AUSTIN, TX - Digital Brands Group, Inc. (NASDAQ: DBGI), a luxury lifestyle digital-first brand conglomerate, today announced the cash exercise of certain outstanding warrants for approximately 1.03 million shares of its common stock at a reduced price. The transaction involves Series A and Series B warrants initially issued on September 5, 2023, with the exercise price lowered from $9.43 to $3.13 per share.
The closing of this transaction is expected to occur around May 7, 2024, subject to customary closing conditions. H.C. Wainwright & Co. is serving as the exclusive placement agent for the offering.
In exchange for the immediate cash exercise of the warrants, DBG will issue new unregistered Series A-1 and Series B-1 warrants to purchase up to an equivalent number of shares at a further reduced exercise price of $2.88 per share. The new Series A-1 warrants will be exercisable for five and a half years from the date of issuance, while the Series B-1 warrants will be exercisable for fifteen months.
DBG anticipates gross proceeds of roughly $3.2 million from the warrant exercise, before accounting for placement agent fees and other offering expenses. The net proceeds are intended for working capital purposes.
The new warrants and shares of common stock to be issued upon their exercise will not be registered under the Securities Act of 1933, as amended, or applicable state securities laws, and will be offered in a private placement under Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder. DBG has committed to filing a registration statement with the Securities and Exchange Commission for the resale of the shares of common stock issuable upon exercise of the new warrants.
This press release does not constitute an offer to sell or a solicitation of an offer to buy any securities described herein and there will be no sale of these securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
The information is based on a press release statement from Digital Brands Group, Inc.
InvestingPro Insights
Digital Brands Group, Inc. (NASDAQ: DBGI) has been navigating a challenging financial landscape, as reflected in the InvestingPro data. With a market capitalization of only $4.93 million, the company's scale remains quite small in the competitive luxury lifestyle sector. The negative price-to-earnings (P/E) ratios, both on a standard and an adjusted basis for the last twelve months as of Q4 2023, underscore the company's struggle to reach profitability. Specifically, the adjusted P/E ratio stood at -0.31, indicating that investors have been wary of the company's earnings potential.
Moreover, the company's revenue growth presents a mixed picture. While there was a modest year-over-year increase of 6.77% in the last twelve months as of Q4 2023, the quarterly revenue growth took a sharp dip of -53.77% in Q4 2023. This suggests that DBG may be facing significant headwinds or cyclical challenges in its business operations.
Two InvestingPro Tips that stand out for DBG are its significant debt burden and the fact that its stock generally trades with high price volatility. The latter is evidenced by a stark 27.05% drop in the one-month price total return as of the latest data point, although there was a strong return of 21.49% over the last three months. These tips are particularly relevant for investors considering the recent warrant exercise and the company's ongoing need for working capital.
For those interested in a deeper analysis, there are more InvestingPro Tips available, which can provide additional insights into DBG's financial health and stock performance. With the use of coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription to access these valuable tips and make more informed investment decisions.
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