Digital Brands Group, Inc. (NASDAQ:DBGI), a retailer specializing in apparel and accessories, has announced an amendment to its debt settlement agreements, extending the final payment deadline, and is currently facing delisting from The Nasdaq Stock Market due to non-compliance with minimum bid price requirements.
On Thursday, the company disclosed that it had entered into amendments with certain investors, pushing the due date for a final cash payment of approximately $1.79 million from September 30, 2024, to October 31, 2024. This amendment relates to settlement agreements originally made on May 24, 2024, to extinguish all obligations under previous securities purchase agreements and promissory notes.
Additionally, Digital Brands Group received a notice from Nasdaq on Tuesday, indicating that the company’s stock had not met the minimum bid price requirement for 30 consecutive business days ending October 1, 2024. As a consequence, the company is at risk of being delisted from the exchange. Digital Brands Group plans to request a hearing before the Nasdaq Hearings Panel to address the notice, which will temporarily stay any further delisting actions.
This news comes after a series of financial maneuvers by Digital Brands Group, which has been working to restructure its debt. In April 2023, the company issued promissory notes totaling approximately $2.5 million, later exchanging these for replacement notes in October 2023. The company's efforts to manage its financial obligations are ongoing amidst challenging market conditions.
In other recent news, Digital Brands Group (DBG) reported a challenging fiscal quarter marked by a decline in net revenue to $3.4 million. However, the company made significant strides in reducing its debt and liabilities, paying off over $5 million in the first half of the year. DBG also announced the launch of AVO, a new direct-to-consumer women's apparel brand, aiming to offer premium apparel at competitive prices.
The company has received offers for its NASDAQ shell, valuing it between $3.5 million to $5 million. DBG managed to cut its G&A expenses by $4.5 million through the Sundry acquisition and reduce digital advertising costs. Despite a net loss of $3.5 million, DBG is optimistic about achieving profitability and is close to reaching cash flow breakeven with a small revenue increase.
DBG plans to ramp up growth marketing spending in the second half of the year, with initiatives including the addition of brands to a major department store, the launch of a new licensed brand, and the introduction of new direct-to-consumer brands.
InvestingPro Insights
Digital Brands Group's financial struggles, as highlighted in the article, are further underscored by recent data from InvestingPro. The company's market capitalization has dwindled to a mere $0.71 million, reflecting severe investor skepticism. This aligns with an InvestingPro Tip indicating that DBGI is "operating with a significant debt burden," which is evident in the company's efforts to amend debt settlement agreements.
The stock's performance has been particularly alarming, with InvestingPro data showing a staggering 96.19% price decline over the past year. This dramatic drop explains why DBGI is facing delisting from Nasdaq due to non-compliance with minimum bid price requirements. The company's financial health appears precarious, as another InvestingPro Tip warns that DBGI is "quickly burning through cash," which could further complicate its ability to meet debt obligations and maintain operations.
For investors seeking a more comprehensive analysis, InvestingPro offers 15 additional tips on DBGI, providing deeper insights into the company's financial situation and market performance.
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