DBGI Announces Debt-For-Equity Exchange with Its Senior Lender

Rhea-AI Summary

Digital Brands Group, Inc. (Nasdaq: DBGI) announced a debt-for-equity exchange with Black Oak Capital to retire approximately $6.25 million in principal debt. This move strengthens DBG's balance sheet, enhancing its potential for acquisitions and growth. Black Oak Capital will serve as a long-term shareholder, with terms limiting monthly conversions to $500,000 or 10% of trading volume. Executive statements highlight optimism for future shareholder value and operational flexibility, alongside a caution regarding forward-looking statements.

Positive

• Debt-for-equity exchange increases balance sheet strength.
• Opportunity for acquisitions and growth enhanced.
• Black Oak Capital becomes a long-term shareholder, indicating confidence.

Negative

• None.

AUSTIN, Texas, Oct. 3, 2022 /PRNewswire/ -- Digital Brands Group, Inc. ("DBG")  (Nasdaq: DBGI), a curated collection of luxury lifestyle, digital-first brands, today announced that the Company has entered into a debt-for-equity exchange agreement with its senior lender, Black Oak Capital, to repay and retire approximately $6.25 million in principal debt of the Company.

"This debt exchange puts DBG's balance sheet in a strong position to pursue acquisitions and growth. We are excited to be a shareholder and believe this creates meaningful short and long-term shareholder value," said Kurt Hanson, Partner and Managing Director of Black Oak Capital.

Under the agreement, investors agree that in no event will Investors in the aggregate convert in any calendar month more than the greater of (i) $500,000 of Shares (measure by the number of shares of common stock underlying the Shares to be converted multiplied by the then conversion price per Share) or (ii) Shares which underlying shares of common stock comprises more than 10% of the aggregate trading volume of the Company's common stock as reported by Nasdaq.

"We are excited to have Black Oak Capital as a long-term shareholder. This debt exchange significantly benefits our balance sheet and will allow for growth and acquisition opportunities that were not previously possible," said Hil Davis, CEO of Digital Brands Group.

Under the agreement, the Company has authorized a new series of convertible preferred stock of the Company designated as Series A Convertible Preferred Stock, par value $0.0001 per share, the terms of which are set forth in the certificate of designation for such series of Preferred Stock, which Series A Preferred Stock shall be convertible into shares of Common Stock.

Forward-looking Statements

Certain statements included in this release are "forward-looking statements" within the meaning of the federal securities laws. Forward-looking statements are made based on our expectations and beliefs concerning future events impacting DBG and therefore involve several risks and uncertainties. You can identify these statements by the fact that they use words such as "will," "anticipate," "estimate," "expect," "should," and "may" and other words and terms of similar meaning or use of future dates, however, the absence of these words or similar expressions does not mean that a statement is not forward-looking. All statements regarding DBG's plans, objectives, projections and expectations relating to DBG's operations or financial performance, and assumptions related thereto are forward-looking statements. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements. DBG undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. These forward-looking statements, including the Company's ability to regain and/or maintain compliance with the applicable continued listing requirements for The Nasdaq Capital Market or otherwise achieve any milestones included in its plan of compliance with Nasdaq, are based on information currently available to DBG and its current plans or expectations and are subject to a number of uncertainties and risks that could significantly affect current plans. Risks concerning DBG's business are described in detail in DBG's Annual Report on Form 10-K for the year ended December 31, 2021, and DBG's other Periodic and Current Reports filed with the Securities and Exchange Commission.

About Digital Brands Group
We offer a wide variety of apparel through numerous brands on a both direct-to-consumer and wholesale basis. We focus on owning the customer's "closet share" by leveraging their data and purchase history to create personalized targeted content and looks for that specific customer cohort.

Digital Brands Group, Inc. Company Contact
Hil Davis, CEO
Email: invest@digitalbrandsgroup.co
Phone: (800) 593-1047

Related Links

https://www.digitalbrandsgroup.co

https://ir.digitalbrandsgroup.co

View original content:https://www.prnewswire.com/news-releases/dbgi-announces-debt-for-equity-exchange-with-its-senior-lender-301638591.html

SOURCE Digital Brands Group, Inc.

FAQ

What is the significance of the debt-for-equity exchange for DBGI?

The debt-for-equity exchange helps DBGI retire $6.25 million in debt, improving its balance sheet and enabling future growth and acquisitions.

Who is Black Oak Capital in relation to Digital Brands Group?

Black Oak Capital is DBG's senior lender and now a long-term shareholder following the recent debt-for-equity exchange.

What financial impact does the debt-for-equity exchange have on DBGI?

The exchange reduces DBG's outstanding debt, potentially enhancing its financial stability and ability to pursue growth opportunities.

What are the limitations on shares conversion in the agreement with Black Oak Capital?

The agreement restricts monthly conversions to either $500,000 or the amount representing 10% of DBGI's aggregate trading volume.

What risks are associated with the forward-looking statements in the press release?

Forward-looking statements carry risks; actual results may differ materially due to uncertainties affecting DBG's operations and financial performance.