 6,095 warrants to purchase common stock at an exercise price of $131.25 to the lender in connection with its merchant advances. In 2023, the Company obtained merchant advances totaling $502,051 from Shopify Capital, and made repayments totaling $208,416 . As of June 30, 2023, the remaining principal outstanding was Promissory Note Payable As of June 30, 2023 and December 31, 2022, the outstanding principal on the note to the sellers of Bailey was $3,500,000. The maturity date was December 31, 2022. On July 5, 2023, the parties agreed to extend the maturity date to June 30, 2024. Interest expense was $105,000 and $105,000 for the three months ended June 30, 2023 and 2022 and $210,000 and $210,000 for the six months ended June 30, 2023 and 2022, all respectively, which was accrued and unpaid as of June 30, 2023. The Company issued a promissory note in the principal amount of $5,500,000 to the Sundry Holders pursuant to the Sundry acquisition. The note bears interest at 8% per annum and matures on February 15, 2023. In February 2023, the parties verbally agreed to extend the maturity date to December 31, 2023. Interest expense was $149,177 and $259,177 for the three and six months ended June 30, 2023, respectively. On June 21, 2023, the Company and the Sundry Holders executed a Securities Purchase Agreement (the “Sundry SPA”) whereby the Company issued per share (see Note 7). The shares were issued pursuant to the cancellation of the Sundry Holders’ entire principal amount of In March 2023, the Company and various purchasers executed a Securities Purchase Agreement (“March 2023 Notes”) whereby the investors purchased from the Company promissory notes in the aggregate principal amount of $2,458,750, consisting of original issue discount of $608,750. The Company received net proceeds of $1,850,000 after additional fees. The March 2023 Notes are due and payable on September 30, 2023 (the “Maturity Date”). The Company will also have the option to prepay the Notes with no penalties at any time prior to the Maturity Date. If the Company completes a debt or equity financing of less than $7,500,000, the Company is required to repay 50% of the remaining balance of the March 2023 Notes. Following such 50% repayment, the Company must also use any proceeds from any subsequent debt or equity financing to repay the March 2023 Notes. Upon the closing of any debt or equity financing of $7,500,000 or greater, the Company is required to repay 100% of the Notes with no penalties. There is no additional interest after the 20% original interest discount. The Company recognized a debt discount of $608,750, of which $263,839 was amortized through June 30, 2023. The following is a summary of promissory notes payable, net: June 30, December 31, 2023 2022 Bailey Note $ 3,500,000 $ 3,500,000 Sundry Note — 5,500,000 March 2023 Notes - principal 2,458,750 — March 2023 Notes - unamortized debt discount (344,911) — Promissory note payable, net $ 5,613,839 $ 9,000,000 | 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 December 31, 2022 and 2021: December 31, 2022 2021 Accrued expenses $ 668,714 $ 178,819 Reserve for returns 307,725 33,933 Payroll related liabilities 2,618,870 1,183,598 Sales tax liability 262,765 225,804 Due to seller — 396,320 Other liabilities 78,845 59,613 $ 3,936,920 $ 2,078,087 As of December 31, 2022, payroll liabilities included an aggregate of $1,074,316 in payroll taxes due to remit to federal and state authorities. Of this amount, $539,839 pertained to DBG and $534,477 pertained to Bailey44. The amounts are subject to further penalties and interest. As of December 31, 2022, accrued expenses included $535,000 in accrued common stock issuances pursuant to an advisory agreement for services performed in 2022. The 200 shares of common stock owed per the agreement are expected to be issued in the second quarter of 2023. Due to seller represents amounts to the seller owed pursuant the Stateside Acquisition after certain purchase price adjustments were made in the fourth quarter of 2021, and repaid in 2022. Venture Debt As of December 31, 2021, the gross loan balance with Black Oak Capital (“Black Oak”) pertaining to its senior credit agreement was $6,001,755. In February 2022, the Company received $237,500 in proceeds, including loan fees of $12,500, from the existing venture debt lender under the same terms as the existing facility. On September 29, 2022, the Company and Black Oak executed a Securities Purchase Agreement (the “Black Oak SPA”) whereby the Company issued 6,300 shares of Series A Convertible Preferred Stock to Black Oak for $1,000 per share (see Note 7). The shares were issued pursuant to the conversion of Black Oak’s entire principal amount of $6,251,755, and the Company recorded $48,245 in interest as part of the conversion. Pursuant to the Black Oak SPA, all accrued interest remaining outstanding. Accrued interest was $269,880 as of December 31, 2022. For the year ended December 31, 2022 and 2021, $12,500 and $147,389 of loan fees and discounts from warrants were amortized to interest expense, leaving unamortized balance of $0 as of December 31 2022. Interest expense was $573,455 and $825,219 for the years ended December 31, 2022 and 2021, 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 12,786 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 year ended December 31, 2021, $27,894 of the debt discount was amortized to interest expense. 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. In addition, the Company issued 0.2 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 181 shares of common stock. As of December 31, 2022 and 2021, there was $100,000 remaining in outstanding principal that was not converted into equity (see table below). During the year ended December 31, 2021, $100,000 of the 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. Upon closing of the IPO, the outstanding principal was converted into 145 shares of common stock. Convertible Promissory Notes 2021 Notes On August 27, 2021, the Company entered into a Securities Purchase Agreement with Oasis Capital, LLC (“Oasis Capital”) further to which Oasis Capital purchased a senior secured convertible note (the “Oasis Note”), with an interest rate of 6% per annum, having a face value of $5,265,000 for a total purchase price of $5,000,000, secured by all assets of the Company. The Oasis Note, in the principal amount of $5,265,000, bears interest at 6% per annum and is due and payable 18 months from the date of issuance, unless sooner converted. The Oasis Note is convertible at the option of Oasis Capital into shares of the Company’s common stock at a conversion price (the “ Oasis Conversion Price”) which is the lesser of (i) $90.601, and (ii) 90% of the average of the two lowest volumed weighted average prices (“VWAPs’) during the five consecutive trading day period preceding the delivery of the notice of conversion. Oasis Capital is not permitted to submit conversion notices in any thirty day period having conversion amounts equaling, in the aggregate, in excess of $500,000. If the Oasis Conversion Price set forth in any conversion notice is less than $7,500 per share, the Company, at its sole option, may elect to pay the applicable conversion amount in cash rather than issue shares of its common stock. On October 1, 2021, the Company entered into an Amended and Restated Securities Purchase Agreement with FirstFire Global Opportunities Fund, LLC (“FirstFire”) and Oasis Capital further to which FirstFire purchased a Senior Secured Convertible Promissory Note (the “First FirstFire Note”), with an interest rate of 6% per annum, having a face value of $1,575,000 for a total purchase price of $1,500,000, secured by all assets of the Company. The First FirstFire Note, in the principal amount of $1,575,000, bears interest at 6% per annum and is due and payable 18 months from the date of issuance, unless sooner converted. The First FirstFire Note is convertible at the option of FirstFire into shares of the Company’s common stock at a conversion price (the “First FirstFire Conversion Price”) which is the lesser of (i) $9,880, and (ii) 90% of the average of the two lowest volume-weighted average prices during the five consecutive trading day period preceding the delivery of the notice of conversion. On November 16, 2021, the Company entered into a Securities Purchase Agreement with FirstFire further to which FirstFire purchased a Senior Secured Convertible Promissory Note (the “Second FirstFire Note” and together with the First FirstFire Note, the “FirstFire Notes”), with an interest rate of 6% per annum, having a face value of $2,625,000 for a total purchase price of $2,500,000. The Second FirstFire Note is convertible at the option of FirstFire into shares of the Company’s common stock at a conversion price (the “Second FirstFire Conversion Price”) which is the lesser of (i) $10,700, and (ii) 90% of the average of the two lowest volume-weighted average prices during the five consecutive trading day period preceding the delivery of the notice of conversion. The Company evaluated the terms of the conversion features of the Oasis and FirstFire Notes as noted above in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity’s Own Stock, and determined they are not indexed to the Company’s common stock and that the conversion features meet the definition of a liability. The notes contain an indeterminate number of shares to settle with conversion options outside of the Company’s control. Therefore, the Company bifurcated the conversion feature and accounted for it as a separate derivative liability. Upon issuance of the Oasis and FirstFire Notes, the Company recognized a derivative liability at an aggregate fair value of $3,204,924, which is recorded as a debt discount and was amortized over the life of the notes. The original issue discount and issuance costs for the Oasis and FirstFire Notes totaled $1,560,000, which were recognized as a debt discount and was amortized over the life of the notes. As of December 31, 2021, the outstanding principal of the FirstFire and Oasis Notes was $9,465,000. During the year ended December 31, 2022, the Company fully converted the outstanding principal of $9,465,000 and accrued interest of $533,242 into an aggregate of 79,807 shares of commons stock. The Company recorded an additional $484,904 in interest expense as a result of the conversions. As a result of the conversions, all terms and conditions under the notes were met and no further obligations exist. 2022 Notes On April 8, 2022, the Company and various purchasers executed a Securities Purchase Agreement (“April Notes”) whereby the investors purchased from the Company convertible promissory notes in the aggregate principal amount of $3,068,750, consisting of original issue discount of $613,750. The Company received net proceeds of $2,313,750 after the original issue discount and fees, resulting in a debt discount of $755,000. Upon the Company’s public offering in May 2022 (see below), the Company repaid $3,068,750 to the investors and the debt discount was fully amortized. In connection with the April Notes, the Company issued an aggregate of 503 warrants to purchase common stock at an exercise price of $3,050 per share. The Company recognized $98,241 as a debt discount for the fair value of the warrants using the Black-Scholes option model, which was fully amortized upon the notes’ repayment in May. On July 22 and July 28, 2022, the Company and various purchasers executed a Securities Purchase Agreement (“July Notes”) whereby the investors purchased from the Company convertible promissory notes in the aggregate principal amount of $1,875,000, consisting of original issue discount of $375,000. The Company received net proceeds of $1,450,000 after the original issue discount and fees. In connection with the July 22 and July 28 notes, the Company issued an aggregate of 1,645 and 1,106 warrants to purchase common stock at an exercise price of $380 and $282.50 per share, respectively. The Company recognized $692,299 as a debt discount for the fair value of the warrants using the Black-Scholes option model, which will be amortized to interest expense over the life of the notes. If the July Notes are not repaid in full by the maturity date or if any other event of default occurs, (1) the face value of the notes will be automatically increased to 120%; (2) the notes will begin generating an annual interest rate of 20%, which will be paid in cash monthly until the default is cured; and (3) if such default continues for 14 or more calendar days, at the Investors’ discretion, the notes shall become convertible at the option of the investors into shares of the Company’s common stock at a conversion price equal to the closing price of the Company’s common stock on the on the date of the note conversion. The Company evaluated the terms of the conversion features of the July notes as noted above in accordance with ASC Topic No. 815 — 40, Derivatives and Hedging — Contracts in Entity’s Own Stock In December 2022, the Company fully repaid the outstanding principal of $1,875,000 pertaining to the July 22 and 28 notes, as well as an additional $416,923 due to the default provisions noted above. This amount was included in interest expense in the consolidated statements of operations. On December 29, 2022, the Company and various purchasers executed a Securities Purchase Agreement (“December Notes”) whereby the investors purchased from the Company convertible promissory notes in the aggregate principal amount of $4,000,000, consisting of original issue discount of $800,000. The Company received net proceeds of $3,000,000. The December Notes were due and payable on February 15, 2023. If the December Notes are not repaid in full by the maturity date or if any other event of default occurs, (1) the face value of the December Notes will be automatically increased to 120%; (2) the Notes will begin generating an annual interest rate of 20%, which will be paid in cash monthly until the default is cured; and (3) if such default continues for 14 or more calendar days, at the investors’ discretion, the December Notes shall become convertible at the option of the investors into shares of the Company’s common stock at a conversion price equal to the closing price of the Company’s common stock on the date of the note conversion. The December Notes were fully repaid in February 2023. In connection with the December Notes, the Company issued to the investors an aggregate of 18,779 warrants to purchase common stock at an exercise price equal to $106.50, and 2,400 shares of common stock. The Company recognized $428,200 as a debt discount for the fair value of the warrants and common shares using the Black-Scholes option model, which will be amortized to interest expense over the life of the notes. The following is a summary of the convertible notes for the years ended December 31, 2022 and 2021: Unamortized Convertible Note Principal Debt Discount Payable, Net Balance, December 31, 2020 $ 100,000 $ — $ 100,000 Issuance of Oasis note, net of issuance costs 5,265,000 (715,000) 4,550,000 Issuance of FirstFire First note, net of issuance costs 1,575,000 (315,000) 1,260,000 Issuance of Second FirstFire note, net of issuance costs 2,625,000 (530,000) 2,095,000 Derivative liability in connection with notes — (3,204,924) (3,204,924) Amortization of debt discount — 801,538 801,538 Balance, December 31, 2021 9,565,000 (3,963,386) 5,601,614 Proceeds from issuance of notes 8,943,750 (1,992,500) 6,951,250 Repayments of notes (4,943,750) — (4,943,750) Conversion of notes into common stock (9,465,000) — (9,465,000) Warrant and common shares issued with convertible notes — (1,368,741) (1,368,741) Derivative liability in connection with notes — (559,957) (559,957) Amortization of debt discount — 6,506,384 6,506,384 Balance, December 31, 2022 $ 4,100,000 $ (1,378,200) $ 2,721,800 As of December 31, 2022, the December Notes remained outstanding with a principal of $4,000,000 and unamortized debt discount of $1,278,200, consisting of the original issue discount, $50,000 in other financing fees, and the fair value of warrants and shares. The December Notes were fully repaid in February 2023 (see Note 14). During the years ended December 31, 2022 and 2021, the Company amortized $6,506,384 and $801,538, respectively of debt discount to interest expense pertaining to all convertible notes. As of December 31, 2022, there was no remaining derivative liability outstanding pertaining to any convertible notes. Loan Payable — PPP and SBA Loan In December 2021, the Company received notification that both its PPP Loans of $203,994 and $204,000 were approved for full forgiveness. As such, $407,994 was recorded as other non-operating income in the consolidated financial statements. In April 2022, Bailey received notification of full forgiveness of its 2 nd st As of December 31, 2022, the Company and H&J had outstanding loans under the EIDL program of $150,000 and $147,438, respectively. The EIDL Loans mature in thirty years from the effective date of the Loan and has a fixed interest rate of 3.75% per annum. The H&J loan was classified in liabilities per discontinued operations. Loan Payable In May 2021, H&J entered into a loan payable with a bank and received proceeds of $75,000. The line bears interest at 7.76% and matures in December 2025. As of December 31, 2022 and 2021, the outstanding balance was $73,187 and $72,269, respectively. The H&J loan was classified in liabilities per discontinued operations. In December 2021, H&J entered into a merchant advance loan for a principal amount of $153,860 and received proceeds of $140,000. The loan bears interest at 9.9% and matures in June 2023. As of December 31, 2021, the outstanding balance was $149,962. The H&J loan was classified in liabilities per discontinued operations. Note Payable – Related Party As of December 31, 2022 and 2021, H&J had an outstanding note payable of $129,489 and $299,489, respectively owned by the H&J Seller. The note matured in July 2022 and bears interest at 12% per annum. The H&J loan was classified in liabilities per discontinued operations. Merchant Advances In 2022 and 2021, H&J entered into merchant advance loans for proceeds of $147,267 and $140,000, respectively. The loan bears interest at 9.9% per annum. As of December 31, 2022 and 2021, the outstanding principal of the loans was $63,433 and $149,962, respectively. The outstanding loan at December 31, 2022 matures in November 2023. In 2022, the Company obtained several merchant advances for net proceeds of $1,335,360 to fund operations. These advances are, for the most part, secured by expected future sales transactions of the Company with expected payments on a weekly basis. During 2022, the Company made repayments totaling $1,078,385 and $896,334 remained outstanding, which is expected to be repaid in 2023. As of the date of these financial statements, the Company was in compliance with these covenants. 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. Upon the IPO closing in May 2021, the Company repaid $1,000,000 of the outstanding principal on this note in May 2021. In August 2021, the maturity date was further extended to December 31, 2022. The Company is required to make prepayments of $2,000,000 to $4,000,000 if the Company completes a secondary public offering. If a public offering is not consummated before October 31, 2021 and June 30, 2022, the Company shall repay 10% of the outstanding principal at each date. The Company did not make any payments in October 2021, and the Company and the lender agreed to defer these payments to the maturity date of the loan, December 31, 2022. As of the date of these financial statements, the parties are undergoing an extension of the maturity date, but is in technical default. The note incurs interest at 12% per annum. As of December 31, 2022 and 2021, $3,500,000 remained outstanding. Interest expense was $420,000 and $494,000 for the years ended December 31, 2022 and 2021, respectively, all of which was accrued and unpaid as of December 31, 2022. 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 48 warrants to the lender, 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. As noted in Note 4, the Company issued a promissory note in the principal amount of $5,500,000 to the Sundry Holders pursuant to the Sundry acquisition. The note bears interest at 8% per annum and matures on February 15, 2023. In February 2023, the parties verbally agreed to extend the maturity date to December 31, 2023. |
STOCKHOLDERS' DEFICIT_2
STOCKHOLDERS' DEFICIT | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
STOCKHOLDERS' DEFICIT | ||
STOCKHOLDERS' DEFICIT | NOTE 8: STOCKHOLDERS’ DEFICIT On January 11, 2023, the Company, entered into a Securities Purchase Agreement (the “Purchase Agreement”) with a certain accredited investor (the “Investor”), pursuant to which the Company agreed to issue and sell, in a private placement (the “January Private Placement”), an aggregate of 19,000 shares (the “Shares”) of the Company’s common stock (“Common Stock”), and accompanying warrants (the “Common Warrants”) to purchase 19,000 shares of Common Stock, at a combined purchase price of $97.875 per share and Common Warrant, and (ii) 32,086 pre-funded warrants (the “Pre-Funded Warrants” and together with the Common Warrants, the “Warrants” and together with the Shares and the shares of Common Stock underlying the Warrants, the “Securities”) exercisable for 32,086 shares of Common Stock, and accompanying Common Warrants to purchase 32,086 shares of Common Stock, at a combined purchase price of $97.875 per Pre-Funded Warrant and accompanying Common Warrant, to the Investors, for aggregate gross proceeds from the Private Placement of approximately $5 million before deducting placement agent fees and related offering expenses. As a result of the transaction, the Company issued 50,890 shares of common stock, including the 19,000 shares and the immediate exercise of 32,086 pre-funded warrants, for gross proceeds of $5.0 million. The Company received net proceeds of $4.3 million after deducting placement agent fees and offering expenses. In January 2023, the Company issued 4,400 shares of common stock at a fair value of $322,300 to a former convertible noteholder pursuant to default provisions. The amount was included in interest expense in the consolidated statements of operations. In March 2023, the Company issued an aggregate of 4,756 shares of common stock to Sundry executives based on their employment agreements with the Company. The fair value of $499,338, or $4.20 per share as determined by the agreements, was included in general and administrative expenses in the consolidated statements of operations. In June 2023, the Company issued 78,103 shares of common stock to D. Jones at a fair value of $1,357,043 pursuant to the H&J Settlement Agreement. During the six months ended June 30, 2022, the Company converted an aggregate of $888,930 in outstanding principal into 350 shares of common stock. Series B Preferred Stock On May 30, 2023, the Company entered into a Subscription and Investment Representation Agreement (the “Subscription Agreement”) with John Hilburn Davis IV, its Chief Executive Officer pursuant to which the Company agreed to issue and sell 1 share of the Company’s Series B Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock”) for $25,000. On May 30, 2023, the Company filed a certificate of designation (the “Certificate of Designation”) with the Secretary of State of the State of Delaware, effective as of the time of filing, designating the rights, preferences, privileges and restrictions of the share of Series B Preferred Stock. The Certificate of Designation provides that the Series B Preferred Stock will have 250,000,000 votes per share of Series B Preferred Stock and will vote together with the outstanding shares of the Company’s common stock, par value 0.0001 per share (the “Common Stock”) and Series A Convertible Preferred Stock, par value 0.0001 per share (the “Series A Convertible Preferred Stock”) as a single class exclusively with respect to any proposal to amend the Company’s Sixth Amended and Restated Certificate of Incorporation (as may be amended and/or restated from time to time, the “Restated Certificate”) to effect a reverse stock split of the Company’s common stock. The Series B Preferred Stock will be voted, without action by the holder, on any such proposal in the same proportion as shares of Common Stock and Series A Convertible Preferred Stock are voted. The Series B Preferred Stock otherwise has no voting rights. The Series B Preferred Stock is not convertible into, or exchangeable for, shares of any other class or series of stock or other securities of the Company. The Series B Preferred Stock has no rights with respect to any distribution of assets of the Company, including upon a liquidation, bankruptcy, reorganization, merger, acquisition, sale, dissolution or winding up of the Company, whether voluntarily or involuntarily. The holder of the Series B Preferred Stock will not be entitled to receive dividends of any kind. The outstanding share of Series B Preferred Stock shall be redeemed in whole, but not in part, at any time (i) if such redemption is ordered by the Board of Directors in its sole discretion or (ii) automatically upon the effectiveness of the amendment to the Restated Certificate implementing a reverse stock split. Upon such redemption, the holder of the Series B Preferred Stock will receive consideration of $25,000 in cash. Series C Convertible Preferred Stock On June 21, 2023, the Company, on the one hand, and Moise Emquies, George Levy, Matthieu Leblan, Carol Ann Emquies, Jenny Murphy and Elodie Crichi (collectively, the “Sundry Investors”), on the other hand, executed a Securities Purchase Agreement (the “Sundry SPA”) whereby the Company issued 5,761 shares of Series C Convertible Preferred Stock, par value $0.0001 per share (the “Series C Preferred Stock”) to the Sundry Investors at a purchase price of $1,000 per share. The Series C Preferred Stock is convertible into a number of shares of the Company’s Common Stock equal to $1,000 divided by an initial conversion price of $17.925 which represents the lower of (i) the closing price per share of the Common Stock as reported on the Nasdaq on June 20, 2023, and (ii) the average closing price per share of Common Stock as reported on the Nasdaq for the five trading days preceding June 21, 2023. The shares of Series C Preferred Stock were issued in consideration for the cancellation of certain promissory notes issued by the Company to the Sundry Investors dated December 30, 2022 (the “Sundry Loan Documents”). The following is a summary of the rights and preferences of the Series C Convertible Preferred Stock. On June 21, 2023, the Company filed the Certificate of Designation with the Secretary of State for the State of Delaware designating up to 5,761 shares out of the authorized but unissued shares of its preferred stock as Series C Convertible Preferred Stock. The following is a summary of the principal terms of the Series C Preferred Stock. Except for stock dividends or distributions for which adjustments are to be made pursuant to the Certificate of Designation, the holders of the Series C Preferred Stock (the “Series C Holders”) shall be entitled to receive, and the Company shall pay, dividends on shares of the Series C Preferred Stock equal (on an as-if-converted-to-Common-Stock basis) to and in the same form as dividends actually paid on shares of the Common Stock when, as and if such dividends are paid on shares of the Common Stock. No other dividends shall be paid on shares of the Series C Preferred Stock. The Series C Holders are entitled to vote as a class as expressly provided in the Certificate of Designation. The Series C Holders are also entitled to vote with the holders of shares of Common Stock, voting together as one class, on all matters in which the Series C Holders are permitted to vote with the class of shares of Common Stock. With respect to any vote with the class of Common Stock, each share of the Series C Preferred Stock shall entitle the Holder thereof to cast that number of votes per share as is equal to the number of shares of Common Stock into which it is then convertible (subject to the ownership limitations specified in the Certificate of Designation) using the record date for determining the stockholders of the Company eligible to vote on such matters as the date as of which the conversion price is calculated. The Series C Preferred Stock shall rank (i) senior to all of the Common Stock; (ii) senior to Junior Securities; (iii) on parity with Parity Securities; and (iv) junior to Senior Securities, in each case, as to dividends or distributions of assets upon liquidation, dissolution or winding up of the Company, whether voluntarily or involuntarily. Subject to any superior liquidation rights of the holders of any Senior Securities of the Company and the rights of the Company’s existing and future creditors, upon a Liquidation, each Holder shall be entitled to be paid out of the assets of the Company legally available for distribution to stockholders, prior and in preference to any distribution of any of the assets or surplus funds of the Company to the holders of the Common Stock and Junior Securities and pari passu with any distribution to the holders of Parity Securities, an amount equal to the Stated Value (as defined in the Certificate of Designation) for each share of the Series C Preferred Stock held by such Holder and an amount equal to any accrued and unpaid dividends thereon, and thereafter the Series C Holders shall be entitled to receive out of the assets, whether capital or surplus, of the Company the same amount that a holder of Common Stock would receive if the Series C Preferred Stock were fully converted (disregarding for such purposes any conversion limitations hereunder) to Common Stock which amounts shall be paid pari passu with all holders of Common Stock. Each share of the Series C Preferred Stock shall be convertible, at any time and from time to time from and after June 21, 2023 at the option of the Holder thereof, into that number of shares of Common Stock determined by dividing the Stated Value of such share of the Series C Preferred Stock ($1,000 as of June 21, 2023) by the Conversion Price. The conversion price for each share of the Series C Preferred Stock is $17.925, which is the lower of (a) the closing price per share of the Common Stock as reported on the Nasdaq Capital Market on June 20, 2023 (the trading day before the date of the Sundry SPA), and (b) the average closing price per share of Common Stock as reported on the Nasdaq Capital Market for the five The Company has the option to redeem any or all of the then outstanding Series C Preferred Stock at 112% of the then Stated Value any time after June 21, 2023 and so long as there is an effective Registration Statement covering the shares issuable upon conversion of the Series C Preferred Stock. | NOTE 8: STOCKHOLDERS’ DEFICIT Amendments to Articles of Incorporation On October 13, 2022, On October 21, 2022, the Board of Directors approved a one reverse stock split became effective as of November 3, 2022. Accordingly, all share and per share amounts for all periods presented in the accompanying consolidated financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect this reverse stock split and adjustment of the preferred stock conversion ratios. 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 66⅔% The Restated Certificate also effected a 1-for-15.625 reverse stock split approved by the Company’s Board of Directors as described above. Series A Preferred Stock On August 31, 2022, the Company entered into a Subscription and Investment Representation Agreement with Hil Davis, its Chief Executive Officer, pursuant to which the Company agreed to issue 1 share of the Company’s Series A Preferred Stock to for $25,000. The issuance of the preferred stock reduced the due to related party balance. The share of Series A Preferred Stock had 250,000,000 votes per share and voted together with the outstanding shares of the Company’s common stock as a single class exclusively with respect to any proposals to amend the Certificate of Incorporation to effect a reverse stock split of the Company’s common stock and to increase the authorized number of shares of the Company’s common stock. The terms of the Series A Preferred Stock provided that the outstanding share of Series A Preferred Stock would be redeemed in whole, but not in part, at any time: (i) if such redemption is ordered by the Board of Directors in its sole discretion or (ii) automatically upon the approval of Proposals 2 and 6 presented at the Company’s 2022 annual shareholders meeting. Following conclusion of the shareholders meeting, such share of the Company’s Series A Preferred Stock was redeemed. On October 13, 2022, the outstanding share of the Company’s Series A Preferred Stock was redeemed for $25,000. Series A Convertible Preferred Stock On September 29, 2022, the Company filed the Certificate of Designation designating up to 6,800 shares out of the authorized but unissued shares of its preferred stock as Series A Convertible Preferred Stock. Except for stock dividends or distributions for which adjustments are to be made pursuant to the Certificate of Designation, the holders of the Series A Preferred Stock (the “Holders”) shall be entitled to receive, and the Company shall pay, dividends on shares of the Series A Preferred Stock equal (on an as-if-converted-to-Common-Stock basis) to and in the same form as dividends actually paid on shares of the Common Stock when, as and if such dividends are paid on shares of the Common Stock. No other dividends shall be paid on shares of the Series A Preferred Stock. With respect to any vote with the class of Common Stock, each share of the Series A Preferred Stock shall entitle the Holder thereof to cast that number of votes per share as is equal to the number of shares of Common Stock into which it is then convertible. The Series A Preferred Stock shall rank (i) senior to all of the Common Stock; (ii) senior to any class or series of capital stock of the Company hereafter created specifically ranking by its terms junior to any Preferred Stock (“Junior Securities”); (iii) on parity with any class or series of capital stock of the Corporation created specifically ranking by its terms on parity with the Preferred Stock (“Parity Securities”); and (iv) junior to any class or series of capital stock of the Company hereafter created specifically ranking by its terms senior to any Preferred Stock (“Senior Securities”), in each case, as to dividends or distributions of assets upon liquidation, dissolution or winding up of the Company, whether voluntarily or involuntarily. Each share of the Series A Preferred Stock shall be convertible, at any time and from time to time from and after September 29, 2022 at the option of the Holder thereof, into that number of shares of Common Stock determined by dividing the Stated Value of such share of the Series A Preferred Stock ($1,000 as of September 29, 2022) by the Conversion Price. The conversion price for each share of the Series A Preferred Stock is the closing price of the Common Stock on September 29, 2022, which was $232.50. Common Stock The Company had 1,000,000,000 shares of common stock authorized with a par value of $0.0001 as of December 31, 2022. 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. 2022 Transactions During the year ended December 31, 2022, the Company issued an aggregate of 79,807 shares of common stock pursuant to the conversion of the FirstFire and Oasis Notes (see Note 7). In September 2022, the Company issued 30 shares of common stock pursuant to a consultant agreement at a fair value of $123,000. As part of the Sundry acquisition (see Note 4), the Company issued 3,636 shares of common stock to the Sundry Sellers at a fair value of $1,000,000. In connection with the December Notes, the Company issued 2,400 shares of common stock with a fair value of $264,000. Underwriting Agreements and Public Offerings On May 5, 2022, the Company entered into an underwriting agreement (the “Alexander Underwriting Agreement”) with Alexander Capital, L.P., acting as representative of the several underwriters named in the Alexander Underwriting Agreement (the “ Alexander Underwriters”), relating to the Company’s underwritten the offering pursuant to which the Company agreed to issue and sell 14,956 shares of the Company’s common stock. The shares were sold to the public at a combined public offering price of $625 per share and were purchased by the Underwriters from the Company at a price of $575 per share. The Company also granted the Alexander Underwriters a 45-day option to purchase up to an additional 2,243 shares of Common Stock at the same price, which expired and were not purchased. The shares were sold in the Offering pursuant to a Registration Statement on Form S-1, as amended (File No. 333-264347) (the “Registration Statement”), a Registration Statement on Form S-1 pursuant to 462(b) of the Securities Act of 1933, as amended (File No. 333-264775), and a related prospectus filed with the Securities and Exchange Commission. The public offering closed on May 10, 2022 and the Company sold 14,956 shares of common stock for total gross proceeds of $9.3 million. The Company received net proceeds of $8.1 million after deducting underwriters’ discounts and commissions of $0.7 million and direct offering expenses of $0.5 million. On November 29, 2022, the Company, entered into a Securities Purchase Agreement with investors pursuant to which the Company agreed to issue and sell, in an offering (i) an aggregate of 6,720 shares (the “Shares”) of the Company’s common stock, and accompanying Class B Warrants (the “Class B Warrants”) to purchase 6,720 shares of common stock and accompanying Class C Warrants (the “Class C Warrants”) to purchase 6,720 shares of Common Stock, at a combined public offering price of $137.50 per share and Class B Warrant and Class C Warrant, and (ii) 66,007 pre-funded warrants (the “Pre-Funded Warrants” and together with the Class B Warrants and the Class C Warrants, the “Warrants” and together with the Shares and the shares of common stock underlying the Warrants, the “Securities”) exercisable for 66,007 shares of Common Stock, and accompanying Class B Warrants to purchase 66,007 shares of Common Stock and Class C Warrants to purchase 66,007 shares of Common Stock, at a combined public offering price of $137.50, less the exercise price of $0.0001, per Pre-Funded Warrant and accompanying Class B Warrant and Class C Warrant, to the Investors, for aggregate gross proceeds from the offering of approximately $10 million before deducting placement agent fees and related offering expenses. As a result of the transaction, the Company issued 72,727 shares of common stock, including the 6,720 shares and the immediate exercise of 66,007 pre-funded warrants, for gross proceeds of $10.0 million. The Company received net proceeds of $9.0 million after deducting placement agent fees and offering expenses. 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 964 shares of common stock at a public offering price of $10,375 per share. Additionally, the Company issued warrants to purchase 1,111 shares, which includes 145 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 1,611 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 454 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 61 shares of common stock and recorded $233,184 in compensation expense for the shares issued in excess of accrued balances owed. In connection with the H&J and Stateside acquisitions, the Company issued 877 and 441 shares of common stock to the respective sellers. See Note 4. Pursuant to a consulting agreement, the Company issued 20 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. An additional 17 shares were issued upon settlement of the contingent liability. In May 2021, an aggregate of 13 warrants were exercised for shares of common stock for proceeds of $145,696. In July 2021, warrant holders exercised 142 warrants for proceeds of $1,622,350. On June 28, 2021, the Company’s underwriters purchased 145 shares of common stock at a public offering price of $10,375 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. In connection with the execution of the Oasis Capital EPA, the Company issued Oasis Capital 51 shares of common stock (the “Commitment Shares”). Upon nine months from the Execution Date, Oasis may return a portion of the Commitment Shares. As of December 31, 2021, the Company recorded the fair value of the Commitment Shares of $367,696 as deferred offering costs as no financings under the related EPA have occurred. In connection with the Second FirstFire Note, in November 2021 the Company issued (a) 12 additional shares of common stock to FirstFire and (b) 40 additional shares of common stock to Oasis Capital, as set forth in the waivers and consents (the “Waivers”), dated November 16, 2021 executed by each of FirstFire and Oasis Capital (collectively, the “Waiver Shares”). The Company recorded interest expense of $427,700 pertaining to the fair value of the Waiver Shares issued. In December 2021, the Company issued 60 shares of common stock pursuant to a consulting agreement. The fair value of $339,000 was based on the value of the Company’s common stock on the date of grant and is included in general and administrative expenses in the consolidated statements of operations. |
RELATED PARTY TRANSACTIONS_2
RELATED PARTY TRANSACTIONS | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
RELATED PARTY TRANSACTIONS | ||
RELATED PARTY TRANSACTIONS | NOTE 9: RELATED PARTY TRANSACTIONS During the six months ended June 30, 2023 and 2022, the Company made net repayments for amounts due to related parties totaling $57,427 and $172,036, respectively. As of June 30, 2023 and December 31, 2022, amounts due to related parties were $472,790 and $556,225 , respectively. The advances are unsecured, non-interest bearing and due on demand. Amounts due to related parties consist of current and former executives, and a board member. As of December 31, 2022, H&J had an outstanding note payable of $129,489 owned by the H&J Seller. The balance was $0 upon the H&J disposition in June 2023. | NOTE 9: RELATED PARTY TRANSACTIONS As of December 31, 2022 and 2021, due to related parties includes advances from the former officer, Mark Lynn, who also serves as a director, totaling $104,568 and $104,568 respectively, and accrued salary and expense reimbursements of $100,649 and $126,706, respectively, to current officers. Upon closing of the IPO, 1,003 shares of common stock were issued to directors as conversion of balances owed. In October 2022, the Company received advances from a director, Trevor Pettennude, totaling $325,000. The advances are unsecured, non-interest bearing and due on demand. As of December 31, 2022, the amounts were outstanding. 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, 5,091 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 consolidated statements of operations. As of December 31, 2022 and 2021, H&J had an outstanding note payable of $129,489 and $299,489, respectively, owned by the H&J Seller. The note matured on December 10, 2022 and bears interest at 12% per annum. The note is in technical default. The H&J note was classified in liabilities per discontinued operations. |
SHARE-BASED PAYMENTS_2
SHARE-BASED PAYMENTS | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
SHARE-BASED PAYMENTS | ||
SHARE-BASED PAYMENTS | NOTE 10: SHARE-BASED PAYMENTS Common Stock Warrants In connection with the January Private Placement, the Company granted 32,086 pre-funded warrants which were immediately exercised for shares of common stock. The Company also granted an additional 51,086 warrants as part of the offering. Each warrant has an exercise price of $95 per share, is immediately exercisable upon issuance and expires five years after issuance. The Company also granted the placement agent 3,831 warrants to purchase common stock at an exercise price of $3,050.35 per share, which is immediately exercisable upon issuance and expires five years In connection with merchant advances (Note 6), the Company granted 6,095 warrants to purchase common stock at an exercise price of $131.25. The warrants are immediately exercisable upon issuance and expire five years after issuance. The following is a summary of warrant activity: Common Weighted Stock Average Warrants Exercise Price Outstanding - December 31, 2022 176,733 $ 209 Granted 93,099 99.50 Exercised (32,086) 97.88 Forfeited — — Outstanding - June 30, 2023 237,746 $ 181.25 Exercisable at December 31, 2022 171,278 $ 210.50 Exercisable at June 30, 2023 237,745 $ 181.25 Stock Options As of June 30, 2023 and December 31, 2022, the Company had 1,558 stock options outstanding with a weighted average exercise price of $362.11 per share. As of June 30, 2023, there were 1,439 options exercisable. Stock-based compensation expense of $101,500 and $119,759 was recognized for the three months ended June 30, 2023 and 2022, respectively, and $207,094 and $258,852 was recognized for the six months June 30, 2023 and 2022, respectively. During the six months ended June 30, 2023 and 2022, $28,798 and $28,798 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, 2023 amounted to $370,907 and will be recognized over a weighted average period of 0.9 years. | NOTE 10: SHARE-BASED PAYMENTS Common Stock Warrants 2022 Transactions In connection with the April note agreement, the Company granted warrants to acquire 503 shares of common stock at an exercise price of $3,050.00 per share expiring in April 2027. On May 10, 2022, pursuant to the Underwriting Agreement, the Company issued the Underwriters’ Warrants to purchase up to an aggregate of 598 shares of common stock. The Underwriters’ Warrants may be exercised beginning on November 1, 2022 until May 5, 2027. The initial exercise price of each Underwriters’ Warrant is $812.50 per share, which represents 130% of the public offering price. In connection with the July 22 and July 28 notes, the Company issued an aggregate of 1,645 and 1,106 warrants to purchase common stock at an exercise price of $380 and $282.50 per share, respectively. The warrants expire in July 2027. In connection with the November public offering, the Company granted 66,007 pre-funded warrants which were immediately exercised for shares of common stock. The Company also granted an additional 72,727 Class B Warrants and 72,727 Class C Warrants as part of the offering. Each Class B Warrant has an exercise price of $131.25 per share, is immediately exercisable upon issuance and expires five years after issuance. Each Class C Warrant has an exercise price of $131.25 per share, is immediately exercisable upon issuance and expires thirteen months after issuance. The Company also granted the placement agent 5,455 warrants to purchase common stock at an exercise price of $172 per share, which are exercisable 180 days after issuance and expire in five years. In connection with the December Notes, the Company issued to the investors an aggregate of 18,779 warrants to purchase common stock at an exercise price equal to $106.50 for a fair value of $164,200. The warrants are immediately exercisable. The Company granted 1,760 warrants to purchase common stock at an exercise price of $125 to the lender in connection with its merchant advances. 2021 Transactions In connection with the IPO, the Company issued 964 warrants and an additional 145 warrants to purchase common stock per the over-allotment option. Each warrant will have an exercise price of $11,425 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 48 shares of common stock with an exercise price of $12,975 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 48 shares of common stock. The warrants have an exercise price of $10,375 per share and are exercisable immediately after issuance. In May 2021, an aggregate of 13 warrants were exercised for shares of common stock for proceeds of $145,696. In July 2021, warrant holders exercised 142 warrants for proceeds of $1,622,350. A summary of information related to common stock warrants for the years ended December 31, 2022 and 2021 is as follows: Common Weighted Stock Average Warrants Exercise Price Outstanding - December 31, 2020 366 $ 6,650 Granted 1,205 11,450 Conversion of preferred stock warrants upon IPO 21 19,150 Exercised (155) 11,425 Forfeited (4) 19,150 Outstanding - December 31, 2021 1,432 $ 10,300 Granted 241,308 140.36 Exercised (66,007) 131.25 Forfeited — — Outstanding - December 31, 2022 176,733 $ 209.23 Exercisable at December 31, 2021 1,432 $ 10,300 Exercisable at December 31, 2022 171,278 $ 210.41 Preferred Stock Warrants Upon the IPO, all outstanding preferred stock warrants converted into common stock warrants at a ratio of 39,075:1. Stock Options 2020 Incentive Stock Plan The Company has adopted a 2020 Omnibus Incentive Stock Plan (the “2020 Plan”). An aggregate of 33,000 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. During 2021, 1,093 options were granted to executives and directors at an exercise price from $9,625 to $10,375 per share. As of December 31, 2022, 31,907 options were available for future issuance. 2013 Incentive Stock Plan The Company has adopted the 2013 Stock Plan, as amended and restated (the “Plan”), which provides for the grant of shares of stock options, stock appreciation rights, and stock awards (performance shares) to employees, non-employee directors, and non-employee consultants. The number of shares authorized by the Plan was 479 shares as December 31, 2022 and 2021. The option exercise price generally may not be less than the underlying stock’s fair market value at the date of the grant and generally have a term often years. The amounts granted each calendar year to an employee or non-employee is limited depending on the type of award. Stock options comprise all of the awards granted since the Plan’s inception. Shares available for grant under the Plan amounted to 13 and as of December 31, 2022. Vesting generally occurs over a period of immediately to four years. A summary of information related to stock options under our 2013 and 2020 Stock Plan for the years ended December 31, 2022 and 2021 is as follows: Weighted Average Options Exercise Price Outstanding - December 31, 2020 485 $ 5,850 Granted 1,093 10,375 Exercised — — Forfeited — — Outstanding - December 31, 2021 1,558 $ 9,053 Granted — — Exercised — — Forfeited — — Outstanding - December 31, 2022 1,558 $ 9,053 Exercisable at December 31, 2021 1,266 $ 8,975 Exercisable at December 31, 2022 1,389 $ 10,125 Weighted average duration (years) to expiration of outstanding options at December 31, 2022 7.00 The assumptions utilized for option grants during the years ended December 31, 2022 and 2021 are as follows: Year Ended December 31, 2022 2021 Risk Free Interest Rate n/a 0.34% - 0.85 % Expected Dividend Yield n/a 0.00 % Expected Volatility n/a 58.00 % Expected Life (years) n/a 5.18 The total grant-date fair value of the options granted during the years ended December 31, 2021 was $4,696,605. During the year ended December 31, 2022 and 2021, $421,442 and $3,325,897 was recorded to general and administrative expenses, and $57,596 and $551,948 was recorded to sales and marketing expense in the consolidated statements of operations, all respectively. Total unrecognized compensation cost related to non-vested stock option awards as of December 31, 2022 amounted to $577,999 and will be recognized over a weighted average period of 1.56 years. |
LEASE OBLIGATIONS_2
LEASE OBLIGATIONS | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
LEASE OBLIGATIONS | ||
LEASE OBLIGATIONS | NOTE 11: LEASE OBLIGATIONS In January 2023, the Company entered into a lease agreement extension for its corporate office and distribution center in Vernon, California that expires on December 31, 2023. The lease has monthly base rent payments of $38,105. As a result of the extension, the Company recognized a right of use asset and liability of $467,738 using a discount rate of 8.0%. As of June 30, 2023, the Company has $949,071 in accounts payable for past rents due to the landlord pertaining to this lease. In May 2023, the Company entered into a lease agreement extension for a showroom space in Los Angeles, California that commences in March 2023 and expires in January 2025. The original lease began in April 2018 and terminated in May 2020, at which point the lease was month to month. The lease has a monthly base rent of $6,520 until January 31, 2025, at which point the base rent increases to $6,781 until the end of the lease. As a result of the extension, the Company recognized a right of use asset and liability of $125,397 using a discount rate of 8.0%. As of June 30, 2023, the Company has $214,626 in accounts payable for past rents due to the landlord pertaining to this lease. Stateside and Sundry utilize a lease for a showroom in Los Angeles, California which is month to month. Total rent expense for the three months ended June 30, 2023 and 2022 was $37,580 and $195,060, and $210,265 and $469,482 for the six months end June 30, 2023 and 2022, respectively. | NOTE 11: LEASE OBLIGATIONS In April 2021, the Company entered into a lease agreement for operating space in Los Angeles, California. The lease expires in June 2023 and has monthly base rent payments of $17,257. The lease required a $19,500 deposit. The Company adopted ASC 842 on January 1, 2021 and recognized a right of use asset and liability of $250,244 using a discount rate of 6.0%. Under ASC 842, the lease was classified as an operating lease. Stateside leases office and showroom facilities in Los Angeles, California. The leases expire at various dates through November 2022 with base rents ranging from $3,100 to $9,000. Total rent expense for the years ended December 31, 2022 and 2021 was $945,216 and $816,790, respectively. Rent is classified by function on the consolidated statements of operations either as general and administrative, sales and marketing, or cost of revenue. The Company determines whether an arrangement is or contains a lease at inception by evaluating potential lease agreements including services and operating agreements to determine whether an identified asset exists that the Company controls over the term of the arrangement. Lease commencement is determined to be when the lessor provides access to, and the right to control, the identified asset. The rental payments for the Company’s leases are typically structured as either fixed or variable payments. Fixed rent payments include stated minimum rent and stated minimum rent with stated increases. The Company considers lease payments that cannot be predicted with reasonable certainty upon lease commencement to be variable lease payments, which are recorded as incurred each period and are excluded from the calculation of lease liabilities. Management uses judgment in determining lease classification, including determination of the economic life and the fair market value of the identified asset. The fair market value of the identified asset is generally estimated based on comparable market data provided by third-party sources. |
CONTINGENCIES_2
CONTINGENCIES | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
CONTINGENCIES | ||
CONTINGENCIES | NOTE 12: CONTINGENCIES On March 21, 2023, a vendor filed a lawsuit against Digital Brands Group related to trade payables totaling approximately $43,501. Such amounts include interest due, and are included in accounts payable, net of payments made to date, in the accompanying consolidated balance sheets. The Company does not believe it is probable that the losses in excess of such trade payables will be incurred. On February 7, 2023, a vendor filed a lawsuit against Digital Brands Group related to trade payables totaling approximately $182,400. Such amounts include interest due, and are included in accounts payable, net of payments made to date, in the accompanying consolidated balance sheets. The Company does not believe it is probable that the losses in excess of such trade payables will be incurred. On November 9, 2022, a vendor filed a lawsuit against Digital Brand’s Group related to prior services rendered. The claims (including fines, fees, and legal expenses) total an aggregate of $50,190. The matter was settled in January 2023 and are on payment plans which will be paid off in April 2023. In August 2020 and March 2021, two lawsuits were filed against Bailey by third-party’s related to prior services rendered. The claims (including fines, fees, and legal expenses) total an aggregate of $96,900. Both matters were settled in February 2022 and are on payment plans which will be paid off in July and September of 2023. 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. A vendor filed a lawsuit against Bailey related to a retail store lease in the amount of $1.5 million. The Company is disputing the claim for damages and the matter is ongoing. The vendor has recently updated the claim to now be $450,968 after signing a long-term lease with another brand for this location. The Company is disputing this new amount after review of the lease. All claims above, to the extent management believes it will be liable, have been included in accounts payable and accrued expenses and other liabilities in the accompanying consolidated balance sheet as of June 30, 2023. 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. | NOTE 12: CONTINGENCIES On March 21, 2023, a vendor filed a lawsuit against Digital Brands Group related to trade payables totaling approximately $43,501. Such amounts include interest due, and are included in accounts payable, net of payments made to date, in the accompanying consolidated balance sheets. The Company does not believe it is probable that the losses in excess of such trade payables will be incurred. On February 7, 2023, a vendor filed a lawsuit against Digital Brands Group related to trade payables totaling approximately $182,400. Such amounts include interest due, and are included in accounts payable, net of payments made to date, in the accompanying consolidated balance sheets. The Company does not believe it is probable that the losses in excess of such trade payables will be incurred. On November 9, 2022, a vendor filed a lawsuit against Digital Brand's Group related to prior services rendered. The claims (including fines, fees, and legal expenses) total an aggregate of $50,190. The matter was settled in January 2023 and are on payment plans which will be paid off in April 2023. In August 2020 and March 2021, two lawsuits were filed against Bailey by third-party’s related to prior services rendered. The claims (including fines, fees, and legal expenses) total an aggregate of $96,900. Both matters were settled in February 2022 and are on payment plans which will be paid off in July and September of 2023 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. On September 24, 2020 a Bailey’s product vendor filed a lawsuit against Bailey for 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. In December 2021, the Company reached a settlement; however, the settlement terms were not met and the Company received a judgement of $496,000. The amount due has been paid, the lawsuit dismissed and there is no claim or amount due. A vendor filed a lawsuit against Bailey related to a retail store lease in the amount of $1.5 million. The Company is disputing the claim for damages and the matter is ongoing. The Company has been involved in a dispute with the former owners of H&J regarding its obligation to “true up” their ownership interest in our Company further to that membership interest purchase agreement dated May 18, 2021 whereby we acquired all of the outstanding membership interests of H&J (the “H&J Purchase Agreement”). Further to the H&J Purchase Agreement, we agreed that if, at May 18, 2022, the one year anniversary of the closing date of our initial public offering, the product of the number of shares of our common stock issued at the closing of such acquisition multiplied by the average closing price per share of our shares of common stock as quoted on the NasdaqCM for the thirty (30) day trading period immediately preceding such date plus the gross proceeds, if any, of shares of our stock issued to such sellers and sold by them during the one year period from the closing date of the offering does not exceed the sum of $9.1 million, less the value of any shares of common stock cancelled further to any indemnification claims or post-closing adjustments under the H&J Purchase Agreement, then we shall issue to the subject sellers an additional aggregate number of shares of common stock equal to any such valuation shortfall at a per share price equal to the then closing price per share of our common stock as quoted on the NasdaqCM. We did not honor our obligation to issue such shares and the former owner of H&J have claimed that they were damaged as a result. As part of a proposed settlement with such holders, the Company has tentatively agreed to the following: (i) to transfer all membership interests of H&J back to the original owners, (ii) to pay such owners the sum of $229,000, (iii) issue the former owners of H&J an aggregate of $1,400,000 worth of our common stock to be issued on May 16, 2023 based on the lower of (a) the stock closing price per share on May 15, 2023, and (b) the average common stock closing price based on the average of the 5 trading days preceding May 16, 2023, with the closing price on May 9, 2023. Such tentative terms are to be memorialized in definitive purchase agreements and as such there is no assurance that such arrangements will be finalized. As of the issuance date of these financial statements, the above terms and continued negotiations have been verbally approved by the Board. All claims above, to the extent management believes it will be liable, have been included in accounts payable and accrued expenses and other liabilities in the accompanying consolidated balance sheet as of December 31, 2022. 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_2
INCOME TAXES | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
INCOME TAXES | ||
INCOME TAXES | NOTE 13: INCOME TAXES The Company has historically calculated the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate for the full fiscal year to “ordinary” income or loss (pretax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period. The Company has used a discrete effective tax rate method to calculate taxes for the fiscal three and six month periods ended June 30, 2023. The Company determined that since small changes in estimated “ordinary” income would result in significant changes in the estimated annual effective tax rate, the historical method would not provide a reliable estimate for the fiscal three and six-month periods ended June 30, 2023. The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. The Company assessed the need for a valuation allowance against its net deferred tax assets and determined a full valuation allowance is required due, cumulative losses through June 30, 2023, and no history of generating taxable income. | NOTE 13: INCOME TAXES Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. The differences relate primarily to depreciable assets using accelerated depreciation methods for income tax purposes, share-based compensation expense, and for net operating loss carryforwards. As of December 31, 2022, and 2021, the Company had net deferred tax assets before valuation allowance of $16,733,582 and $13,103,268, respectively. The following table presents the deferred tax assets and liabilities by source: December 31, 2022 2021 Deferred tax assets: Net operating loss carryforwards $ 16,733,582 $ 13,108,371 Deferred tax liabilities: Depreciation timing differences — (5,103) Valuation allowance (16,733,582) (13,103,268) Net deferred tax assets $ — $ — The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. The Company assessed the need for a valuation allowance against its net deferred tax assets and determined a full valuation allowance is required due, cumulative losses through December 31, 2022, and no history of generating taxable income. Therefore, valuation allowances of $16,733,582 and $13,103,268 were recorded as of December 31, 2022 and 2021, respectively. Valuation allowance increased by $3,630,314 and $3,081,497 during the years ended December 31, 2022 and 2021, respectively. Deferred tax assets were calculated using the Company’s combined effective tax rate, which it estimated to be approximately 28.0%. The effective rate is reduced to 0% for 2022 and 2021 due to the full valuation allowance on its net deferred tax assets. The Company has permanent differences, consisting of non-deductible impairments of goodwill and intangible assets of $17.7 million and amortization of non-cash debt issuance costs of $6.5 million. The Company’s ability to utilize net operating loss carryforwards will depend on its ability to generate adequate future taxable income. At December 31, 2022 and 2021, the Company had net operating loss carryforwards available to offset future taxable income in the amounts of approximately $59,865,000 and $46,896,000, for which losses from 2018 forward can be carried forward indefinitely. As a result of prior operating losses, the Company has net operating loss, or “NOL,” carryforwards for federal income tax purposes. The ability to utilize NOL carryforwards to reduce taxable income in future years could become subject to significant limitations under Section 382 of the Internal Revenue Code if the Company undergoes an ownership change. The Company would undergo an ownership change if, among other things, the stockholders who own, directly or indirectly, 5% or more of our common stock, or are otherwise treated as “5% shareholders” under Section 382 of the U.S. Internal Revenue Code and the regulations promulgated thereunder, increase their aggregate percentage ownership of the Company’s stock by more than 50 percentage points over the lowest percentage of the stock owned by these stockholders at any time during the testing period, which is generally the three-year period preceding the potential ownership change. The Company has evaluated its income tax positions and has determined that it does not have any uncertain tax positions. The Company will recognize interest and penalties related to any uncertain tax positions through its income tax expense. The Company is not presently subject to any income tax audit in any taxing jurisdiction, though all tax years from 2018 on remain open to examination. The Company recorded a tax benefit of $1,100,120 for the year ended December 31, 2021 related to a full release of its valuation allowance pertaining to the acquisition of H&J (see Note 4). The acquisition of H&J created a deferred tax liability position, and those deferred tax liabilities can be used as a source of income for the Company’s existing deferred tax assets. |
SUBSEQUENT EVENTS_2
SUBSEQUENT EVENTS | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
SUBSEQUENT EVENTS | ||
SUBSEQUENT EVENTS | NOTE 14: SUBSEQUENT EVENTS On July 5, 2023, the Company and the Bailey sellers agreed to extend the maturity date of the Bailey Note to June 30, 2024. On August 21, 2023, the Company filed a Certificate of Amendment to our Certificate of Incorporation, as amended, to effect a one-for-twenty-five (1-for- 25 | NOTE 14: SUBSEQUENT EVENTS On January 11, 2023, the Company, entered into a Securities Purchase Agreement (the “Purchase Agreement”) with a certain accredited investor (the “Investor”), pursuant to which the Company agreed to issue and sell, in a private placement (the “Private Placement”), an aggregate of 19,000 shares (the “Shares”) of the Company’s common stock, par value $0.0001 per share (“Common Stock”), and accompanying warrants (the “Common Warrants”) to purchase 19,000 shares of Common Stock, at a combined purchase price of $97.875 per share and Common Warrant, and (ii) 32,086 pre-funded warrants (the “Pre-Funded Warrants” and together with the Common Warrants, the “Warrants” and together with the Shares and the shares of Common Stock underlying the Warrants, the “Securities”) exercisable for 32,086 shares of Common Stock, and accompanying Common Warrants to purchase 32,086 shares of Common Stock, at a combined purchase price of $97.875, less the exercise price of $0.0001, per Pre-Funded Warrant and accompanying Common Warrant, to the Investors, for aggregate gross proceeds from the Private Placement of approximately $5 million. Each Common Warrant has an exercise price of $95 per share, will be immediately exercisable upon issuance and will expire five years from the date of issuance. In February 2023, the Company fully repaid the December Notes for $4.0 million. In February 2023, the Company and the Sundry Sellers verbally agreed to extend the maturity date to December 31, 2023. On April 7, 2023, the Company and various purchasers executed a Securities Purchase Agreement (“April 2023 Notes”) whereby the investors purchased from the Company convertible promissory notes in the aggregate principal amount of $2,208,750, consisting of original issue discount of $408,750. The Company received net proceeds of $1,800,000. The April 2023 Notes are due and payable on September 30, 2023. If the April 2023 Notes are not repaid in full by the maturity date or if any other event of default occurs, (1) the face value of the April Notes will be automatically increased to 120%; (2) the April 2023 Notes will begin generating an annual interest rate of 20%, which will be paid in cash monthly until the default is cured; and (3) if such default continues for 14 or more calendar days, at the investors’ discretion, the April 2023 Notes shall become convertible at the option of the investors into shares of the Company’s common stock at a conversion price equal to the closing price of the Company’s common stock on the date of the note conversion. On June 21, 2023, the Company and the former owners of H&J executed a Settlement Agreement and Release (the “Settlement Agreement”) whereby contemporaneously with the parties’ execution of the Settlement Agreement (i) the Company agreed to make an aggregate cash payment of $229,000 to D. Jones Tailored Collection, Ltd. (“D. Jones”), (ii) the Company issued 78,103 shares of common stock to D. Jones, and (iii) the Company assigned and transferred one hundred percent (100%) of the Company’s membership interest in H&J to D. Jones. The total estimated value of the common stock was approximately $1.4 million. We accounted for the disposition as discontinued operations in the accompanying consolidated financial statements, and as a result, we retrospectively reflected certain adjustments to the years ended December 31, 2022 and 2021 in accordance with Accounting Standard Codification (ASC) 205-20 for reporting Discounting Operations. On August 21, 2023, the Company filed a Certificate of Amendment to our Certificate of Incorporation, as amended, to effect a one-for-twenty-five (1-for- 25 |
SUMMARY OF SIGNIFICANT ACCOU_13
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
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”). | Basis of Presentation The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“GAAP”). |
Principles of Consolidation | Principles of Consolidation These condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries Bailey, H&J and Stateside from the dates of acquisition. All inter-company transactions and balances have been eliminated on consolidation. As of June 21, 2023, the Company no longer consolidated the assets, liabilities, revenues and expenses of H&J (see Note 4). | H&J Disposition On June 21, 2023, the Company and the former owners of H&J executed a Settlement Agreement and Release (the “Settlement Agreement”) whereby contemporaneously with the parties’ execution of the Settlement Agreement (i) the Company agreed to make an aggregate cash payment of $229,000 to D. Jones Tailored Collection, Ltd. (“D. Jones”), (ii) the Company issued 78,103 shares of common stock to D. Jones, and (iii) the Company assigned and transferred one hundred percent (100%) of the Company’s membership interest in H&J to D. Jones. This transaction is known as the “H&J Settlement”. The H&J Settlement was accounted for a business disposition in accordance with ASC 810-40-40-3A. In accordance with the provisions of ASC 205-20, the Company has excluded the results of discontinued operations from its results of continuing operations in the accompanying consolidated statements of operations for the three and six months ended June 30, 2023 and 2022 in it’s Form 10-Q Quarterly Report filed on August 21, 2023. Accordingly, the consolidated financial statements as of and for the years ended December 31, 2022 and 2021 have been adjusted retroactively to account for the discontinued operations classification of H&J. Principles of Consolidation These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries Bailey, H&J, Stateside and Sundry from the dates of acquisition. All inter-company transactions and balances have been eliminated on consolidation. H&J has been retroactively adjusted to be presented as discontinued operations (see above). |
Use of Estimates | Use of Estimates The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions reflected in these financial statements include, but are not limited to, inventory, impairment of long-lived assets, contingent consideration and derivative liabilities. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates when there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those 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. |
Restatement of Previously Issued Financial Statements | Reclassification of Previously Issued Financial Statements Certain prior year accounts have been reclassified to conform with current year presentation pertaining to cost of net revenue and general and administrative expenses. The Company has reclassified $297,696 and $630,976 in general and administrative expenses per previously reported financial statements to cost of net revenues in the accompanying consolidated statements of operations for the three and six months ended June 30, 2022, respectively. The reclassified costs from general and administrative expense to cost of net revenues are primarily personnel and warehouse related costs. The reclassification had no effect on the reported results of operations. Certain prior year accounts have been reclassified to conform with current year presentation regarding income (loss) from discontinued operations. H&J’s assets and liabilities as of December 31, 2022 have also been reclassified on the consolidated balance sheet. See Note 4. | Restatement of Previously Issued Financial Statements Certain prior year accounts have been reclassified to conform with current year presentation pertaining to cost of net revenue and general and administrative expenses. The Company has reclassified The reclassified costs from general and administrative expense to cost of net revenues made in the fourth quarter of 2022 and 2021 are fixed in nature as they are personnel and warehouse related costs. The impact of the reclassification was approximately for each of the quarters ended March 31, 2022, June 30, 2022 and September 30, 2022. The impact of the reclassification was approximately |
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 six months to be cash equivalents. As of June 30, 2023 and December 31, 2022, 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. | 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 December 31, 2022 and 2021, 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 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, 2023 Using: Level 1 Level 2 Level 3 Total Liabilities: Contingent consideration $ — $ — $ — $ — $ — $ — $ — $ — Fair Value Measurements as of December 31, 2022 Using: Level 1 Level 2 Level 3 Total Liabilities: Contingent consideration $ — $ — $ 12,098,475 $ 12,098,475 $ — $ — $ 12,098,475 $ 12,098,475 Contingent Consideration The Company recorded a contingent consideration liability relating to stock price guarantees included in its acquisitions of Bailey44 and H&J. The estimated fair value of the contingent consideration was recorded using significant unobservable measures and other fair value inputs and was therefore classified as a Level 3 financial instrument. 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. Norwest Waiver On June 21, 2023, the Company, on the one hand, and Norwest Venture Partners XI, LP and Norwest Venture Partners XII, LP (together, the “Norwest Investors”), on the other hand, executed a Waiver and Amendment (the “Norwest Amendment”) whereby the Norwest Investors agreed to waive and terminate certain true up rights of the Norwest Investors under the Agreement and Plan of Merger, dated February 12, 2020 (the “Bailey Merger Agreement”), among the Company, Bailey 44, LLC, Norwest Venture Partners XI, LP, and Norwest Venture Partners XII, LP and Denim.LA Acquisition Corp. This transaction is known as the “Norwest Waiver”. As a result of the Norwest Waiver, the Company recorded a fair value of H&J Settlement Agreement On June 21, 2023, the Company and the former owners of H&J executed a Settlement Agreement and Release (the “Settlement Agreement”) whereby the Company transferred 100% of its membership interests in H&J to D. Jones (the “H&J Seller”). Pursuant to the Settlement Agreement, the Company agreed to make an aggregate cash payment of shares of common stock to the H&J Seller. In connection with the Settlement Agreement, the parties agreed that no further shares were owed to the H&J Seller resulting from the stock price guarantee pursuant to the May 2021 H&J acquisition. As a result, the Company recorded a fair value of The detail of contingent consideration by company is as follows: June 30, December 31, 2023 2022 Bailey $ — $ 10,698,475 Harper & Jones — 1,400,000 $ — $ 12,098,475 | 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, accounts receivable, due from factor, prepaid expenses, accounts payable, accrued expenses, deferred revenue, due to related parties, related party note payable, accrued interest, loan 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 December 31, 2022 Using: Level 1 Level 2 Level 3 Total Liabilities: Warrant liability $ — $ — $ — $ — Contingent consideration — — 12,098,475 12,098,475 Derivative liability — — — — $ — $ — $ 12,098,475 $ 12,098,475 Fair Value Measurements as of December 31, 2021 Using: Level 1 Level 2 Level 3 Total Liabilities: Warrant liability $ — $ 18,223 $ — $ 18,223 Contingent consideration — — 12,179,476 12,179,476 Derivative liability — — 2,294,720 2,294,720 $ — $ 18,223 $ 14,474,196 $ 14,492,419 Warrant Liability 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 years ended December 31, 2022 and 2021 are as follows: Warrant Liability Outstanding as of December 31, 2020 $ 6,265 Change in fair value 11,958 Outstanding as of December 31, 2021 18,223 Change in fair value (18,223) Outstanding as of December 31, 2022 $ — Contingent Consideration The Company records a contingent consideration liability 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 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. 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 years ended December 31, 2022 and 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 Conversion into shares (73,500) Change in fair value 8,764,460 Outstanding as of December 31, 2021 12,179,476 Repayments to Harper & Jones seller (645,304) Change in fair value 564,303 Outstanding as of December 31, 2022 $ 12,098,475 During the year ended December 31, 2022, the Company utilized the following inputs for the fair value of the contingent consideration: volatilities of 79.3% and 88.9%, risk-free rate of 0.25%, expected share increase of 5% per annum, and the guaranteed stock price of $828 for Bailey and $10,375 for Harper & Jones. The detail of contingent consideration by company is as follows: December 31, 2022 2021 Bailey $ 10,698,475 7,935,016 Harper & Jones 1,400,000 4,244,460 $ 12,098,475 $ 12,179,476 The contingent consideration liabilities were revalued for a final time as of May 18, 2022, the anniversary date of the Company’s initial public offering. As of the date of the issuance of these financial statements, the contingent consideration liabilities were not yet settled with shares. In December 2022, the Company paid $645,304 to the H&J Seller to partially reduce the contingent consideration balance owed. The Company and the H&J Seller are in the process of amending the May 2021 purchase agreement to determine the ultimate settlement of the Company’s common stock to the H&J Seller by May 16, 2023. Refer to Note 12. Derivative Liability In connection with the Company’s convertible notes, the Company recorded a derivative liability (see Note 7). The estimated fair value of the derivative liability 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 derivative liability is valued using a multinomial lattice model. The multinomial lattice inputs include the underlying stock price, volatility of common stock and remaining term of the convertible note. Changes in derivative liability during the years ended December 31, 2022 and 2021 are as follows: Derivative Liability Outstanding as of December 31, 2020 $ — Initial fair value on issuance of convertible note 3,204,924 Change in fair value (910,204) Outstanding as of December 31, 2021 2,294,720 Initial fair value on issuance of convertible note 559,957 Conversion of underlying notes into common stock (1,500,243) Change in fair value (1,354,434) Outstanding as of December 31, 2022 $ — During the year ended December 31, 2022, the Company utilized the following inputs for the fair value of the derivative liability: volatility of 70.9% - 96.7%, risk-free rate of 2.71% - 3.74%, and remaining term ranging from .08 years - 0.62 years. The change in fair value of the derivative liability is included in other non-operating income (expense), net in the consolidated statements of operations. |
Inventory | Inventory Inventory is stated at the lower of cost or net realizable value and accounted for using the weighted average cost method for DSTLD and first-in, first-out method for Bailey, Stateside and Sundry. The inventory balances as of June 30, 2023 and December 31, 2022 consist substantially of finished good products purchased or produced for resale, as well as any raw materials the Company purchased to modify the products and work in progress. Inventory consisted of the following: June 30, December 31, 2023 2022 Raw materials $ 1,508,416 $ 1,611,134 Work in process 653,412 888,643 Finished goods 2,609,443 2,725,505 Inventory $ 4,771,271 $ 5,225,282 | Inventory Inventory is stated at the lower of cost or net realizable value and accounted for using the weighted average cost method for DSTLD and H&J and first-in, first-out method for Bailey, Stateside and Sundry. The inventory balances as of December 31, 2022 and 2021 consist substantially of finished good products purchased or produced for resale, as well as any raw materials the Company purchased to modify the products and work in progress. Inventory consisted of the following: December 31, 2022 2021 Raw materials $ 1,508,416 $ 292,167 Work in process 888,643 242,673 Finished goods 2,725,505 2,220,519 Inventory $ 5,122,564 $ 2,660,203 |
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 December 31, 2022 and 2021 consist of software with three (3) year lives, property and equipment with three (3) to ten (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 $75,126 and $92,213 for the years ended December 31, 2022 and 2021, respectively. | |
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 | |
Impairment | Impairment 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. | 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 fourth quarter every year. |
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. | |
Annual Impairment Tests | Annual Impairment At December 31, 2022, management determined that certain events and circumstances occurred that indicated that the carrying value of the Company’s brand name assets, and the carrying amount of the reporting units, pertaining to Bailey44 and Harper & Jones may not be recoverable. The qualitative assessment was primarily due to reduced or stagnant revenues of both entities as compared to the Company’s initial projections at the time of each respective acquisition, as well as the entities’ liabilities in excess of assets. As such, the Company compared the estimated fair value of the brand names with its carrying value and recorded an impairment loss of $3,667,000 in the consolidated statements of operations. Additionally, the Company compared the fair value of the reporting units to the carrying amounts and recorded an impairment loss of $11,872,332 | Annual Impairment Tests At December 31, 2021, management determined that certain events and circumstances occurred, primarily the continued reduction in revenues partially as a result of COVID-19, that indicated that the carrying value of the Company’s brand name asset pertaining to Bailey44 may not be recoverable. As such, the Company compared the estimated fair value of the brand name with its carrying value and recorded an impairment loss of $3,400,000 in the consolidated statements of operations. At December 31, 2022, management determined that certain events and circumstances occurred that indicated that the carrying value of the Company’s brand name assets, and the carrying amount of the reporting units, pertaining to Bailey44 and Harper & Jones may not be recoverable. The qualitative assessment was primarily due to reduced or stagnant revenues of both entities as compared to the Company’s initial projections at the time of each respective acquisition, as well as the entities’ liabilities in excess of assets. As such, the Company compared the estimated fair value of the brand names with its carrying value and recorded an impairment loss of $3,667,000 in the consolidated statements of operations. Additionally, the Company compared the fair value of the reporting units to the carrying amounts and recorded an impairment loss of $11,872,332 Year Ended December 31, 2022 2021 Bailey brand name (intangibles) $ 2,182,000 $ 3,400,000 Bailey goodwill 3,321,095 — Total impairment $ 5,503,095 $ 3,400,000 In determining the fair value of the respective reporting units, management estimated the price that would be received to sell the reporting unit as a whole in an orderly transaction between market participants at the measurement date. This includes reviewing market comparables such as revenue multipliers and assigning certain assets and liabilities to the reporting units, such as the respective working capital deficits of each entity and debt obligations that would need to be assumed by a market participant buyer in an orderly transaction. The Company calculated the carrying amounts of each reporting unit by utilizing the entities’ assets and liabilities at December 31, 2022, including the carrying value of the identifiable intangible assets and goodwill assigned to the respective reporting units. Refer to Note 12 for the related developments with H&J. |
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 $307,725 and $33,933 as of December 31, 2022 and 2021, 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. Cost of revenues includes direct labor pertaining to our inventory production activities and an allocation of overhead costs including rent and insurance. Cost of revenues also includes inventory write-offs and reserves. | |
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 distribution costs. Total shipping and handling billed to customers as a component of net revenues was approximately $72,000 and $23,000 for the years ended December 31, 2022 and 2021, respectively. Total shipping and handling costs included in distribution costs were approximately $525,000 and $423,000, respectively. | |
Advertising and Promotion | Advertising and Promotion Advertising and promotional costs are expensed as incurred. Advertising and promotional expense for the years ended December 31, 2022 and 2021 amounted to approximately $1,178,000 and $240,000, respectively. The amounts are included in sales and marketing expense. | |
General and Administrative | General and Administrative General and administrative expenses consist primarily of compensation and benefits costs, professional services and information technology. General and administrative expenses also include payment processing fees, design and warehousing fees. | |
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 December 31, 2022 and 2021, 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. 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 simplified method is based on the average of the vesting tranches and the contractual life of each grant. For stock price volatility, the Company uses comparable public companies as a basis for its expected volatility to calculate the fair value of options grants. 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. The number of stock award forfeitures are recognized as incurred. | |
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 an expense over the employee’s requisite vesting period and over the nonemployee’s period of providing goods or services. The Company measures employee stock-based awards at grant-date fair value and recognizes employee compensation expense on a straight-line basis over the vesting period of the award. Determining the appropriate fair value of stock-based awards requires the input of subjective assumptions, including the fair value of the Company’s common stock, and for stock options, the expected life of the option, and expected stock price volatility. The Company used the Black-Scholes option pricing model to value its stock option awards. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and management uses different assumptions, stock-based compensation expense could be materially different for future awards. | |
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. As of December 31, 2021, the Company capitalized $367,696 in deferred offering costs pertaining to its equity line of credit agreement with Oasis (Note 8). In 2022, the Company wrote off these costs to general and administrative expenses in the consolidated statements of operations as the equity line of credit financing never occurred. | |
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 December 31, 2022 our operating segments included: DSTLD, Bailey, H&J, Stateside and Sundry. 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. The following table sets forth the computation of basic and diluted net income (loss) per share: Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Numerator: Net income (loss) from continuing operations $ 6,536,310 $ (9,482,520) $ 470,415 $ (17,200,792) Income (loss) from discontinued operations, net of tax (1,492,050) (51,404) (1,562,503) (166,074) Net income (loss) $ 5,044,260 $ (9,533,924) $ (1,092,088) $ (17,366,866) Denominator: Weighted average common shares outstanding - basic 246,809 14,329 236,824 9,836 Weighted average common shares outstanding - diluted 834,604 14,329 824,619 9,836 Net income (loss) from continuing operations per share - basic $ 26.48 $ (661.78) $ 1.99 $ (1,748.68) Net income (loss) from continuing operations per share - diluted $ 7.83 $ (661.78) $ 0.57 $ (1,748.68) Net income (loss) from discontinued operations per common share – basic $ (6.05) $ (3.59) $ (6.60) $ (16.88) Net income (loss) from discontinued operations per common share – diluted $ (6.05) $ (3.59) $ (6.60) $ (16.88) Net income (loss) per share – $ 20.44 $ (665.36) $ (4.61) $ (1,765.57) Net income (loss) per share – $ 6.04 $ (665.36) $ (4.61) $ (1,765.57) The following table sets forth the a) the dilutive items included in the weighted average common shares – diluted amount above as of June 30, 2023 and b) the number of potential common shares excluded from the calculations of net loss per diluted share because their inclusion would be anti-dilutive as of June 30, 2022: June 30, 2023 2022 — 18,496 Convertible notes 27,097 — Series A convertible preferred stock 321,395 — Series C convertible preferred stock 237,746 2,533 Common stock warrants 1,558 1,558 Stock options 587,795 22,588 The stock options and warrants above are out-of-the-money as of June 30, 2023 and 2022. | 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 December 31, 2022 and 2021, diluted net loss per share is the same as basic net loss per share for each year. Potentially dilutive items outstanding as of December 31, 2022 and 2021 are as follows: December 31, 2022 2021 Convertible notes 37,915 1,916 Series A convertible preferred stock 4,320 — Common stock warrants 176,733 1,432 Stock options 1,558 1,558 Total potentially dilutive shares 220,526 4,907 The potentially dilutive shares pertaining to the Company’s outstanding convertible notes were calculated based on the assumed conversion abilities as of December 31, 2022 and 2021. The ultimate number of shares for which the notes can convert into is indeterminable. The stock options and warrants above are out-of-the-money as of December 31, 2022 and 2021. |
Concentrations | Concentrations The Company utilized three and two vendors that made up 30% and 40%, respectively, of all inventory purchases during the years ended December 31, 2022 and 2021. 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. | |
Leases | Leases On January 1, 2022, the Company adopted ASC 842, Leases The Company elected transitional practical expedients for existing leases which eliminated the requirements to reassess existing lease classification, initial direct costs, and whether contracts contain leases. Also, the Company elected to present the payments associated with short-term leases as an expense in statements of operations. Short-term leases are leases with a lease term of 12 months or less. | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which amends and clarifies several provisions of Topic 326. In May 2019, the FASB issued ASU 2019-05, Financial Instruments-Credit Losses (Topic 326): Targeted Transition Relief, which amends Topic 326 to allow the fair value option to be elected for certain financial instruments upon adoption. ASU 2019-10 extended the effective date of ASU 2016-13 until December 15, 2022. The Company adopted this new guidance, including the subsequent updates to Topic 326, on January 1, 2023 and the adoption did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures. 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 | Recent Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02: Leases (Topic 842). 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 ACCOU_14
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
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, 2023 Using: Level 1 Level 2 Level 3 Total Liabilities: Contingent consideration $ — $ — $ — $ — $ — $ — $ — $ — Fair Value Measurements as of December 31, 2022 Using: Level 1 Level 2 Level 3 Total Liabilities: Contingent consideration $ — $ — $ 12,098,475 $ 12,098,475 $ — $ — $ 12,098,475 $ 12,098,475 | Fair Value Measurements as of December 31, 2022 Using: Level 1 Level 2 Level 3 Total Liabilities: Warrant liability $ — $ — $ — $ — Contingent consideration — — 12,098,475 12,098,475 Derivative liability — — — — $ — $ — $ 12,098,475 $ 12,098,475 Fair Value Measurements as of December 31, 2021 Using: Level 1 Level 2 Level 3 Total Liabilities: Warrant liability $ — $ 18,223 $ — $ 18,223 Contingent consideration — — 12,179,476 12,179,476 Derivative liability — — 2,294,720 2,294,720 $ — $ 18,223 $ 14,474,196 $ 14,492,419 |
Schedule of changes in acquisition-related 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 Conversion into shares (73,500) Change in fair value 8,764,460 Outstanding as of December 31, 2021 12,179,476 Repayments to Harper & Jones seller (645,304) Change in fair value 564,303 Outstanding as of December 31, 2022 $ 12,098,475 | |
Schedule of changes in derivative liability | Derivative Liability Outstanding as of December 31, 2020 $ — Initial fair value on issuance of convertible note 3,204,924 Change in fair value (910,204) Outstanding as of December 31, 2021 2,294,720 Initial fair value on issuance of convertible note 559,957 Conversion of underlying notes into common stock (1,500,243) Change in fair value (1,354,434) Outstanding as of December 31, 2022 $ — | |
Schedule of inventory | June 30, December 31, 2023 2022 Raw materials $ 1,508,416 $ 1,611,134 Work in process 653,412 888,643 Finished goods 2,609,443 2,725,505 Inventory $ 4,771,271 $ 5,225,282 | December 31, 2022 2021 Raw materials $ 1,508,416 $ 292,167 Work in process 888,643 242,673 Finished goods 2,725,505 2,220,519 Inventory $ 5,122,564 $ 2,660,203 |
Schedule of potentially dilutive items outstanding | June 30, 2023 2022 — 18,496 Convertible notes 27,097 — Series A convertible preferred stock 321,395 — Series C convertible preferred stock 237,746 2,533 Common stock warrants 1,558 1,558 Stock options 587,795 22,588 | December 31, 2022 2021 Convertible notes 37,915 1,916 Series A convertible preferred stock 4,320 — Common stock warrants 176,733 1,432 Stock options 1,558 1,558 Total potentially dilutive shares 220,526 4,907 |
Schedule of estimated useful lives of amortizable intangible assets | Customer relationships 3 years | |
Schedule of changes in common stock warrant liability | Warrant Liability Outstanding as of December 31, 2020 $ 6,265 Change in fair value 11,958 Outstanding as of December 31, 2021 18,223 Change in fair value (18,223) Outstanding as of December 31, 2022 $ — | |
Summary of goodwill and intangible impairment | Year Ended December 31, 2022 2021 Bailey brand name (intangibles) $ 2,182,000 $ 3,400,000 Bailey goodwill 3,321,095 — Total impairment $ 5,503,095 $ 3,400,000 | |
Summary of contingent consideration | June 30, December 31, 2023 2022 Bailey $ — $ 10,698,475 Harper & Jones — 1,400,000 $ — $ 12,098,475 | December 31, 2022 2021 Bailey $ 10,698,475 7,935,016 Harper & Jones 1,400,000 4,244,460 $ 12,098,475 $ 12,179,476 |
BUSINESS COMBINATIONS AND DISPO
BUSINESS COMBINATIONS AND DISPOSITION (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
BUSINESS COMBINATIONS AND DISPOSITION | |
Schedule of components of purchase price consideration | Cash $ 7,500,000 Promissory notes payable 5,500,000 Common stock 1,000,000 Purchase price consideration $ 14,000,000 |
Schedule of assets and liabilities acquired in business combination | Purchase Price Allocation Cash and cash equivalents $ 252,697 Accounts receivable, net 63,956 Due from factor, net 387,884 Inventory 2,941,755 Prepaid expenses and other current assets 32,629 Property, equipment and software, net 48,985 Goodwill 3,711,322 Intangible assets 7,403,800 Accounts payable (615,706) Accrued expenses and other liabilities (227,321) Purchase price consideration $ 14,000,000 |
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 Due from factor, net — Inventory 77,159 Prepaid expenses and other current assets 69,715 Property, equipment and software, net 83,986 Goodwill 9,681,548 Intangible assets 3,936,030 Accounts payable (51,927) Accrued expenses and other liabilities (107,957) Purchase price consideration $ 11,947,058 |
Schedule of business acquisition pro forma information | Year Ended December 31, 2022 2021 Net revenues $ 28,519,261 $ 34,635,426 Net loss $ (42,001,415) $ (33,171,473) Net loss per common share $ (1,361.50) $ (10,870.25) |
June 2023 Disposition | |
BUSINESS COMBINATIONS AND DISPOSITION | |
Schedule of assets and liabilities acquired in business combination | December 31, 2022 2021 Cash and cash equivalents $ 7,666 $ 12,598 Inventory 102,718 95,155 Accounts receivable, net 45,018 22,010 Goodwill 1,130,310 9,681,548 Intangible assets, net 1,521,265 3,578,182 Other current and non-current assets 62,703 161,740 Accounts payable 81,991 54,981 Accrued expenses and other liabilities 520,195 381,290 Deferred revenue 202,129 276,397 Due to related parties 1,008 21,361 Note payable - related party 129,489 299,489 Loan payable 284,059 148,900 |
June 2023 Disposition | Discontinued operations | |
BUSINESS COMBINATIONS AND DISPOSITION | |
Schedule of assets and liabilities acquired in business combination | Year Ended December 31, 2022 2021 Net revenues $ 3,637,620 $ 1,819,896 Cost of net revenues 1,241,594 1,888,091 Gross profit (loss) 2,396,026 (68,195) Operating expenses: General and administrative 2,303,854 603,007 Sales and marketing 931,650 540,873 Impairment 10,036,238 — Total operating expenses 13,271,742 1,143,880 Loss from operations (10,875,716) (1,212,075) Other income (expense): Interest expense (52,927) (44,828) Other non-operating income (expenses) — 233,030 Total other income (expense), net (52,927) 188,202 Income tax benefit (provision) — — Net loss from discontinued operations $ (10,928,643) $ (1,023,873) Weighted average common shares outstanding - basic and diluted 30,852 3,052 Net loss from discontinued operations per common share - basic $ (354.23) $ (335.52) |
Stateside | |
BUSINESS COMBINATIONS AND DISPOSITION | |
Schedule of fair value of purchase price consideration | Cash $ 5,000,000 Common stock 3,403,196 Purchase price consideration $ 8,403,196 |
Schedule of allocation of purchase price in regard to acquisition | Purchase Price Allocation Cash and cash equivalents 32,700 Accounts receivable, net 154,678 Due from factor, net 371,247 Inventory 603,625 Prepaid expenses and other current assets 7,970 Deposits 9,595 Property, equipment and software, net — Goodwill 2,104,056 Intangible assets 5,939,140 Accounts payable (374,443) Accrued expenses and other liabilities (445,372) $ 8,403,196 |
DUE FROM FACTOR (Tables)_2
DUE FROM FACTOR (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
DUE FROM FACTOR | ||
Schedule of due to/ from factor | June 30, December 31, 2023 2022 Outstanding receivables: Without recourse $ 787,542 $ 1,680,042 With recourse 50,979 65,411 Matured funds and deposits 88,516 81,055 Advances (478,753) (632,826) Credits due customers (10,142) (354,282) $ 438,142 $ 839,400 | December 31, 2022 2021 Outstanding receivables: Without recourse $ 564,548 $ 579,295 With recourse 352,379 361,584 Advances 118,521 121,617 Credits due customers (196,048) (77,208) $ 839,400 $ 985,288 |
GOODWILL AND INTANGIBLE ASSET_5
GOODWILL AND INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
GOODWILL AND INTANGIBLE ASSETS | |
Summary of future amortization expense | Year Ending December 31, 2023 2,924,020 2024 2,474,178 2025 1,666,160 $ 7,064,358 |
Summary of goodwill by entity | Bailey Stateside Sundry Total Balances at December 31, 2020 $ 6,479,218 $ — $ — $ 6,479,218 Business combination — 2,104,056 — 2,104,056 Impairment — — — — Balances at December 31, 2021 6,479,218 2,104,056 — 8,583,274 Business combination — — 3,711,322 3,711,322 Impairment (3,321,095) — — (3,321,095) Balances at December 31, 2022 $ 3,158,123 $ 2,104,056 $ 3,711,322 $ 8,973,501 |
Summary of information relating to the Company's identifiable intangible assets | Gross Accumulated Carrying December 31, 2022 Amount Amortization Value Amortized: Customer relationships $ 9,734,560 (2,670,202) $ 7,064,358 9,734,560 (2,670,202) 7,064,358 Indefinite-lived: Brand name $ 5,841,880 — 5,841,880 $ 15,576,440 $ (2,670,202) $ 12,906,238 Gross Accumulated Carrying December 31, 2021 Amount Amortization Value Amortized: Customer relationships $ 4,736,080 (1,091,509) $ 3,644,571 4,736,080 (1,091,509) 3,644,571 Indefinite-lived: Brand name $ 5,618,560 — 5,618,560 $ 10,354,640 $ (1,091,509) $ 9,263,131 |
LIABILITIES AND DEBT (Tables)_2
LIABILITIES AND DEBT (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
LIABILITIES AND DEBT | ||
Schedule of accrued expenses and other liabilities | June 30, December 31, 2023 2022 Accrued expenses $ 503,927 $ 668,714 Reserve for returns — 307,725 Payroll related liabilities 4,009,812 2,618,870 Sales tax liability 277,800 262,765 Other liabilities 247,398 78,845 $ 5,038,937 $ 3,936,920 | December 31, 2022 2021 Accrued expenses $ 668,714 $ 178,819 Reserve for returns 307,725 33,933 Payroll related liabilities 2,618,870 1,183,598 Sales tax liability 262,765 225,804 Due to seller — 396,320 Other liabilities 78,845 59,613 $ 3,936,920 $ 2,078,087 |
Summary of the convertible notes | Unamortized Convertible Note Principal Debt Discount Payable, Net Balance, December 31, 2022 $ 4,100,000 $ (1,378,200) $ 2,721,800 Repayments of notes (4,000,000) — (4,000,000) Amortization of debt discount — 689,100 689,100 Loss on extinguishment of debt — 689,100 689,100 Balance, June 30, 2023 $ 100,000 $ — $ 100,000 | Unamortized Convertible Note Principal Debt Discount Payable, Net Balance, December 31, 2020 $ 100,000 $ — $ 100,000 Issuance of Oasis note, net of issuance costs 5,265,000 (715,000) 4,550,000 Issuance of FirstFire First note, net of issuance costs 1,575,000 (315,000) 1,260,000 Issuance of Second FirstFire note, net of issuance costs 2,625,000 (530,000) 2,095,000 Derivative liability in connection with notes — (3,204,924) (3,204,924) Amortization of debt discount — 801,538 801,538 Balance, December 31, 2021 9,565,000 (3,963,386) 5,601,614 Proceeds from issuance of notes 8,943,750 (1,992,500) 6,951,250 Repayments of notes (4,943,750) — (4,943,750) Conversion of notes into common stock (9,465,000) — (9,465,000) Warrant and common shares issued with convertible notes — (1,368,741) (1,368,741) Derivative liability in connection with notes — (559,957) (559,957) Amortization of debt discount — 6,506,384 6,506,384 Balance, December 31, 2022 $ 4,100,000 $ (1,378,200) $ 2,721,800 |
SHARE-BASED PAYMENTS (Tables)_2
SHARE-BASED PAYMENTS (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
SHARE-BASED PAYMENTS | ||
Summary of information related to common stock and preferred stock warrants | Common Weighted Stock Average Warrants Exercise Price Outstanding - December 31, 2022 176,733 $ 209 Granted 93,099 99.50 Exercised (32,086) 97.88 Forfeited — — Outstanding - June 30, 2023 237,746 $ 181.25 Exercisable at December 31, 2022 171,278 $ 210.50 Exercisable at June 30, 2023 237,745 $ 181.25 | Common Weighted Stock Average Warrants Exercise Price Outstanding - December 31, 2020 366 $ 6,650 Granted 1,205 11,450 Conversion of preferred stock warrants upon IPO 21 19,150 Exercised (155) 11,425 Forfeited (4) 19,150 Outstanding - December 31, 2021 1,432 $ 10,300 Granted 241,308 140.36 Exercised (66,007) 131.25 Forfeited — — Outstanding - December 31, 2022 176,733 $ 209.23 Exercisable at December 31, 2021 1,432 $ 10,300 Exercisable at December 31, 2022 171,278 $ 210.41 |
Summary of information related to stock options under stock plan | Weighted Average Options Exercise Price Outstanding - December 31, 2020 485 $ 5,850 Granted 1,093 10,375 Exercised — — Forfeited — — Outstanding - December 31, 2021 1,558 $ 9,053 Granted — — Exercised — — Forfeited — — Outstanding - December 31, 2022 1,558 $ 9,053 Exercisable at December 31, 2021 1,266 $ 8,975 Exercisable at December 31, 2022 1,389 $ 10,125 Weighted average duration (years) to expiration of outstanding options at December 31, 2022 7.00 | |
Schedule of assumptions utilized for option grants | Year Ended December 31, 2022 2021 Risk Free Interest Rate n/a 0.34% - 0.85 % Expected Dividend Yield n/a 0.00 % Expected Volatility n/a 58.00 % Expected Life (years) n/a 5.18 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES | |
Schedule of deferred tax assets and liabilities | December 31, 2022 2021 Deferred tax assets: Net operating loss carryforwards $ 16,733,582 $ 13,108,371 Deferred tax liabilities: Depreciation timing differences — (5,103) Valuation allowance (16,733,582) (13,103,268) Net deferred tax assets $ — $ — |
NATURE OF OPERATIONS (Details_2
NATURE OF OPERATIONS (Details) | 1 Months Ended | 6 Months Ended | 12 Months Ended | ||||||
Oct. 21, 2022 | May 18, 2021 | May 13, 2021 USD ($) $ / shares shares | May 12, 2021 | Sep. 30, 2022 shares | Jun. 30, 2023 shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 30, 2022 | Aug. 30, 2021 | |
NATURE OF OPERATIONS | |||||||||
Number of shares issued | shares | 30 | 50,890 | |||||||
Aggregate net proceeds from the IPO, inclusive of the proceeds from the over-allotment exercise | $ 8,100,000 | ||||||||
Reverse stock split conversion ratio | 0.01 | 1 | 0.064 | ||||||
IPO [Member] | |||||||||
NATURE OF OPERATIONS | |||||||||
Warrants issued to purchase common stock | shares | 1,111 | ||||||||
Underwriting discounts and commissions | $ 800,000 | ||||||||
Estimated offering expenses | 600,000 | ||||||||
Additional offering costs | $ 600,000 | ||||||||
Share issued price | $ / shares | $ 10,375 | $ 625 | |||||||
Number of shares issued | shares | 964 | 14,956 | |||||||
Aggregate net proceeds from the IPO, inclusive of the proceeds from the over-allotment exercise | $ 8,600,000 | ||||||||
Over-Allotment Option [Member] | |||||||||
NATURE OF OPERATIONS | |||||||||
Warrants issued to purchase common stock | shares | 145 | ||||||||
Harper & Jones | |||||||||
NATURE OF OPERATIONS | |||||||||
Percentage of equity acquired | 100% | ||||||||
Stateside | |||||||||
NATURE OF OPERATIONS | |||||||||
Percentage of equity acquired | 100% | ||||||||
Sundry | |||||||||
NATURE OF OPERATIONS | |||||||||
Percentage of equity acquired | 100% |
GOING CONCERN (Details)_2
GOING CONCERN (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
GOING CONCERN | ||||||||
Net loss | $ 5,044,260 | $ (6,136,349) | $ (9,533,924) | $ (7,832,942) | $ (1,092,088) | $ (17,366,866) | $ (38,043,362) | $ (32,357,957) |
Working capital deficit | $ 16,037,518 | $ 16,037,518 | $ 32,064,398 |
SUMMARY OF SIGNIFICANT ACCOU_15
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 3 Months Ended | 12 Months Ended | ||||||||||
Oct. 21, 2022 | May 18, 2021 | May 12, 2021 | Sep. 30, 2022 USD ($) | Jun. 30, 2022 USD ($) | Mar. 31, 2022 USD ($) | Sep. 30, 2021 USD ($) | Jun. 30, 2021 USD ($) | Mar. 31, 2021 USD ($) | Dec. 31, 2021 USD ($) | Jun. 30, 2023 USD ($) | Dec. 31, 2022 USD ($) | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||||||||
Reverse stock split conversion ratio | 0.01 | 1 | 0.064 | |||||||||
Cash and cash equivalents in bank deposit | $ 250,000 | $ 250,000 | ||||||||||
Reclassification adjustment | $ 290,000 | $ 290,000 | $ 290,000 | $ 255,000 | $ 255,000 | $ 255,000 | $ 1,027,387 |
SUMMARY OF SIGNIFICANT ACCOU_16
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fair Value of Financial Instruments (Details) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Liabilities: | |||
Outstanding as of Opening balance | $ 18,223 | $ 18,223 | $ 6,265 |
Warrant liability | 14,492,419 | ||
Outstanding as of Ending balance | 18,223 | ||
Fair value of contingent consideration | 12,098,475 | 12,179,476 | |
Change in fair value | (18,223) | (18,223) | 11,958 |
Total | 12,098,475 | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | |||
Outstanding as of beginning balance | $ 12,179,476 | 12,179,476 | 0 |
Initial recognition in connection with acquisition of Harper & Jones | 3,421,516 | ||
Stock price guarantee per consulting agreement | 67,000 | ||
Conversion into shares | (73,500) | ||
Change in fair value | 564,303 | 8,764,460 | |
Repayments to Harper & Jones seller | (645,304) | ||
Outstanding as of ending balance | 12,098,475 | 12,179,476 | |
Harper & Jones, LLC | |||
Liabilities: | |||
Fair value of contingent consideration | 1,400,000 | 4,244,460 | |
Bailey LLC | |||
Liabilities: | |||
Fair value of contingent consideration | $ 10,698,475 | 7,935,016 | |
Expected Volatility | Minimum | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | |||
Fair value of the contingent consideration | 0.793 | ||
Expected Volatility | Maximum [Member] | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | |||
Fair value of the contingent consideration | 0.889 | ||
Risk Free Interest Rate | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | |||
Fair value of the contingent consideration | 0.0025 | ||
Expected share | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | |||
Fair value of the contingent consideration | 0.05 | ||
Stock price | Harper & Jones, LLC | |||
Liabilities: | |||
Fair value of contingent consideration | $ 10,375,000 | ||
Stock price | Bailey LLC | |||
Liabilities: | |||
Fair value of contingent consideration | 828,000 | ||
Level 2 | |||
Liabilities: | |||
Warrant liability | 18,223 | ||
Level 3 | |||
Liabilities: | |||
Warrant liability | 14,474,196 | ||
Fair value of contingent consideration | 12,098,475 | 12,179,476 | |
Derivative liability | $ 2,294,720 | ||
Total | $ 12,098,475 |
SUMMARY OF SIGNIFICANT ACCOU_17
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Derivative Liability (Details) | 12 Months Ended | |
Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||
Outstanding as of beginning balance | $ 12,179,476 | $ 0 |
Change in fair value | 564,303 | 8,764,460 |
Outstanding as of ending balance | $ 12,098,475 | 12,179,476 |
Maximum | Expected Volatility | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||
Fair value of the derivative liability | 0.967 | |
Maximum | Risk Free Interest Rate | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||
Fair value of the derivative liability | 0.0374 | |
Maximum | Expected Life (years) | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||
Fair value of the derivative liability | 0.62 | |
Minimum | Expected Volatility | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||
Fair value of the derivative liability | 0.709 | |
Minimum | Risk Free Interest Rate | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||
Fair value of the derivative liability | 0.0271 | |
Minimum | Expected Life (years) | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||
Fair value of the derivative liability | 0.08 | |
Derivative Liability | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||
Outstanding as of beginning balance | $ 2,294,720 | |
Initial fair value on issuance of convertible note | 559,957 | 3,204,924 |
Conversion of underlying notes into common stock | (1,500,243) | |
Change in fair value | $ (1,354,434) | (910,204) |
Outstanding as of ending balance | $ 2,294,720 |
SUMMARY OF SIGNIFICANT ACCOU_18
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Equipment, and Software (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Property, Equipment, and Software | ||
General and administrative expenses | $ 75,126 | $ 92,213 |
Property and equipment | Minimum | ||
Property, Equipment, and Software | ||
Lease life or expected life | 3 years | 3 years |
Property and equipment | Maximum | ||
Property, Equipment, and Software | ||
Lease life or expected life | 10 years | 10 years |
Software | ||
Property, Equipment, and Software | ||
Lease life or expected life | 3 years | 3 years |
SUMMARY OF SIGNIFICANT ACCOU_19
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Deferred Offering Costs (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Restructuring Cost and Reserve | |||
Deferred offering costs | $ 214,647 | ||
Deferred offering costs capitalized | $ 104,512 | $ 367,696 | |
Harper & Jones, LLC | |||
Restructuring Cost and Reserve | |||
Repayments of Notes Payable | $ 645,304 |
SUMMARY OF SIGNIFICANT ACCOU_20
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Impairment (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Indefinite-lived Intangible Assets | ||
Total impairment of intangibles | $ 3,667,000 | |
Total impairment of goodwill | 3,321,095 | |
Total impairment | 5,503,095 | $ 3,400,000 |
Bailey Goodwill | ||
Indefinite-lived Intangible Assets | ||
Total impairment of goodwill | 3,321,095 | |
Bailey brand name | ||
Indefinite-lived Intangible Assets | ||
Total impairment of intangibles | $ 2,182,000 | $ 3,400,000 |
SUMMARY OF SIGNIFICANT ACCOU_21
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Concentrations (Details) - item | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Number of vendors | 3 | 2 |
Inventory, percentage | 30% | 40% |
SUMMARY OF SIGNIFICANT ACCOU_22
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Indefinite-Lived Intangible Assets (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Brand name | |
Indefinite-lived Intangible Assets [Line Items] | |
Impairment loss of indefinite-lived intangible assets | $ 3,400,000 |
SUMMARY OF SIGNIFICANT ACCOU_23
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Inventory (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Raw materials | $ 1,508,416 | $ 1,611,134 | $ 292,167 |
Work in process | 653,412 | 888,643 | 242,673 |
Finished goods | 2,609,443 | 2,725,505 | 2,220,519 |
Inventory | $ 4,771,271 | $ 5,225,282 | $ 2,660,203 |
SUMMARY OF SIGNIFICANT ACCOU_24
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Net Loss per Share (Details) - shares | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Total potentially dilutive shares | 587,795 | 22,588 | 220,526 | 4,907 |
Stock options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Total potentially dilutive shares | 1,558 | 1,558 | 1,558 | 1,558 |
Convertible notes | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Total potentially dilutive shares | 18,496 | 37,915 | 1,916 | |
Series A convertible preferred stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Total potentially dilutive shares | 27,097 | 4,320 | ||
Common stock warrants | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Total potentially dilutive shares | 237,746 | 2,533 | 176,733 | 1,432 |
SUMMARY OF SIGNIFICANT ACCOU_25
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Advertising and Promotion (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Advertising and promotional expense | $ 1,178,000 | $ 240,000 |
SUMMARY OF SIGNIFICANT ACCOU_26
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Shipping and Handling (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Total shipping and handling | $ 72,000 | $ 23,000 |
Total shipping and handling costs included in distribution costs | $ 525,000 | $ 423,000 |
SUMMARY OF SIGNIFICANT ACCOU_27
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Leases (Details) | Dec. 31, 2022 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Lease term | 12 months |
BUSINESS COMBINATIONS AND DIS_2
BUSINESS COMBINATIONS AND DISPOSITION - 2022 Acquisition (Details) - USD ($) | 12 Months Ended | |||||
Dec. 30, 2022 | Feb. 12, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | Feb. 15, 2023 | Apr. 30, 2021 | |
BUSINESS COMBINATIONS AND DISPOSITION | ||||||
Contingent consideration liability | $ 12,098,475 | $ 12,179,476 | ||||
Promissory note payable | ||||||
BUSINESS COMBINATIONS AND DISPOSITION | ||||||
Aggregate principal amount | 3,500,000 | $ 1,000,000 | ||||
Bailey LLC | ||||||
BUSINESS COMBINATIONS AND DISPOSITION | ||||||
Aggregate principal amount | $ 5,500,000 | |||||
Bailey LLC | Promissory note payable | ||||||
BUSINESS COMBINATIONS AND DISPOSITION | ||||||
Aggregate principal amount | 4,500,000 | |||||
Preferred Stock | Series B Preferred Stock | ||||||
BUSINESS COMBINATIONS AND DISPOSITION | ||||||
Conversion of preferred stock into common stock (shares) | (20,754,717) | |||||
2022 Acquisition | ||||||
BUSINESS COMBINATIONS AND DISPOSITION | ||||||
Cash | $ 7,500,000 | 7,500,000 | ||||
Consideration in promissory notes | 5,500,000 | |||||
Common stock | $ 1,000,000 | 1,000,000 | ||||
Percentage of equity acquired | 8% | |||||
Number of shares of common stock issued | 3,636 | |||||
Business acquisition, equity interest fair value | $ 1,000,000 | |||||
Previous Acquisitions | ||||||
BUSINESS COMBINATIONS AND DISPOSITION | ||||||
Business acquisition, equity interest rate | 100% | |||||
Sale parent stock gross proceeds does not exceed | $ 11,000,000 | |||||
Previous Acquisitions | Bailey LLC | ||||||
BUSINESS COMBINATIONS AND DISPOSITION | ||||||
Total purchase price consideration | 15,500,000 | |||||
Contingent consideration liability | $ 10,698,475 | $ 7,935,016 | ||||
Previous Acquisitions | Bailey LLC | Promissory note payable | ||||||
BUSINESS COMBINATIONS AND DISPOSITION | ||||||
Aggregate principal amount | $ 4,500,000 | |||||
Previous Acquisitions | Preferred Stock | Series B Preferred Stock | ||||||
BUSINESS COMBINATIONS AND DISPOSITION | ||||||
Conversion of preferred stock into common stock (shares) | 20,754,717 |
BUSINESS COMBINATIONS AND DIS_3
BUSINESS COMBINATIONS AND DISPOSITION (Details) | May 18, 2021 USD ($) shares |
BUSINESS COMBINATIONS AND DISPOSITION | |
Trading day immediately preceding period | 30 days |
Gross proceeds from common stock indemnification claims | $ 9,100,000 |
Harper & Jones | |
BUSINESS COMBINATIONS AND DISPOSITION | |
Business acquisition interest acquired | 100% |
Number of shares connection with merger | shares | 87,711 |
Harper & Jones | IPO | |
BUSINESS COMBINATIONS AND DISPOSITION | |
Cash payments | $ 500,000 |
Business acquisition issuable amount | $ 9,100,000 |
BUSINESS COMBINATIONS AND DIS_4
BUSINESS COMBINATIONS AND DISPOSITION - Purchase price consideration (Details) - USD ($) | 12 Months Ended | ||
Dec. 30, 2022 | May 18, 2021 | Dec. 31, 2022 | |
Harper & Jones | |||
BUSINESS COMBINATIONS AND DISPOSITION | |||
Cash | $ 500,000 | ||
Common stock | 8,025,542 | ||
Contingent consideration | 3,421,516 | ||
Purchase price consideration | $ 11,947,058 | ||
2022 Acquisition | |||
BUSINESS COMBINATIONS AND DISPOSITION | |||
Cash | $ 7,500,000 | $ 7,500,000 | |
Common stock | 1,000,000 | 1,000,000 | |
Contingent consideration | 5,500,000 | ||
Purchase price consideration | $ 14,000,000 | 14,000,000 | |
Promissory note payable | 2022 Acquisition | |||
BUSINESS COMBINATIONS AND DISPOSITION | |||
Contingent consideration | $ 5,500,000 |
BUSINESS COMBINATIONS AND DIS_5
BUSINESS COMBINATIONS AND DISPOSITION - Assets acquired and Liabilities assumed (Details) - USD ($) | 12 Months Ended | |||||
Dec. 30, 2022 | May 18, 2021 | Dec. 31, 2022 | Jun. 30, 2023 | Dec. 31, 2021 | Dec. 31, 2020 | |
BUSINESS COMBINATIONS AND DISPOSITION | ||||||
Goodwill | $ 10,103,812 | $ 8,973,501 | $ 8,583,274 | $ 6,479,218 | ||
Harper & Jones | ||||||
BUSINESS COMBINATIONS AND DISPOSITION | ||||||
Cash and cash equivalents | $ 24,335 | |||||
Accounts receivable, net | 49,472 | |||||
Inventory | 77,159 | |||||
Prepaid expenses and other current assets | 69,715 | |||||
Property, equipment and software, net | 83,986 | |||||
Goodwill | 9,681,548 | |||||
Intangible assets | 3,936,030 | |||||
Accounts payable | (51,927) | |||||
Accrued expenses and other liabilities | (107,957) | |||||
Purchase price consideration | $ 11,947,058 | |||||
2022 Acquisition | ||||||
BUSINESS COMBINATIONS AND DISPOSITION | ||||||
Cash and cash equivalents | $ 252,697 | |||||
Accounts receivable, net | 63,956 | |||||
Due from factor, net | 387,884 | |||||
Inventory | 2,941,755 | |||||
Prepaid expenses and other current assets | 32,629 | |||||
Property, equipment and software, net | 48,985 | |||||
Goodwill | 3,711,322 | |||||
Intangible assets | 7,403,800 | |||||
Accounts payable | (615,706) | |||||
Accrued expenses and other liabilities | (227,321) | |||||
Purchase price consideration | $ 14,000,000 | $ 14,000,000 |
BUSINESS COMBINATIONS AND DIS_6
BUSINESS COMBINATIONS AND DISPOSITION - Stateside (Details) - Stateside | Aug. 30, 2021 USD ($) shares |
BUSINESS COMBINATIONS AND DISPOSITION | |
Membership interests acquired in cash | $ 5,000,000 |
Value of shares of common stock transferred | shares | 44,062 |
Cash held in escrow | $ 375,000 |
Value of shares held in escrow | $ 375,000 |
Number of shares held in escrow | shares | 3,305 |
BUSINESS COMBINATIONS AND DIS_7
BUSINESS COMBINATIONS AND DISPOSITION - Stateside purchase price consideration (Details) - Stateside | Aug. 30, 2021 USD ($) |
Fair value of the purchase price consideration | |
Cash | $ 5,000,000 |
Common stock | 3,403,196 |
Purchase price consideration | $ 8,403,196 |
BUSINESS COMBINATIONS AND DIS_8
BUSINESS COMBINATIONS AND DISPOSITION - Stateside Assets acquired and Liabilities assumed (Details) - USD ($) | Aug. 30, 2021 | Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
BUSINESS COMBINATIONS AND DISPOSITION | |||||
Goodwill | $ 8,973,501 | $ 10,103,812 | $ 8,583,274 | $ 6,479,218 | |
Stateside | |||||
BUSINESS COMBINATIONS AND DISPOSITION | |||||
Cash and cash equivalents | $ 32,700 | ||||
Accounts receivable, net | 154,678 | ||||
Due from factor, net | 371,247 | ||||
Inventory | 603,625 | ||||
Prepaid expenses and other current assets | 7,970 | ||||
Deposits | 9,595 | ||||
Goodwill | 2,104,056 | $ 2,104,056 | $ 2,104,056 | $ 2,104,056 | |
Intangible assets | 5,939,140 | ||||
Accounts payable | (374,443) | ||||
Accrued expenses and other liabilities | (445,372) | ||||
Purchase price consideration | $ 8,403,196 |
BUSINESS COMBINATIONS AND DIS_9
BUSINESS COMBINATIONS AND DISPOSITION - Stateside Additional information (Details) - USD ($) | 12 Months Ended | |||
Dec. 30, 2022 | Aug. 30, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
BUSINESS COMBINATIONS AND DISPOSITION | ||||
Estimated useful lives | 3 years | |||
Customer relationships | ||||
BUSINESS COMBINATIONS AND DISPOSITION | ||||
Estimated useful lives | 3 years | |||
Stateside | ||||
BUSINESS COMBINATIONS AND DISPOSITION | ||||
Working capital adjustments | $ 493,791 | |||
Net amount due to seller | $ 396,320 | |||
Net revenue since the acquisition date | $ 1,695,000 | |||
Net income since the acquisition date | $ 285,000 | |||
Stateside | Customer relationships | ||||
BUSINESS COMBINATIONS AND DISPOSITION | ||||
Estimated useful lives | 3 years |
BUSINESS COMBINATIONS AND DI_10
BUSINESS COMBINATIONS AND DISPOSITION - Unaudited Pro Forma Financial Information (Details) - USD ($) | 6 Months Ended | 12 Months Ended | ||||
Dec. 30, 2022 | May 18, 2021 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
BUSINESS COMBINATIONS AND DISPOSITION | ||||||
Estimated useful lives | 3 years | |||||
Fair value of contingent consideration | $ 12,098,475 | $ 12,179,476 | ||||
Net revenues | $ 14,728,296 | 28,519,261 | 34,635,426 | |||
Net loss | $ (16,907,152) | $ (42,001,415) | $ (33,171,473) | |||
Net loss per common share - basic | $ (1,718.83) | $ (1,361.50) | $ (10,870.25) | |||
Net loss per common share - diluted | $ (1,718.83) | |||||
Harper & Jones | ||||||
BUSINESS COMBINATIONS AND DISPOSITION | ||||||
Contingent consideration liability, valuation shortfall | $ 3,421,516 | |||||
Fair value of contingent consideration | $ 1,400,000 | $ 4,244,460 | ||||
Net revenues | 1,860,000 | |||||
Net loss | $ 390,000 | |||||
Customer relationships | ||||||
BUSINESS COMBINATIONS AND DISPOSITION | ||||||
Estimated useful lives | 3 years | |||||
Customer relationships | Harper & Jones | ||||||
BUSINESS COMBINATIONS AND DISPOSITION | ||||||
Estimated useful lives | 3 years |
BUSINESS COMBINATIONS AND DI_11
BUSINESS COMBINATIONS AND DISPOSITION - June 2023 Disposition (Details) - USD ($) | 6 Months Ended | ||||
Jun. 21, 2023 | Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
BUSINESS COMBINATIONS AND DISPOSITION | |||||
Goodwill | $ 8,973,501 | $ 10,103,812 | $ 8,583,274 | $ 6,479,218 | |
Aggregate cash payment agreed to pay | $ 229,000 | ||||
H&J Settlement Agreement | D.Jones (H&J Seller) | |||||
BUSINESS COMBINATIONS AND DISPOSITION | |||||
Aggregate cash payment agreed to pay | $ 229,000 | ||||
Issuance of common stock pursuant to disposition (in shares) | 78,103 | 78,103 | |||
Percentage of membership interest transferred | 100% | ||||
June 2023 Disposition | |||||
BUSINESS COMBINATIONS AND DISPOSITION | |||||
Cash and cash equivalents | 7,666 | 12,598 | |||
Inventory | 102,718 | 95,155 | |||
Accounts receivable, net | 45,018 | 22,010 | |||
Goodwill | 1,130,310 | 9,681,548 | |||
Intangible assets, net | 1,521,265 | 3,578,182 | |||
Other current and non-current assets | 62,703 | 161,740 | |||
Accounts payable | 81,991 | 54,981 | |||
Accrued expenses and other liabilities | 520,195 | 381,290 | |||
Deferred revenue | 202,129 | 276,397 | |||
Due to related parties | 1,008 | 21,361 | |||
Note payable - related party | 129,489 | 299,489 | |||
Loan payable | $ 284,059 | $ 148,900 | |||
June 2023 Disposition | H&J Settlement Agreement | D.Jones (H&J Seller) | |||||
BUSINESS COMBINATIONS AND DISPOSITION | |||||
Aggregate cash payment agreed to pay | $ 229,000 | ||||
Issuance of common stock pursuant to disposition (in shares) | 78,103 | ||||
Percentage of membership interest transferred | 100% |
BUSINESS COMBINATIONS AND DI_12
BUSINESS COMBINATIONS AND DISPOSITION - Discontinued operations of H&J (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
BUSINESS COMBINATIONS AND DISPOSITION | ||||||||
Net revenues | $ 4,493,424 | $ 2,649,432 | $ 8,869,803 | $ 5,278,562 | $ 10,333,558 | $ 5,764,963 | ||
Cost of net revenues | 2,157,349 | 1,536,703 | 4,540,488 | 3,552,396 | 6,789,314 | 3,828,496 | ||
Gross profit (loss) | 2,336,075 | 1,112,729 | 4,329,315 | 1,726,166 | 3,544,244 | 1,936,467 | ||
Operating expenses: | ||||||||
General and administrative | 4,074,051 | 4,243,031 | 8,380,063 | 8,073,621 | 14,067,681 | 16,149,510 | ||
Sales and marketing | 1,097,326 | 1,372,568 | 2,036,677 | 2,230,087 | 4,018,985 | 3,269,710 | ||
Impairment | 5,503,095 | 3,400,000 | ||||||
Total operating expenses | (5,284,884) | 11,758,443 | 230,664 | 17,849,721 | 24,765,633 | 32,073,050 | ||
Income (loss) from operations | 7,620,959 | (10,645,714) | 4,098,651 | (16,123,555) | (21,221,389) | (30,136,583) | ||
Other income (expense): | ||||||||
Interest expense | (1,086,889) | (2,173,769) | (2,951,487) | (3,730,612) | (8,961,410) | (3,619,093) | ||
Other non-operating income (expenses) | 2,240 | 3,336,963 | (676,749) | 2,653,375 | 3,068,080 | 1,321,472 | ||
Total other income (expense), net | (1,084,649) | 1,163,194 | (3,628,236) | (1,077,237) | (5,893,330) | (2,297,621) | ||
Income tax benefit (provision) | 1,100,120 | |||||||
Net income (loss) | $ 5,044,260 | $ (6,136,349) | $ (9,533,924) | $ (7,832,942) | $ (1,092,088) | $ (17,366,866) | $ (38,043,362) | $ (32,357,957) |
Weighted average common shares outstanding - basic | 246,809 | 14,329 | 236,824 | 9,836 | 30,852 | 3,052 | ||
Weighted average common shares outstanding - diluted | 834,604 | 14,329 | 824,619 | 9,836 | 30,852 | 3,052 | ||
Net loss per common share - basic | $ 26.48 | $ (661.78) | $ 1.99 | $ (1,748.68) | $ (878.87) | $ (10,268.22) | ||
Net loss per common share - diluted | $ 7.83 | $ (661.78) | $ 0.57 | $ (1,748.68) | $ (878.87) | $ (10,268.22) | ||
Harper & Jones | Discontinued Operations [Member] | ||||||||
BUSINESS COMBINATIONS AND DISPOSITION | ||||||||
Net revenues | $ 3,637,620 | $ 1,819,896 | ||||||
Cost of net revenues | 1,241,594 | 1,888,091 | ||||||
Gross profit (loss) | 2,396,026 | (68,195) | ||||||
Operating expenses: | ||||||||
General and administrative | 2,303,854 | 603,007 | ||||||
Sales and marketing | 931,650 | 540,873 | ||||||
Impairment | 10,036,238 | |||||||
Total operating expenses | 13,271,742 | 1,143,880 | ||||||
Income (loss) from operations | (10,875,716) | (1,212,075) | ||||||
Other income (expense): | ||||||||
Interest expense | (52,927) | (44,828) | ||||||
Other non-operating income (expenses) | 233,030 | |||||||
Total other income (expense), net | (52,927) | 188,202 | ||||||
Net income (loss) | $ (10,928,643) | $ (1,023,873) | ||||||
Weighted average common shares outstanding - basic | 30,852 | 3,052 | ||||||
Weighted average common shares outstanding - diluted | 30,852 | 3,052 | ||||||
Net loss per common share - basic | $ (354.23) | $ (335.52) | ||||||
Net loss per common share - diluted | $ (354.23) | $ (335.52) |
DUE FROM FACTOR (Details)_2
DUE FROM FACTOR (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Outstanding receivables: | |||
Without recourse, Current | $ 787,542 | $ 1,680,042 | $ 579,295 |
With recourse, Current | 50,979 | 65,411 | 361,584 |
Advances | 118,521 | 121,617 | |
Credits due customers, Current | (10,142) | (354,282) | (77,208) |
Due from factor | $ 438,142 | $ 839,400 | $ 985,288 |
DUE FROM FACTOR - Additional in
DUE FROM FACTOR - Additional information (Details). | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Debt Instrument | |
Maximum advances on net sales can be requested, percentage | 50% |
LIBOR | |
Debt Instrument | |
Debt instrument variable rate | 2.50% |
Prime Rate | |
Debt Instrument | |
Increase (Decrease) in interest rate | 0.03% |
Stateside | |
Debt Instrument | |
Maximum commission and fees payable | $ 30,000 |
Promissory note, annual interest rate (as a percent) | 4% |
Stateside | Prime Rate | |
Debt Instrument | |
Debt instrument variable rate | 2% |
Maximum commission and fees payable | $ 30,000 |
Bailey | Prime Rate | |
Debt Instrument | |
Promissory note, annual interest rate (as a percent) | 4.25% |
GOODWILL AND INTANGIBLE ASSET_6
GOODWILL AND INTANGIBLE ASSETS - Summary of goodwill by entity (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Business Combination Segment Allocation | ||
Balance | $ 8,583,274 | $ 6,479,218 |
Business combinations | 3,711,322 | 2,104,056 |
Impairment | (3,321,095) | |
Balance | 10,103,812 | 8,583,274 |
Bailey LLC | ||
Business Combination Segment Allocation | ||
Balance | 6,479,218 | 6,479,218 |
Impairment | (3,321,095) | |
Balance | 3,158,123 | 6,479,218 |
Stateside | ||
Business Combination Segment Allocation | ||
Balance | 2,104,056 | |
Business combinations | 2,104,056 | |
Balance | 2,104,056 | $ 2,104,056 |
Sundry | ||
Business Combination Segment Allocation | ||
Business combinations | 3,711,322 | |
Balance | $ 3,711,322 |
GOODWILL AND INTANGIBLE ASSET_7
GOODWILL AND INTANGIBLE ASSETS (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Aug. 30, 2021 | May 18, 2021 | Dec. 31, 2020 | |
Indefinite-lived Intangible Assets | |||||||||
Business combinations | $ 3,711,322 | $ 2,104,056 | |||||||
Gross Amount | $ 9,734,560 | $ 9,734,560 | 9,734,560 | 4,736,080 | |||||
Accumulated Amortization | (4,155,129) | (4,155,129) | (2,670,202) | (1,091,509) | |||||
Carrying Value | 5,579,431 | 5,579,431 | 7,064,358 | 3,644,571 | |||||
Indefinite-lived | 15,576,440 | 15,576,440 | 15,576,440 | 10,354,640 | |||||
Total-Gross | 12,906,238 | ||||||||
Intangible assets, net | 11,421,311 | 11,421,311 | 12,906,238 | 9,263,131 | |||||
Amortization expense | 804,924 | $ 537,812 | 1,759,277 | $ 1,075,625 | 1,653,819 | 1,128,524 | |||
Goodwill | 8,973,501 | 8,973,501 | 10,103,812 | 8,583,274 | $ 6,479,218 | ||||
Stateside | |||||||||
Indefinite-lived Intangible Assets | |||||||||
Business combinations | 2,104,056 | ||||||||
Goodwill | 2,104,056 | 2,104,056 | 2,104,056 | 2,104,056 | $ 2,104,056 | ||||
Bailey LLC | |||||||||
Indefinite-lived Intangible Assets | |||||||||
Goodwill | 3,158,123 | 3,158,123 | 3,158,123 | 6,479,218 | $ 6,479,218 | ||||
Harper & Jones | |||||||||
Indefinite-lived Intangible Assets | |||||||||
Goodwill | $ 9,681,548 | ||||||||
Customer relationships | |||||||||
Indefinite-lived Intangible Assets | |||||||||
Gross Amount | 9,734,560 | 9,734,560 | 9,734,560 | 4,736,080 | |||||
Accumulated Amortization | (4,155,129) | (4,155,129) | (2,670,202) | (1,091,509) | |||||
Carrying Value | 5,579,431 | 5,579,431 | 7,064,358 | 3,644,571 | |||||
Brand name | |||||||||
Indefinite-lived Intangible Assets | |||||||||
Indefinite-lived | $ 5,841,880 | $ 5,841,880 | 5,618,560 | ||||||
Total-Gross | 5,841,880 | ||||||||
Intangible assets, net | $ 5,841,880 | $ 5,618,560 |
GOODWILL AND INTANGIBLE ASSET_8
GOODWILL AND INTANGIBLE ASSETS - Future amortization expense (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
GOODWILL AND INTANGIBLE ASSETS | |||
2023 | $ 2,924,020 | ||
2024 | 2,474,178 | ||
2025 | 1,666,160 | ||
Carrying Value | $ 5,579,431 | $ 7,064,358 | $ 3,644,571 |
LIABILITIES AND DEBT - Accrue_2
LIABILITIES AND DEBT - Accrued Expenses and Other Liabilities (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
LIABILITIES AND DEBT | |||
Accrued expenses | $ 503,927 | $ 668,714 | $ 178,819 |
Reserve for returns | 307,725 | 33,933 | |
Payroll related liabilities | 4,009,812 | 2,618,870 | 1,183,598 |
Sales tax liability | 277,800 | 262,765 | 225,804 |
Due to seller | 396,320 | ||
Other liabilities | 247,398 | 78,845 | 59,613 |
Accrued expenses and other liabilities, Total | 5,038,937 | 3,936,920 | $ 2,078,087 |
Estimated penalties associated with accrued payroll taxes | 1,288,048 | 1,074,316 | |
Accrued expenses included in accrued common stock | $ 535,000 | $ 535,000 | |
Number of common shares owed per the agreement | 5,000 | 200 | |
DBG | |||
LIABILITIES AND DEBT | |||
Sales tax liability | $ 620,400 | $ 539,839 | |
Bailey | |||
LIABILITIES AND DEBT | |||
Sales tax liability | $ 667,648 | $ 534,477 |
LIABILITIES AND DEBT - Venture
LIABILITIES AND DEBT - Venture Debt (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||||||
Sep. 29, 2022 | Nov. 16, 2021 | May 13, 2021 | Feb. 28, 2022 | Jul. 31, 2021 | May 31, 2021 | Mar. 31, 2017 | Dec. 31, 2022 | Dec. 31, 2021 | |
Line of Credit Facility | |||||||||
Gross proceeds received | $ 237,500 | ||||||||
Warrants granted | 142 | 13 | |||||||
Warrants value | $ 1,622,350 | $ 145,696 | |||||||
Interest expense | $ 427,700 | 573,455 | $ 825,219 | ||||||
Note Warrant | |||||||||
Line of Credit Facility | |||||||||
Loan fees and discounts from warrants were amortized to interest expense | 12,500 | 147,389 | |||||||
Loan fees and discounts from warrants unamortized balance | $ 0 | ||||||||
IPO | Common stock warrants | |||||||||
Line of Credit Facility | |||||||||
Warrants granted | 48 | 964 | |||||||
Venture Debt | Series A Convertible Preferred Stock | Black Oak SPA | |||||||||
Line of Credit Facility | |||||||||
Compounded monthly fees | $ 6,300 | ||||||||
Venture Debt | Secured Debt | |||||||||
Line of Credit Facility | |||||||||
Loan fees | $ 12,500 | ||||||||
Maximum borrowing capacity | $ 237,500 | $ 6,001,755 | |||||||
Venture Debt | Secured Debt | Follow-On Public Offering | Series A Convertible Preferred Stock | |||||||||
Line of Credit Facility | |||||||||
Line of credit facility, frequency of payments | $1,000 | ||||||||
Amended Venture Debt | Secured Debt | Secondary Follow-On Public Offering Prior To September 30 2021 | |||||||||
Line of Credit Facility | |||||||||
Loan payment | $ 6,251,755 | ||||||||
Accrued interest | $ 48,245 | ||||||||
Amended Venture Debt | Secured Debt | Secondary Follow-On Public Offering After September 30 2021 | |||||||||
Line of Credit Facility | |||||||||
Loan payment | $ 269,880 |
LIABILITIES AND DEBT - Conver_3
LIABILITIES AND DEBT - Convertible Debt (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |||||
Apr. 01, 2021 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
LIABILITIES AND DEBT | |||||||
Amortization of debt issuance costs | $ 6,500,000 | ||||||
Issuance of convertible notes payable | 3,280,360 | $ 2,779,910 | |||||
Derivative liability in connection with convertible note | 559,957 | 3,204,924 | |||||
Proceeds from Issuance of Debt | 237,500 | ||||||
Convertible Debt | |||||||
LIABILITIES AND DEBT | |||||||
Amortization of debt discount | $ 689,100 | $ 1,724,291 | 6,506,384 | 801,538 | |||
Principal | 4,100,000 | 9,565,000 | $ 100,000 | ||||
Unamortized debt discount | 1,378,200 | 3,963,386 | |||||
Debt Conversion, Converted Instrument, Shares Issued | 350 | ||||||
Convertible Debt 2020 Regulation CF Offering | |||||||
LIABILITIES AND DEBT | |||||||
Outstanding principal and accrued interest upon closing of IPO | $ 16,942 | ||||||
Conversion of shares | 12,786 | ||||||
Convertible Debt 2020 Regulation CF Offering | Convertible Debt | |||||||
LIABILITIES AND DEBT | |||||||
Issuance costs | $ 69,627 | ||||||
Amortization of debt issuance costs | 27,894 | ||||||
Proceeds from Issuance of Debt | $ 473,650 | 450,308 | |||||
Debt Instrument, Interest Rate, Stated Percentage | 6% | ||||||
Convertible Debt 2020 Regulation D Offering | |||||||
LIABILITIES AND DEBT | |||||||
Outstanding principal and accrued interest upon closing of IPO | $ 100,000 | 100,000 | $ 100,000 | ||||
Amortization of debt issuance costs | 100,000 | ||||||
Default interest expense | 132,609 | ||||||
Proceeds from Issuance of Debt | 755,000 | ||||||
Convertible Debt 2020 Regulation D Offering | IPO | |||||||
LIABILITIES AND DEBT | |||||||
Outstanding principal and accrued interest upon closing of IPO | $ 185,000 | ||||||
Convertible Debt 2020 Regulation D Offering | Convertible Debt | |||||||
LIABILITIES AND DEBT | |||||||
Debt instrument term | 9 months | ||||||
Proceeds from Issuance of Debt | $ 55,000 | $ 800,000 | |||||
Debt Instrument, Interest Rate, Stated Percentage | 14% | ||||||
Convertible Debt 2020 Regulation D Offering | Debt Converted Into Common Stock | Convertible Debt | |||||||
LIABILITIES AND DEBT | |||||||
Debt Conversion, Converted Instrument, Shares Issued | 181 | ||||||
Convertible Debt 2019 Regulation D Offering | Convertible Debt | |||||||
LIABILITIES AND DEBT | |||||||
Debt instrument term | 36 months | ||||||
Proceeds from Issuance of Debt | $ 799,280 | ||||||
Debt Instrument, Interest Rate, Stated Percentage | 12% | ||||||
Convertible Debt 2019 Regulation D Offering | Debt Converted Into Common Stock | Convertible Debt | |||||||
LIABILITIES AND DEBT | |||||||
Debt Conversion, Converted Instrument, Shares Issued | 145 | ||||||
December Notes | |||||||
LIABILITIES AND DEBT | |||||||
Principal | 4,000,000 | ||||||
Unamortized debt discount | 1,278,200 | ||||||
Other financing fees | $ 50,000 |
LIABILITIES AND DEBT - Conver_4
LIABILITIES AND DEBT - Convertible Promissory Note (Details) | 1 Months Ended | 6 Months Ended | 12 Months Ended | ||||||||||||
Dec. 29, 2022 USD ($) | Apr. 08, 2022 USD ($) $ / shares shares | Nov. 16, 2021 USD ($) item D $ / shares | Oct. 01, 2021 USD ($) item D $ / shares | Feb. 28, 2023 USD ($) | Dec. 31, 2022 USD ($) $ / shares shares | Sep. 30, 2022 shares | May 31, 2022 USD ($) | Nov. 30, 2021 shares | Jun. 30, 2023 USD ($) $ / shares shares | Jun. 30, 2022 USD ($) shares | Dec. 31, 2022 USD ($) D $ / shares shares | Dec. 31, 2021 USD ($) | Aug. 27, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Debt Instrument | |||||||||||||||
Repayments of debt | $ 6,604,552 | $ 3,068,750 | $ 7,350,276 | $ 2,006,628 | |||||||||||
Exercise price of warrants | $ / shares | $ 95 | ||||||||||||||
Outstanding principal amount converted | $ 888,930 | ||||||||||||||
Amortization of debt issuance costs | 6,500,000 | ||||||||||||||
Number of shares issued | shares | 30 | 50,890 | |||||||||||||
Issuance of convertible notes payable | 3,280,360 | 2,779,910 | |||||||||||||
Derivative liability in connection with convertible note | 559,957 | 3,204,924 | |||||||||||||
Convertible Debt | |||||||||||||||
Debt Instrument | |||||||||||||||
Principal | $ 4,100,000 | 4,100,000 | 9,565,000 | $ 100,000 | |||||||||||
Unamortized debt discount | (1,378,200) | (1,378,200) | (3,963,386) | ||||||||||||
Convertible Note Payable, Net | 2,721,800 | 2,721,800 | 5,601,614 | $ 100,000 | |||||||||||
Amortization of debt discount | $ 689,100 | $ 1,724,291 | 6,506,384 | 801,538 | |||||||||||
Shares issued to notes payable holders | shares | 350 | ||||||||||||||
Outstanding principal amount converted | $ 888,930 | ||||||||||||||
Oasis Note | |||||||||||||||
Debt Instrument | |||||||||||||||
Principal | $ 5,000,000 | ||||||||||||||
Amortization of debt discount | 6,506,384 | 801,538 | |||||||||||||
Aggregate principal amount | 5,265,000 | 5,265,000 | $ 5,265,000 | ||||||||||||
Derivative liability at fair value | 3,204,924 | $ 3,204,924 | |||||||||||||
Term of debt | 18 months | ||||||||||||||
Threshold percentage of stock price | 90% | ||||||||||||||
Number of lowest vwaps | D | 2 | ||||||||||||||
Number of consecutive trading days | D | 5 | ||||||||||||||
Period not to submit notice | 30 days | ||||||||||||||
Minimum conversion amount | $ 500,000 | $ 500,000 | |||||||||||||
Minimum conversion price | $ / shares | $ 7,500 | $ 7,500 | |||||||||||||
Number of shares issued | shares | 40 | ||||||||||||||
Debt Instrument, Convertible, Conversion Price | $ / shares | $ 90.601 | $ 90.601 | |||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 6% | 6% | 6% | ||||||||||||
Oasis Note | Convertible Debt | |||||||||||||||
Debt Instrument | |||||||||||||||
Principal | 5,265,000 | ||||||||||||||
Unamortized debt discount | (715,000) | ||||||||||||||
Issuance of convertible notes payable | 4,550,000 | ||||||||||||||
First Fire First Note | |||||||||||||||
Debt Instrument | |||||||||||||||
Principal | $ 1,500,000 | ||||||||||||||
Aggregate principal amount | $ 1,575,000 | ||||||||||||||
Term of debt | 18 months | ||||||||||||||
Threshold percentage of stock price | 90% | ||||||||||||||
Number of lowest vwaps | item | 2 | ||||||||||||||
Number of consecutive trading days | D | 5 | ||||||||||||||
Debt Instrument, Convertible, Conversion Price | $ / shares | $ 9,880 | ||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 6% | ||||||||||||||
First Fire First Note | Convertible Debt | |||||||||||||||
Debt Instrument | |||||||||||||||
Principal | 1,575,000 | ||||||||||||||
Unamortized debt discount | (315,000) | ||||||||||||||
Issuance of convertible notes payable | 1,260,000 | ||||||||||||||
Second First Fire Note | |||||||||||||||
Debt Instrument | |||||||||||||||
Principal | $ 2,500,000 | ||||||||||||||
Aggregate principal amount | $ 2,625,000 | ||||||||||||||
Threshold percentage of stock price | 90% | ||||||||||||||
Number of lowest vwaps | item | 2 | ||||||||||||||
Number of consecutive trading days | D | 5 | ||||||||||||||
Debt Instrument, Convertible, Conversion Price | $ / shares | $ 10,700 | ||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 6% | ||||||||||||||
Second First Fire Note | Convertible Debt | |||||||||||||||
Debt Instrument | |||||||||||||||
Principal | 2,625,000 | ||||||||||||||
Unamortized debt discount | (530,000) | ||||||||||||||
Issuance of convertible notes payable | 2,095,000 | ||||||||||||||
Oasis and FirstFire Notes | |||||||||||||||
Debt Instrument | |||||||||||||||
Principal | 9,465,000 | ||||||||||||||
Interest Expense, Debt | $ 484,904 | ||||||||||||||
Accrued interest amount converted | $ 533,242 | ||||||||||||||
Shares issued to notes payable holders | shares | 79,807 | ||||||||||||||
Outstanding principal amount converted | $ 9,465,000 | ||||||||||||||
Debt discount which will be amortized over the life of the note | 1,560,000 | ||||||||||||||
Derivative liability | Convertible Debt | |||||||||||||||
Debt Instrument | |||||||||||||||
Unamortized debt discount | $ (559,957) | (559,957) | (3,204,924) | ||||||||||||
Derivative liability in connection with convertible note | (559,957) | (3,204,924) | |||||||||||||
Proceeds from issuance of notes | Convertible Debt | |||||||||||||||
Debt Instrument | |||||||||||||||
Principal | 8,943,750 | 8,943,750 | |||||||||||||
Unamortized debt discount | (1,992,500) | (1,992,500) | |||||||||||||
Issuance of convertible notes payable | 6,951,250 | ||||||||||||||
Repayments of notes | |||||||||||||||
Debt Instrument | |||||||||||||||
Repayments of notes | (4,000,000) | ||||||||||||||
Repayments of notes | Convertible Debt | |||||||||||||||
Debt Instrument | |||||||||||||||
Repayments of notes | (4,943,750) | ||||||||||||||
Conversion of notes into common stock | Convertible Debt | |||||||||||||||
Debt Instrument | |||||||||||||||
Conversion of notes into common stock | (9,465,000) | ||||||||||||||
Warrant and common shares issued with convertible notes | Convertible Debt | |||||||||||||||
Debt Instrument | |||||||||||||||
Unamortized debt discount | (1,368,741) | (1,368,741) | |||||||||||||
Warrant and common shares issued with convertible notes | (1,368,741) | ||||||||||||||
Paycheck Protection Program, Cares Act [Member] | |||||||||||||||
Debt Instrument | |||||||||||||||
Aggregate principal amount | $ 203,994 | ||||||||||||||
April Notes | Securities purchase agreement | |||||||||||||||
Debt Instrument | |||||||||||||||
Unamortized debt discount | $ (755,000) | ||||||||||||||
Aggregate principal amount | 3,068,750 | ||||||||||||||
Original issue discount | 613,750 | ||||||||||||||
Net proceeds | $ 2,313,750 | ||||||||||||||
Repayments of debt | $ 3,068,750 | ||||||||||||||
Number of warrants issued to purchase common stock | shares | 503 | ||||||||||||||
Exercise price of warrants | $ / shares | $ 3,050 | ||||||||||||||
Debt discount for the fair value of the warrants | $ 98,241 | ||||||||||||||
July Notes | Securities purchase agreement | |||||||||||||||
Debt Instrument | |||||||||||||||
Aggregate principal amount | 1,875,000 | 1,875,000 | |||||||||||||
Original issue discount | 375,000 | 375,000 | |||||||||||||
Net proceeds | $ 1,450,000 | ||||||||||||||
Repayments of debt | $ 1,875,000 | ||||||||||||||
Percentage of annual interest rate for notes, if notes are not repaid in full by the maturity date or if any other event of default occurs | 20% | 20% | |||||||||||||
Derivative liability at fair value | $ 559,957 | $ 559,957 | |||||||||||||
July 22 Notes | Securities purchase agreement | |||||||||||||||
Debt Instrument | |||||||||||||||
Number of warrants issued to purchase common stock | shares | 1,645 | 1,645 | |||||||||||||
Exercise price of warrants | $ / shares | $ 380 | $ 380 | |||||||||||||
July 28 Notes | Securities purchase agreement | |||||||||||||||
Debt Instrument | |||||||||||||||
Number of warrants issued to purchase common stock | shares | 1,106 | 1,106 | |||||||||||||
Exercise price of warrants | $ / shares | $ 282.50 | $ 282.50 | |||||||||||||
Debt discount for the fair value of the warrants | $ 692,299 | $ 692,299 | |||||||||||||
December Notes | |||||||||||||||
Debt Instrument | |||||||||||||||
Principal | 4,000,000 | 4,000,000 | |||||||||||||
Unamortized debt discount | $ (1,278,200) | $ (1,278,200) | |||||||||||||
Number of shares issued | shares | 2,400 | ||||||||||||||
December Notes | Securities purchase agreement | |||||||||||||||
Debt Instrument | |||||||||||||||
Unamortized debt discount | $ (1,378,200) | ||||||||||||||
Amortization of debt discount | $ 689,100 | ||||||||||||||
Aggregate principal amount | $ 4,000,000 | ||||||||||||||
Original issue discount | 800,000 | ||||||||||||||
Net proceeds | $ 3,000,000 | ||||||||||||||
Repayments of debt | $ 4,000,000 | ||||||||||||||
Number of warrants issued to purchase common stock | shares | 18,779 | 18,779 | 18,779 | ||||||||||||
Exercise price of warrants | $ / shares | $ 106.50 | $ 106.50 | $ 106.50 | ||||||||||||
Debt discount for the fair value of the warrants | $ 428,200 | $ 428,200 | $ 428,200 | ||||||||||||
Increased percentage of face value of the notes, if notes are not repaid in full by the maturity date or if any other event of default occurs | 120% | 120% | |||||||||||||
Percentage of annual interest rate for notes, if notes are not repaid in full by the maturity date or if any other event of default occurs | 20% | 20% | |||||||||||||
Repayments of additional amount of debt | $ 416,923 | ||||||||||||||
Number of shares issued | shares | 2,400 | 2,400 | |||||||||||||
July 22 notes | Securities purchase agreement | |||||||||||||||
Debt Instrument | |||||||||||||||
Exercise price of warrants | $ / shares | $ 380 | $ 380 | |||||||||||||
July 28 notes | |||||||||||||||
Debt Instrument | |||||||||||||||
Warrants issued to purchase common stock | shares | 1,106 | 1,106 | |||||||||||||
July 28 notes | Securities purchase agreement | |||||||||||||||
Debt Instrument | |||||||||||||||
Exercise price of warrants | $ / shares | $ 282.50 | $ 282.50 |
LIABILITIES AND DEBT - Loan P_2
LIABILITIES AND DEBT - Loan Payable - PPP and SBA Loan (Details) - USD ($) | 1 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Apr. 30, 2022 | Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Feb. 15, 2023 | May 31, 2021 | Feb. 28, 2021 | Jun. 25, 2020 | |
LIABILITIES AND DEBT | ||||||||
Loans payable, net of current portion | $ 443,635 | $ 150,000 | $ 342,050 | |||||
Bailey LLC | ||||||||
LIABILITIES AND DEBT | ||||||||
Aggregate principal amount | $ 5,500,000 | |||||||
Promissory note, annual interest rate (as a percent) | 8% | |||||||
Interest rate | 8% | |||||||
H&J | ||||||||
LIABILITIES AND DEBT | ||||||||
Note payable - related party | $ 129,489 | 299,489 | ||||||
Aggregate principal amount | 153,860 | $ 75,000 | ||||||
Promissory note, annual interest rate (as a percent) | 9.90% | 7.76% | ||||||
Aggregate of principal amount | $ 73,187 | 72,269 | ||||||
Proceeds from loan originations | $ 140,000 | |||||||
Interest rates of notes | 12% | |||||||
Interest rate | 9.90% | 7.76% | ||||||
Loans payable, net of current portion | 149,962 | |||||||
PPP Loan | ||||||||
LIABILITIES AND DEBT | ||||||||
Aggregate principal amount | 203,994 | |||||||
PPP Loan | Bailey LLC | ||||||||
LIABILITIES AND DEBT | ||||||||
Aggregate principal amount | 204,000 | $ 407,994 | ||||||
Convertible Note Payable, Net | 933,295 | $ 933,295 | ||||||
Economic Injury Disaster Loan | ||||||||
LIABILITIES AND DEBT | ||||||||
Promissory note, annual interest rate (as a percent) | 3.75% | |||||||
Convertible Note Payable, Net | 147,438 | |||||||
Interest rate | 3.75% | |||||||
Economic Injury Disaster Loan | H&J | ||||||||
LIABILITIES AND DEBT | ||||||||
Convertible Note Payable, Net | 150,000 | |||||||
1st PPP loan | Bailey LLC | ||||||||
LIABILITIES AND DEBT | ||||||||
Loan forgiveness amount | $ 413,705 | |||||||
2nd PPP loan | Bailey LLC | ||||||||
LIABILITIES AND DEBT | ||||||||
Loan forgiveness amount | $ 1,347,050 | |||||||
Merchant Advances | ||||||||
LIABILITIES AND DEBT | ||||||||
Net proceeds | 1,692,748 | 1,335,360 | ||||||
Repayments of debt | $ 2,331,972 | 1,078,385 | ||||||
Outstanding amount | $ 896,334 | |||||||
Merchant Advances | H&J | ||||||||
LIABILITIES AND DEBT | ||||||||
Promissory note, annual interest rate (as a percent) | 9.90% | |||||||
Proceeds from debt | $ 147,267 | 140,000 | ||||||
Interest rate | 9.90% | |||||||
Loans payable, net of current portion | $ 63,433 | $ 149,962 |
LIABILITIES AND DEBT - Promis_2
LIABILITIES AND DEBT - Promissory Note Payable (Details) | 1 Months Ended | 12 Months Ended | |||||
May 31, 2021 USD ($) | Apr. 30, 2021 USD ($) shares | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Jun. 30, 2023 USD ($) | Feb. 15, 2023 USD ($) | Feb. 28, 2021 USD ($) | |
Debt Instrument | |||||||
Gross proceeds received | $ 237,500 | ||||||
Outstanding balance | 1,829,629 | $ 2,279,768 | $ 1,190,405 | ||||
Debt Discount Cost | 263,958 | ||||||
Bailey LLC | |||||||
Debt Instrument | |||||||
Aggregate principal amount | $ 5,500,000 | ||||||
Promissory note, annual interest rate (as a percent) | 8% | ||||||
Promissory note payable | |||||||
Debt Instrument | |||||||
Aggregate principal amount | $ 1,000,000 | 3,500,000 | |||||
Gross proceeds received | $ 810,000 | ||||||
Warrants issued | shares | 48 | ||||||
Debt discount | $ 73,958 | ||||||
Promissory note payable | Secondary Public Offering | |||||||
Debt Instrument | |||||||
Percentage of outstanding principal | 10 | ||||||
Promissory note payable | Secondary Public Offering | Maximum | |||||||
Debt Instrument | |||||||
Aggregate principal amount | $ 4,000,000 | ||||||
Promissory note payable | Secondary Public Offering | Minimum | |||||||
Debt Instrument | |||||||
Aggregate principal amount | 2,000,000 | ||||||
Promissory note payable | Bailey LLC | |||||||
Debt Instrument | |||||||
Aggregate principal amount | 4,500,000 | ||||||
Repayment of outstanding principal amount | $ 1,000,000 | ||||||
Promissory note payable | Notes Payable to Banks | |||||||
Debt Instrument | |||||||
Interest expense | $ 420,000 | 494,000 | |||||
Promissory note, annual interest rate (as a percent) | 12% | ||||||
PPP Loan | |||||||
Debt Instrument | |||||||
Aggregate principal amount | 203,994 | ||||||
PPP Loan | Bailey LLC | |||||||
Debt Instrument | |||||||
Aggregate principal amount | $ 204,000 | $ 407,994 |
STOCKHOLDERS' DEFICIT (Detail_2
STOCKHOLDERS' DEFICIT (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||||||||||||||||||
Aug. 21, 2023 | May 30, 2023 USD ($) | Jan. 11, 2023 $ / shares shares | Nov. 29, 2022 USD ($) $ / shares shares | Oct. 21, 2022 | Oct. 13, 2022 USD ($) shares | Nov. 16, 2021 USD ($) | Aug. 30, 2021 USD ($) shares | Jun. 28, 2021 USD ($) $ / shares shares | May 18, 2021 USD ($) $ / shares shares | May 13, 2021 USD ($) $ / shares shares | May 12, 2021 | Sep. 30, 2022 USD ($) shares | Dec. 31, 2021 USD ($) $ / shares shares | Nov. 30, 2021 shares | Jul. 31, 2021 USD ($) shares | May 31, 2021 USD ($) shares | Jun. 30, 2023 USD ($) $ / shares shares | Mar. 31, 2023 USD ($) $ / shares shares | Jun. 30, 2022 USD ($) | Jun. 30, 2023 USD ($) $ / shares shares | Jun. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 USD ($) $ / shares shares | Oct. 12, 2022 shares | Sep. 29, 2022 USD ($) $ / shares shares | Aug. 31, 2022 USD ($) shares | |
Class of Stock | |||||||||||||||||||||||||||
Common stock, Shares authorized (in shares) | 1,000,000,000 | 1,000,000,000 | 1,000,000,000 | 1,000,000,000 | 1,000,000,000 | 1,000,000,000 | 200,000,000 | ||||||||||||||||||||
Aggregate number of authorized shares (in shares) | 1,010,000,000 | ||||||||||||||||||||||||||
Reverse stock split conversion ratio | 0.01 | 1 | 0.064 | ||||||||||||||||||||||||
Percentage of affirmative votes required to remove directors from the Board | 66.3333% | ||||||||||||||||||||||||||
Reverse stock split approved | 1-for-15.625 | ||||||||||||||||||||||||||
voting rights | one vote per share | ||||||||||||||||||||||||||
Common stock issued pursuant to consulting agreement | $ | $ 123,000 | $ 123,000 | $ 595,500 | ||||||||||||||||||||||||
Number of shares issued | 30 | 50,890 | |||||||||||||||||||||||||
Issue price (in dollars per share) | $ / shares | $ 4.20 | ||||||||||||||||||||||||||
Proceeds from issuance of common stock | $ | 8,100,000 | ||||||||||||||||||||||||||
Net proceeds of after deducting underwriting discounts and commissions | $ | 700,000 | ||||||||||||||||||||||||||
Direct offering expenses | $ | 500,000 | ||||||||||||||||||||||||||
Value of shares issued | $ | $ 25,000 | $ 5,000,003 | |||||||||||||||||||||||||
Converted outstanding principal | $ | $ 888,930 | ||||||||||||||||||||||||||
Stock-based compensation expense | $ | $ 101,500 | $ 119,759 | $ 207,094 | $ 258,852 | |||||||||||||||||||||||
Contingent consideration liability | $ | $ 12,179,476 | 12,098,475 | 12,179,476 | ||||||||||||||||||||||||
Exercise of warrants | $ | 1,768,046 | ||||||||||||||||||||||||||
Deferred offering costs | $ | $ 367,696 | 104,512 | 367,696 | ||||||||||||||||||||||||
Interest expense | $ | $ 427,700 | $ 573,455 | $ 825,219 | ||||||||||||||||||||||||
Exercise price of warrants | $ / shares | $ 95 | $ 95 | |||||||||||||||||||||||||
Common stock par value (in dollars per share) | $ / shares | $ 0.0001 | 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||||||||||||||||
Pre-funded warrants | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Shares issued to notes payable holders | 32,086 | ||||||||||||||||||||||||||
Number of shares issued | 32,086 | ||||||||||||||||||||||||||
Warrants issued | 32,086 | ||||||||||||||||||||||||||
Number of shares resulting from conversion | 32,086 | ||||||||||||||||||||||||||
General and administrative expenses | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Value of shares issued | $ | $ 339,000 | ||||||||||||||||||||||||||
Stock-based compensation expense | $ | $ 421,442 | $ 3,325,897 | |||||||||||||||||||||||||
Stateside | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Fair value of shares issued | $ | $ 3,403,196 | ||||||||||||||||||||||||||
Number of shares of common stock issued | 44,062 | ||||||||||||||||||||||||||
Sundry | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Fair value of shares issued | $ | $ 1,000,000 | ||||||||||||||||||||||||||
Number of shares of common stock issued | 3,636 | ||||||||||||||||||||||||||
Common Stock | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Common stock, Shares authorized (in shares) | 200,000,000 | 1,000,000,000 | |||||||||||||||||||||||||
Shares issued to notes payable holders | 350 | ||||||||||||||||||||||||||
Number of shares issued | 50,890 | ||||||||||||||||||||||||||
Value of shares issued | $ | $ 5 | ||||||||||||||||||||||||||
Warrants were exercised | 142 | 13 | |||||||||||||||||||||||||
Exercise of warrants | $ | $ 1,622,350 | $ 145,696 | |||||||||||||||||||||||||
Number of shares resulting from conversion | 350 | ||||||||||||||||||||||||||
Common stock par value (in dollars per share) | $ / shares | $ 0.0001 | ||||||||||||||||||||||||||
Common Stock | Stateside | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Stock to the respective sellers | 441 | ||||||||||||||||||||||||||
Common Stock | H&J and Stateside acquisitions | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Stock to the respective sellers | 877 | ||||||||||||||||||||||||||
Preferred Stock | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Preferred stock, shares authorized (in shares) | 10,000,000 | ||||||||||||||||||||||||||
Subsequent events | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Reverse stock split conversion ratio | 0.04 | ||||||||||||||||||||||||||
Subsequent events | Pre-funded warrants | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Shares issued to notes payable holders | 32,086 | ||||||||||||||||||||||||||
Warrants issued | 32,086 | ||||||||||||||||||||||||||
Number of shares resulting from conversion | 32,086 | ||||||||||||||||||||||||||
Common stock par value (in dollars per share) | $ / shares | $ 0.0001 | ||||||||||||||||||||||||||
Equity purchase agreement | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Number of shares issued | 51 | ||||||||||||||||||||||||||
Deferred offering costs | $ | 367,696 | 367,696 | |||||||||||||||||||||||||
Securities purchase agreement | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Gross proceeds | $ | $ 10,000,000 | ||||||||||||||||||||||||||
Securities purchase agreement | Pre-funded warrants | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Warrants issued | 66,007 | ||||||||||||||||||||||||||
Securities purchase agreement | Statement scenario one | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Share issued price | $ / shares | $ 137.50 | ||||||||||||||||||||||||||
Securities purchase agreement | Statement scenario one | Class B Warrants | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Warrants issued | 6,720 | ||||||||||||||||||||||||||
Securities purchase agreement | Statement scenario one | Class C Warrants | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Warrants issued | 6,720 | ||||||||||||||||||||||||||
Securities purchase agreement | Statement scenario Two | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Warrants issued | 66,007 | ||||||||||||||||||||||||||
Share issued price | $ / shares | $ 137.50 | ||||||||||||||||||||||||||
Exercise price of warrants | $ / shares | $ 0.0001 | ||||||||||||||||||||||||||
Aggregate gross proceeds from Offering | $ | $ 10,000,000 | ||||||||||||||||||||||||||
Securities purchase agreement | Statement scenario Two | Class B Warrants | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Warrants issued | 66,007 | ||||||||||||||||||||||||||
Securities purchase agreement | Statement scenario Two | Class C Warrants | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Warrants issued | 66,007 | ||||||||||||||||||||||||||
Securities purchase agreement | Statement scenario Two | Pre-funded warrants | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Warrants exercisable | 66,007 | ||||||||||||||||||||||||||
Securities purchase agreement | Common Stock | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Aggregate number of authorized shares (in shares) | 6,720 | ||||||||||||||||||||||||||
Number of shares issued | 72,727 | ||||||||||||||||||||||||||
Proceeds from issuance of common stock | $ | $ 9,000,000 | ||||||||||||||||||||||||||
Warrants issued | 6,720 | ||||||||||||||||||||||||||
FirstFire | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Number of shares issued | 12 | ||||||||||||||||||||||||||
Oasis Capital | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Number of shares issued | 40 | ||||||||||||||||||||||||||
Debt conversion price (in dollars per share) | $ / shares | $ 90.601 | ||||||||||||||||||||||||||
Oasis and FirstFire Notes | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Shares issued to notes payable holders | 79,807 | ||||||||||||||||||||||||||
Converted outstanding principal | $ | $ 9,465,000 | ||||||||||||||||||||||||||
Number of shares resulting from conversion | 79,807 | ||||||||||||||||||||||||||
Oasis and FirstFire Notes | Equity purchase agreement | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Shares issued to notes payable holders | 79,807 | ||||||||||||||||||||||||||
Number of shares resulting from conversion | 79,807 | ||||||||||||||||||||||||||
December Notes | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Number of shares issued | 2,400 | ||||||||||||||||||||||||||
Fair value of shares issued | $ | $ 264,000 | ||||||||||||||||||||||||||
December Notes | Securities purchase agreement | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Number of shares issued | 2,400 | 2,400 | |||||||||||||||||||||||||
Exercise price of warrants | $ / shares | $ 106.50 | $ 106.50 | $ 106.50 | ||||||||||||||||||||||||
Series A preferred stock | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Stated Value | $ | |||||||||||||||||||||||||||
Preferred stock, shares outstanding | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Redemption of shares | $ | $ 25,000 | ||||||||||||||||||||||||||
Preferred stock, shares authorized (in shares) | 1 | 1 | 1 | 1 | 1 | ||||||||||||||||||||||
Preferred stock | $ | |||||||||||||||||||||||||||
Series A preferred stock | Chief Executive Officer | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Stated Value | $ | $ 25,000 | ||||||||||||||||||||||||||
Preferred stock, shares outstanding | 250,000,000 | ||||||||||||||||||||||||||
Preferred stock | $ | $ 25,000 | ||||||||||||||||||||||||||
Series A Convertible Preferred Stock | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Stated Value | $ | $ 1 | $ 1 | $ 1 | $ 1,000 | |||||||||||||||||||||||
Conversion price (in dollars per share) | $ / shares | $ 232.50 | ||||||||||||||||||||||||||
Preferred stock, shares outstanding | 0 | 6,300 | 6,300 | 6,300 | 0 | ||||||||||||||||||||||
Preferred stock, shares authorized (in shares) | 0 | 6,800 | 6,800 | 6,800 | 0 | 6,800 | |||||||||||||||||||||
Preferred stock | $ | $ 1 | $ 1 | $ 1 | $ 1,000 | |||||||||||||||||||||||
IPO | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Number of shares issued | 964 | 14,956 | |||||||||||||||||||||||||
Number of shares agreed to issued and sell | 14,956 | ||||||||||||||||||||||||||
Issue price (in dollars per share) | $ / shares | $ 575 | ||||||||||||||||||||||||||
Number of option days granted to purchase an additional shares | 45 days | ||||||||||||||||||||||||||
Gross proceeds from the offering | $ | $ 9,300,000 | ||||||||||||||||||||||||||
Proceeds from issuance of common stock | $ | $ 8,600,000 | ||||||||||||||||||||||||||
Maximum number of additional shares allowed to purchase within 45 option days | 2,243 | ||||||||||||||||||||||||||
Warrants issued | 1,111 | ||||||||||||||||||||||||||
Aggregate net proceeds | $ | $ 8,600,000 | ||||||||||||||||||||||||||
Underwriting commissions | $ | 800,000 | ||||||||||||||||||||||||||
Direct offering expenses | $ | 600,000 | ||||||||||||||||||||||||||
Converted outstanding principal | $ | $ 2,680,289 | ||||||||||||||||||||||||||
Underwriting discounts and commissions | $ | $ 800,000 | ||||||||||||||||||||||||||
Share issued price | $ / shares | $ 10,375 | $ 625 | |||||||||||||||||||||||||
IPO | Common Stock | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Shares issued to notes payable holders | 454 | ||||||||||||||||||||||||||
Number of shares issued | 964 | ||||||||||||||||||||||||||
Issue price (in dollars per share) | $ / shares | $ 10,375 | ||||||||||||||||||||||||||
Number of shares resulting from conversion | 454 | ||||||||||||||||||||||||||
IPO | Management | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Shares issued to notes payable holders | 61 | ||||||||||||||||||||||||||
Converted outstanding principal | $ | $ 257,515 | ||||||||||||||||||||||||||
Stock-based compensation expense | $ | $ 233,184 | ||||||||||||||||||||||||||
Number of shares resulting from conversion | 61 | ||||||||||||||||||||||||||
IPO | Series A preferred stock | Preferred Stock | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Preferred Stock converted | 1,611 | ||||||||||||||||||||||||||
Over-allotment option | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Warrants issued | 145 | ||||||||||||||||||||||||||
Over-allotment option | Common Stock | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Number of shares issued | 145 | ||||||||||||||||||||||||||
Issue price (in dollars per share) | $ / shares | $ 10,375 | ||||||||||||||||||||||||||
Aggregate net proceeds | $ | $ 1,400,000 | ||||||||||||||||||||||||||
Underwriting discounts and commissions | $ | $ 100,000 | ||||||||||||||||||||||||||
Consulting agreement | |||||||||||||||||||||||||||
Class of Stock | |||||||||||||||||||||||||||
Number of shares issued | 20 | ||||||||||||||||||||||||||
Value of shares issued | $ | $ 60 | ||||||||||||||||||||||||||
Guaranteed equity value of shares issued | $ | $ 250,000 | ||||||||||||||||||||||||||
Contingent consideration liability | $ | $ 67,000 | ||||||||||||||||||||||||||
Issued upon settlement of contingent liability | 17 |
RELATED PARTY TRANSACTIONS - Du
RELATED PARTY TRANSACTIONS - Due to related parties (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Oct. 31, 2022 | Dec. 31, 2021 | |
Due to related parties | |||
Conversion of stock, shares converted | 1,003 | ||
Advances | |||
Due to related parties | |||
Advance due to related parties | $ 104,568 | $ 104,568 | |
Advances | Director | |||
Due to related parties | |||
Advance due to related parties | $ 325,000 | ||
Accrued Salary | |||
Due to related parties | |||
Advance due to related parties | 100,649 | 100,649 | |
Expense Reimbursements | |||
Due to related parties | |||
Advance due to related parties | $ 126,706 | $ 126,706 |
RELATED PARTY TRANSACTIONS - No
RELATED PARTY TRANSACTIONS - Note Payable (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2022 | Jun. 30, 2023 | Dec. 10, 2022 | Dec. 31, 2021 | |
RELATED PARTY TRANSACTIONS | ||||
Common stock, share issued (in shares) | 178,758 | 316,906 | 5,201 | |
Chief Executive Officer | ||||
RELATED PARTY TRANSACTIONS | ||||
Common stock, share issued (in shares) | 5,091 | |||
Additional stock compensation expense | $ 233,184 | |||
Interest rate | 12% | |||
Notes Payable, Other Payables | ||||
RELATED PARTY TRANSACTIONS | ||||
Interest rate | 0% | |||
Notes Payable, Other Payables | Chief Executive Officer | Note Payable, Chief Executive Officer | ||||
RELATED PARTY TRANSACTIONS | ||||
Increase (decrease) in notes receivables | 115,000 | |||
Aggregate principal amount | $ 129,489 | $ 299,489 |
SHARE-BASED PAYMENTS - Common_2
SHARE-BASED PAYMENTS - Common Stock Warrants - General Information (Details) - USD ($) | 1 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||
May 10, 2022 | May 13, 2021 | Jul. 31, 2021 | May 31, 2021 | Apr. 30, 2021 | Jun. 30, 2023 | Sep. 30, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Jan. 11, 2023 | Nov. 29, 2022 | Dec. 31, 2020 | |
SHARE-BASED PAYMENTS | ||||||||||||
Exercise price per share | $ 95 | |||||||||||
Aggregate shares of stock options granted | 51,086 | 1,093 | ||||||||||
Option outstanding exercise price (in dollars per share) | $ 362.11 | $ 362.11 | $ 9,053 | $ 5,850 | ||||||||
Option outstanding exercise price | $ 362.11 | $ 362.11 | $ 9,053 | $ 5,850 | ||||||||
Weighted average duration (Years) | 5 years | 7 years | ||||||||||
Class of warrant or right, warrants issued | 142 | 13 | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 51,086 | 1,093 | ||||||||||
Warrants value | $ 1,622,350 | $ 145,696 | ||||||||||
IPO | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Warrants issued | 1,111 | |||||||||||
Over-Allotment Option [Member] | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Warrants issued | 145 | |||||||||||
July 22 notes | Securities purchase agreement | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Exercise price per share | $ 380 | |||||||||||
July 28 notes | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Warrants issued | 1,106 | |||||||||||
July 28 notes | Securities purchase agreement | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Exercise price per share | $ 282.50 | |||||||||||
Underwriters Warrants | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Warrants issued | 598 | |||||||||||
Exercise price per share | $ 812.50 | |||||||||||
Percentage of initial exercise price representing the public offering price | 130% | |||||||||||
Pre-funded warrants | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Warrants issued | 32,086 | |||||||||||
Aggregate shares of stock options granted | 32,086 | 66,007 | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 32,086 | 66,007 | ||||||||||
Pre-funded warrants | Securities purchase agreement | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Warrants issued | 66,007 | |||||||||||
Class B Warrants | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Aggregate shares of stock options granted | 72,727 | |||||||||||
Option outstanding exercise price (in dollars per share) | $ 131.25 | |||||||||||
Option outstanding exercise price | $ 131.25 | |||||||||||
Weighted average duration (Years) | 5 years | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 72,727 | |||||||||||
Class C Warrants | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Aggregate shares of stock options granted | 72,727 | |||||||||||
Option outstanding exercise price (in dollars per share) | $ 131.25 | |||||||||||
Option outstanding exercise price | $ 131.25 | |||||||||||
Weighted average duration (Years) | 13 months | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 72,727 | |||||||||||
Placement Agent Warrant | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Exercise price per share | $ 3,050.35 | $ 172 | ||||||||||
Aggregate shares of stock options granted | 3,831 | 5,455 | ||||||||||
Weighted average duration (Years) | 5 years | 5 years | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 3,831 | 5,455 | ||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercisable Contractual Term | 180 days | |||||||||||
Aggregate Warrant | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Warrants issued | 6,095 | 18,779 | ||||||||||
Exercise price of additional units | $ 131.25 | $ 106.50 | ||||||||||
Warrant to purchase common stock fair value | $ 164,200 | |||||||||||
Merchant Cash Advance | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Warrants issued | 1,760 | |||||||||||
Exercise price of additional units | $ 125 | |||||||||||
Common stock | July 22 notes | Securities purchase agreement | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Warrants issued | 1,645 | |||||||||||
Common stock warrants | IPO | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Exercise price per share | $ 12,975 | $ 11,425 | ||||||||||
Class of warrant or right, warrants issued | 48 | 964 | ||||||||||
Percentage of warrants exercise price | 110% | |||||||||||
Warrants expiration term | 5 years | 5 years | ||||||||||
Common stock warrants | Over-Allotment Option [Member] | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Class of warrant or right, warrants issued | 145 | |||||||||||
Common stock warrants | April notes | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Warrants issued | 503 | |||||||||||
Exercise price per share | $ 3,050 | |||||||||||
Common Stock Warrants, Venture Debt Lender | ||||||||||||
SHARE-BASED PAYMENTS | ||||||||||||
Exercise price per share | $ 10,375 | |||||||||||
Class of warrant or right, warrants issued | 48 |
SHARE-BASED PAYMENTS - Warran_2
SHARE-BASED PAYMENTS - Warrants Roll Forward (Details) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2023 $ / shares shares | Dec. 31, 2022 $ / shares shares | Dec. 31, 2021 $ / shares shares | |
SHARE-BASED PAYMENTS | |||
Debt Instrument, Convertible, Conversion Ratio | 39,075 | ||
Common stock warrants | |||
SHARE-BASED PAYMENTS | |||
Warrant Outstanding Beginning Balance | shares | 176,733 | 1,432 | 366 |
Granted | shares | 93,099 | 241,308 | 1,205 |
Conversion of stock warrants upon IPO | shares | 21 | ||
Exercised | shares | (32,086) | (66,007) | (155) |
Forfeited | shares | (4) | ||
Warrant Outstanding Ending Balance | shares | 237,746 | 176,733 | 1,432 |
Common Stock Warrants Exercisable | shares | 237,745 | 171,278 | 1,432 |
Weighted Average Exercise Price Outstanding Beginning Balance | $ 209 | $ 10,300 | $ 6,650 |
Class Of Warrant Or Right Warrants Outstanding Weighted Average Exercise Price Exercisable | 181.25 | 210.50 | |
Granted | 99.50 | 140.36 | $ 11,450 |
Conversion of stock warrants upon IPO | 19,150 | ||
Weighted Average Exercise Price Outstanding Ending Balance | 181.25 | 209 | $ 10,300 |
Weighted Average Exercise Price Exercisable | 181.25 | 210.50 | |
Exercised | 97.88 | 131.25 | 11,425 |
Forfeited | 19,150 | ||
Weighted Average Exercise Price Outstanding Beginning Balance | $ 181.25 | $ 209 | $ 10,300 |
SHARE-BASED PAYMENTS - Stock _2
SHARE-BASED PAYMENTS - Stock Options - Activity (Details) - $ / shares | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
SHARE-BASED PAYMENTS | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Beginning Balance | 1,558 | 1,558 | 485 |
Granted | 51,086 | 1,093 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance | 1,558 | 1,558 | 1,558 |
SHARE-BASED PAYMENTS | |||
Granted | $ 10,375 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Ending Balance | $ 362.11 | $ 362.11 | $ 9,053 |
SHARE-BASED PAYMENTS | |||
Share-based Compensation Arrangement by Share-based Option Exercisable | 1,439 | 1,389 | 1,266 |
Share-based Compensation Arrangement by Weighted Average Exercise Price at December 31, 2021 | $ 10,125 | $ 8,975 | |
Weighted average duration (years) to expiration of outstanding options at December 31, 2021 | 5 years | 7 years |
SHARE-BASED PAYMENTS - 2020 & 2
SHARE-BASED PAYMENTS - 2020 & 2013 Incentive Stock Plan (Details) - $ / shares | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | May 13, 2021 | Dec. 31, 2020 | |
Stock Options | |||||
Aggregate shares of stock options granted | 51,086 | 1,093 | |||
IPO | |||||
Stock Options | |||||
Exercise price | $ 625 | $ 10,375 | |||
Omnibus Incentive Stock Plan, 2020 | |||||
Stock Options | |||||
Common stock, capital shares reserved for future issuance | 33,000 | ||||
Omnibus Incentive Stock Plan, 2020 | IPO | |||||
Stock Options | |||||
Common stock, capital shares reserved for future issuance | 31,907 | ||||
Aggregate shares of stock options granted | 1,093 | ||||
Omnibus Incentive Stock Plan, 2020 | IPO | Minimum | |||||
Stock Options | |||||
Exercise price | $ 9,625 | ||||
Omnibus Incentive Stock Plan, 2020 | IPO | Maximum | |||||
Stock Options | |||||
Exercise price | $ 10,375 | ||||
2013 Incentive Stock Plan | |||||
Stock Options | |||||
Number of shares authorized | 479 | 479 | |||
Number of shares available for grant | 13 | 13 | |||
Vesting period | 4 years |
SHARE-BASED PAYMENTS - Assumpti
SHARE-BASED PAYMENTS - Assumptions utilized for option grants (Details) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
SHARE-BASED PAYMENTS | ||
Risk Free Interest Rate, Minimum | 0.34% | |
Risk Free Interest Rate, Maximum | 0.85% | |
Expected Dividend Yield | 0% | |
Expected Volatility | 58% | |
Expected Life (years) | 0 years | 5 years 2 months 4 days |
SHARE-BASED PAYMENTS - Stock-_2
SHARE-BASED PAYMENTS - Stock-based Compensation - Stock options granted (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
SHARE-BASED PAYMENTS | ||||||
Total grant-date fair value of the options granted | $ 4,696,605 | |||||
Stock-based compensation expense | $ 101,500 | $ 119,759 | $ 207,094 | $ 258,852 | ||
Unrecognized compensation cost related to non-vested stock option | 370,907 | $ 370,907 | $ 577,999 | |||
Share-based arrangement, non-vested weighted average period | 10 months 24 days | 1 year 6 months 21 days | ||||
Sales and marketing expense | ||||||
SHARE-BASED PAYMENTS | ||||||
Stock-based compensation expense | $ 28,798 | $ 28,798 | $ 57,596 | $ 551,948 | ||
General and administrative expenses | ||||||
SHARE-BASED PAYMENTS | ||||||
Stock-based compensation expense | $ 421,442 | $ 3,325,897 |
LEASE OBLIGATIONS (Details)_2
LEASE OBLIGATIONS (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Apr. 30, 2021 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Operating lease agreements | |||||||
Rent expense | $ 17,257 | $ 37,580 | $ 195,060 | $ 210,265 | $ 469,482 | $ 945,216 | $ 816,790 |
Security deposit | 19,500 | ||||||
Right of use asset, net | $ 339,085 | $ 339,085 | 102,349 | ||||
Accounting Standards Update 2016-02 | |||||||
Operating lease agreements | |||||||
Right of use asset, net | $ 250,244 | ||||||
Discount rate | 6% | ||||||
Stateside | |||||||
Operating lease agreements | |||||||
Maximum Rent base | 9,000 | ||||||
Minimum Rent base | $ 3,100 |
CONTINGENCIES (Details)_2
CONTINGENCIES (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||||||
May 30, 2023 USD ($) | May 16, 2023 | Mar. 21, 2023 USD ($) | Feb. 07, 2023 USD ($) | May 18, 2022 USD ($) | May 18, 2021 USD ($) | Dec. 21, 2020 USD ($) | Sep. 24, 2020 USD ($) | Mar. 31, 2021 USD ($) item | Aug. 31, 2020 USD ($) item | Mar. 31, 2023 USD ($) | Jun. 30, 2023 USD ($) | Dec. 31, 2022 USD ($) | Nov. 09, 2023 USD ($) | Nov. 09, 2022 USD ($) | |
Litigation Matters | |||||||||||||||
Settlement amount payable to vendor | $ 50,190 | $ 50,190 | |||||||||||||
Judgement received | $ 496,000 | ||||||||||||||
Trading Day Immediately Preceding Period | 30 days | ||||||||||||||
Gross Proceeds Common Stock Indemnification Claims | $ 9,100,000 | ||||||||||||||
Value of shares issued | $ 25,000 | $ 5,000,003 | |||||||||||||
Common Stock | |||||||||||||||
Litigation Matters | |||||||||||||||
Value of shares issued | $ 5 | ||||||||||||||
H&J Purchase Agreement | |||||||||||||||
Litigation Matters | |||||||||||||||
Trading Day Immediately Preceding Period | 30 days | ||||||||||||||
Gross Proceeds Common Stock Indemnification Claims | $ 9,100,000 | ||||||||||||||
Transfer of Membership Interests | 229,000 | ||||||||||||||
Value of shares issued | $ 1,400,000 | ||||||||||||||
H&J Purchase Agreement | Common Stock | Subsequent events | |||||||||||||||
Litigation Matters | |||||||||||||||
Trading Day Immediately Preceding Period | 5 days | ||||||||||||||
Lawsuits filed related to prior services rendered | |||||||||||||||
Litigation Matters | |||||||||||||||
Damages sought | $ 100,000 | $ 96,900 | $ 96,900 | ||||||||||||
Number of lawsuit settled | item | 2 | 2 | |||||||||||||
lawsuit against Bailey 44 related to a retail store lease | |||||||||||||||
Litigation Matters | |||||||||||||||
Damages sought | $ 1,500,000 | $ 1,500,000 | |||||||||||||
Non-payment of trade payables | |||||||||||||||
Litigation Matters | |||||||||||||||
Damages sought | $ 43,501 | $ 182,400 | |||||||||||||
Non-payment of trade payables | Subsequent events | |||||||||||||||
Litigation Matters | |||||||||||||||
Damages sought | $ 43,501 | $ 182,400 | |||||||||||||
Non-payment of trade payables | Lawsuits filed related to prior services rendered | |||||||||||||||
Litigation Matters | |||||||||||||||
Damages sought | 481,000 | ||||||||||||||
Additional damages sought | $ 296,000 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
INCOME TAXES | ||
Income tax benefit (provision) | $ 1,100,120 | |
Deferred tax assets before valuation allowance | $ 16,733,582 | 13,103,268 |
Increase in valuation allowance | $ 3,630,314 | $ 3,081,497 |
Tax rate | 28% | 0% |
Non-deductible impairments of goodwill and intangible assets | $ 17,700,000 | |
Amortization of non-cash debt issuance costs | 6,500,000 | |
Operating loss carry forward indefinitely | $ 59,865,000 | $ 46,896,000 |
Aggregate percentage of ownership | 50% | |
Change in ownership percentage in common stock | 5% |
INCOME TAXES - Deferred tax ass
INCOME TAXES - Deferred tax assets and liabilities by source (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 16,733,582 | $ 13,108,371 |
Deferred tax liabilities: | ||
Depreciation timing differences | (5,103) | |
Valuation allowance | $ (16,733,582) | $ (13,103,268) |
SUBSEQUENT EVENTS - (Details)
SUBSEQUENT EVENTS - (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||||||
Aug. 21, 2023 | Jun. 21, 2023 USD ($) shares | Apr. 07, 2023 USD ($) | Jan. 11, 2023 $ / shares shares | Oct. 21, 2022 | May 18, 2021 | May 12, 2021 | Sep. 30, 2022 shares | Jun. 30, 2023 USD ($) $ / shares | Jun. 30, 2023 USD ($) $ / shares shares | Dec. 31, 2022 USD ($) $ / shares | Dec. 31, 2021 USD ($) $ / shares | Feb. 28, 2023 USD ($) | Nov. 29, 2022 shares | Apr. 08, 2022 USD ($) | |
Subsequent Events | |||||||||||||||
Number of shares issued | 30 | 50,890 | |||||||||||||
Common stock par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||||||
Promissory note payable | $ | $ 5,613,839 | $ 5,613,839 | $ 9,000,000 | $ 3,500,000 | |||||||||||
Net proceeds | $ | $ 3,280,360 | $ 2,779,910 | |||||||||||||
Reverse stock split conversion ratio | 0.01 | 1 | 0.064 | ||||||||||||
Aggregate cash payment agreed to pay | $ | $ 229,000 | ||||||||||||||
Issuance of common stock pursuant to disposition | $ | 1,357,043 | $ 1,357,043 | |||||||||||||
Securities purchase agreement | April Notes | |||||||||||||||
Subsequent Events | |||||||||||||||
Aggregate principal amount | $ | $ 3,068,750 | ||||||||||||||
Original issue discount | $ | $ 613,750 | ||||||||||||||
D.Jones (H&J Seller) | H&J Settlement Agreement | |||||||||||||||
Subsequent Events | |||||||||||||||
Aggregate cash payment agreed to pay | $ | $ 229,000 | ||||||||||||||
Issuance of common stock pursuant to disposition (in shares) | 78,103 | 78,103 | |||||||||||||
Percentage of membership interest transferred | 100% | ||||||||||||||
Issuance of common stock pursuant to disposition | $ | $ 1,400,000 | $ 1,357,043 | |||||||||||||
Subsequent events | |||||||||||||||
Subsequent Events | |||||||||||||||
Promissory note payable | $ | $ 4,000,000 | ||||||||||||||
Reverse stock split conversion ratio | 0.04 | ||||||||||||||
Subsequent events | Securities purchase agreement | April Notes | |||||||||||||||
Subsequent Events | |||||||||||||||
Aggregate principal amount | $ | $ 2,208,750 | ||||||||||||||
Original issue discount | $ | 408,750 | ||||||||||||||
Net proceeds | $ | $ 1,800,000 | ||||||||||||||
Increased percentage of face value of the notes, if notes are not repaid in full by the maturity date or if any other event of default occurs | 120% | ||||||||||||||
Percentage of annual interest rate for notes, if notes are not repaid in full by the maturity date or if any other event of default occurs | 20% | ||||||||||||||
Common Warrant | |||||||||||||||
Subsequent Events | |||||||||||||||
Warrants issued to purchase common stock | 19,000 | ||||||||||||||
Volume-Weighted Average | $ / shares | $ 97.875 | ||||||||||||||
Number of shares resulting from conversion | 32,086 | ||||||||||||||
Common Warrant | Subsequent events | |||||||||||||||
Subsequent Events | |||||||||||||||
Warrants issued to purchase common stock | 19,000 | ||||||||||||||
Volume-Weighted Average | $ / shares | $ 97.875 | ||||||||||||||
Number of shares resulting from conversion | 32,086 | ||||||||||||||
Exercise price | $ / shares | $ 95 | ||||||||||||||
Warrants exercisable term | 5 years | ||||||||||||||
Pre-funded warrants | |||||||||||||||
Subsequent Events | |||||||||||||||
Number of shares issued | 32,086 | ||||||||||||||
Warrants issued to purchase common stock | 32,086 | ||||||||||||||
Volume-Weighted Average | $ / shares | $ 97.875 | ||||||||||||||
Number of shares resulting from conversion | 32,086 | ||||||||||||||
Pre-funded warrants | Securities purchase agreement | |||||||||||||||
Subsequent Events | |||||||||||||||
Warrants issued to purchase common stock | 66,007 | ||||||||||||||
Pre-funded warrants | Subsequent events | |||||||||||||||
Subsequent Events | |||||||||||||||
Common stock par value (in dollars per share) | $ / shares | $ 0.0001 | ||||||||||||||
Warrants issued to purchase common stock | 32,086 | ||||||||||||||
Volume-Weighted Average | $ / shares | $ 97.875 | ||||||||||||||
Number of shares resulting from conversion | 32,086 | ||||||||||||||
Private Placement | |||||||||||||||
Subsequent Events | |||||||||||||||
Number of shares issued | 19,000 | ||||||||||||||
Private Placement | Subsequent events | |||||||||||||||
Subsequent Events | |||||||||||||||
Number of shares issued | 19,000 | ||||||||||||||
Common stock par value (in dollars per share) | $ / shares | $ 0.0001 | ||||||||||||||
Aggregate amount issued to investor | 5,000,000 |