No valuation cap; 30% discount.
|1||💰 $33.5M revenue in 2019 and 1.2MM customers from the 4 brands we currently own (not this entity).|
|2||💃 Celebrities who've worn our brands: Ellen Degeneres, Mila Kunis, Jennifer Lopez, Hailee Steinfeld, Cara DeLevigne, Kendall Jenner & more.|
|3||📈 4 more acquisitions in progress.|
|4||💸 $15M+ raised to date from 7,500+ investors.|
|5||📊 We are hoping to file our S-1 with the SEC in Q4 2020 (not guaranteed).|
I chose DBG because I truly believe in the portfolio and concept and feel they are perfectly positioned to take advantage of the monumental shifts we are witnessing in both the industry and the uber savvy consumer, who is ready to ditch the fast fashion for high-quality clothing at a reasonable price.
A highly anticipated IPO paired with an exceptionally talented and experienced management team is a winning recipe and gives me confidence in what’s to come.
In addition to being a great investment, im looking forward to having the ability to leverage my investor discount with brands that I am already engaging with! For me this was a no brainer.
Digital Brands Group is a holding company that curates and accelerates a collection of talented, luxury-lifestyle, digital-first brands. We just acquired Bailey 44 and Harper & Jones. And we're just getting started.
Our management team is world-class — having previously worked at Qualcomm, Coach, Ralph Lauren, and more. We have also worked together at DSTLD, one of the brands we currently own.
At DSTLD, we've reached more than 86,400 customers (including celebrities!), because we have the expertise, marketing talent, and connections. Now, we want to leverage this with all of the brands in our portfolio.
It's true that traditional retail stores (i.e. Barneys, Macy's, J.C. Penny) are dying in a world where e-commerce is thriving. Direct-to-consumer brands (i.e. Away, Warby Parker, Everlane) are taking over. Yet, many D2C brands also die due to high costs.
According to IBM U.S. Retail Index, the COVID pandemic has accelerated the shift away from physical stores to digital shopping by roughly five years. Department stores, as a result, are seeing significant declines. In the first quarter of 2020, department store sales and those from other “non-essential” retailers declined by 25%. This grew to a 75% decline in the second quarter. The report indicates that department stores are expected to decline by over 60% for the full year. Meanwhile, e-commerce is projected to grow by nearly 20% in 2020.
According to the Q2 2020 report from the U.S. Census Bureau, U.S. retail e-commerce reached $211.5 billion, up 31.8% from the first quarter, and 44.5% year-over-year. E-commerce also accounted for 16.1% of total retail sales in Q2, up from 11.8% in the first quarter of 2020. We believe the growth in e-commerce due to the COVID pandemic has set a high bar for what is now considered baseline growth.
According to global market-research firm Coresight Research, retailers are likely to decide to close as many as 25,000 U.S. stores in 2020. From January through mid-August, retailers had announced they would close a total of more than 10,000 stores in the U.S. That has already topped last year’s record 9,302 store closures. In 2019, retailers in the United States announced 9,302 store closings, a 59% jump from 2018, which at that time was the highest number since 2012, when Coresight Research started to track the data.
We bring together like-minded direct-to-consumer names under one portfolio to increase revenues, decrease operational costs, and establish brand longevity. Our vision is to build a portfolio of 50+ brands each with the potential to generate $50M-$100M in annual revenue (though please note that this is not guaranteed).
We're talking about the strategy that companies that have been doing for decades with traditional, wholesale, luxury brands. These companies include LVMH (that owns Moët & Chandon, Hennessy, Louis Vuitton, etc), VF Corporation (that owns JanSport, Timberland, North Face, etc), and Tapestry (that owns Coach, Kate Spade, and Stuart Weitzman).
How we're different? Our brands are 'digital-first', instead of 'wholesale-first'. Why? Because e-commerce is where consumers are going. Digital-first brands win because they own the customer relationship and make the customer journey more personalized.
We are using the funds raised on Wefunder to pay for working capital and to place product orders for our Spring 2021 purchase orders from department stores and boutiques for both Bailey's and DSTLD. We will file our S-1 by 11/20 and plan to IPO in March 2021 order to raise more capital to grow Digital Brands Group.
The most successful apparel companies are portfolio companies. All we're doing is modernizing the portfolio approach. We know that we have the right platform to scale.
Digital Brands Group has financial statements ending December 31 2019. Our cash in hand is $208,684, as of October 2020. Over the three months prior, revenues averaged $1,275,000/month, cost of goods sold has averaged $465,500/month, and operational expenses have averaged $750,372/month.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this offering. Some of the information contained in this discussion and analysis, including information regarding the strategy and plans for our business, includes forward-looking statements that involve risks and uncertainties. You should review the "Risk Factors" section for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Digital Brands Group is a holding company of direct-to-consumer brands. Our current portfolio includes four brands: DSTLD, ACE Studios, Bailey 44, and Harper & Jones. We are currently acquiring four more brands: Jack Georges and three more we cannot disclose at the moment.
In 5 years, we hope to own 20 to 30 digital-first lifestyle brands, each generating $50M-$100M in annual revenue. We plan to cross merchandise our brands to show complete outfits using different bands. We refer to this as owning "closet share" by utilizing our customer data across all our brands. These projections cannot be guaranteed.
Denim.la Inc. was incorporated in the State of Delaware in January 2013.
Since then, we have:
Historical Results of Operations
Related Party Transaction
Refer to Question 26 of this Form C for disclosure of all related party transactions.
Liquidity & Capital Resources
To-date, the company has been financed with $6,005,749 in debt, $9,927,550 in equity, and $799,280 in convertibles.
After the conclusion of this Offering, should we hit our minimum funding target, our projected runway is 3 months before we need to raise further capital.
We plan to use the proceeds as set forth in this Form C under "Use of Funds". We don’t have any other sources of capital in the immediate future.
We will likely require additional financing in excess of the proceeds from the Offering in order to perform operations over the lifetime of the Company. We plan to raise capital in 3 months. Except as otherwise described in this Form C, we do not have additional sources of capital other than the proceeds from the offering. Because of the complexities and uncertainties in establishing a new business strategy, it is not possible to adequately project whether the proceeds of this offering will be sufficient to enable us to implement our strategy. This complexity and uncertainty will be increased if less than the maximum amount of securities offered in this offering is sold. The Company intends to raise additional capital in the future from investors. Although capital may be available for early-stage companies, there is no guarantee that the Company will receive any investments from investors.
Runway & Short/Mid Term Expenses
Denim.la Inc. cash in hand is $208,684, as of October 2020. Over the last three months, revenues have averaged $1,275,000/month, cost of goods sold has averaged $465,500/month, and operational expenses have averaged $750,372/month, for an average net margin of $59,128 per month. We are currently profitable.
In Feb 2020, we acquired Bailey 44. We cut $7M+ in operating expenses and it will be profitable in 4Q:20. We hired a new designer and her collections are being very well received by the market.
In March 2020, COVID impacted all our brands, especially Bailey's, which is a wholesale brand. This significantly reduced revenue as stores were closed for 3 to 6 months. It is also shut down our factories and mills, so we were limited on the goods we could produce for Fall 2020.
In April 2020, we agreed to acquire Jack Georges at the IPO. In 2021, JG hopes (not does not guarantee) to generate $10M in revs and $3M+ in EBITDA. We had to push back their acquisition to post IPO due to the time it was taking to audit their books.
In October, we agreed to acquire Harper & Jones at the IPO. In 2021, H&J hopes (not does not guarantee) to generate $4M in revenues and $500k+ in EBITDA
In November 2020, we hope to file our S-1 with the SEC. This is not guaranteed.
In the next three months: we expect to generate $2.0M in net revenue and expect to lose $150,000, which includes $200,000 in IPO expenses.
In the next 6 months, we we expect to generate $3.9M in net revenue and expect to lose $100,000, which includes $350,000 in IPO expenses.
These future looking projections cannot be guaranteed.
We have over $500,000 in Accounts Receivable that will fund in December and January. We are also offering this same deal to our existing friends and family investors and early investors.
We might not be successful in our IPO efforts, and may have to list on alternative exchanges like the OTC
Our acquisitions might not close on time or at all, and may not be as accretive or successful as we forecast
Coronavirus may have an impact on our revenue and supply chain. One of our acquired brands has a small percentage of their production in China.
Our latest SEC filing states we have a going concern issue, which will still be the case through the IPO.
We will need to spend marketing dollars to increase our customer base and market share, and we cannot guarantee all our marketing efforts will be successful
This investment involves a high degree of risk. This investment is suitable only for persons who can bear the economic risk for an indefinite period of time and who can afford to lose their entire investment. Furthermore, investors must understand that such investment is illiquid and is expected to continue to be illiquid for an indefinite period of time. No public market exists for the securities, and no public market is expected to develop following this offering.
The securities offered hereby have not been registered under the securities act of 1933, as amended (the “securities act”), or any state securities or blue sky laws and are being offered and sold in reliance on exemptions from the registration requirements of the securities act and state securities or blue sky laws. Although an offering statement has been filed with the securities and exchange commission (the “sec”), that offering statement does not include the same information that would be included in a registration statement under the securities act and it is not reviewed in any way by the sec. The securities have not been approved or disapproved by the sec, any state securities commission or other regulatory authority, nor have any of the foregoing authorities passed upon the merits of this offering or the adequacy or accuracy of the subscription agreement or any other materials or information made available to investor in connection with this offering over the web-based platform maintained by Wefunder (the “intermediary”). Any representation to the contrary is unlawful.
Investors are subject to limitations on the amount they may invest, as set out in section 4(d). The company is relying on the representations and warranties set forth by each investor in this subscription agreement and the other information provided by investor in connection with this offering to determine the applicability to this offering of exemptions from the registration requirements of the securities act.
Prospective investors may not treat the contents of the subscription agreement, the offering statement or any of the other materials available on the intermediary’s website (collectively, the “offering materials”) or any communications from the company or any of its officers, employees or agents as investment, legal or tax advice. In making an investment decision, investors must rely on their own examination of the company and the terms of this offering, including the merits and the risks involved. Each prospective investor should consult the investor’s own counsel, accountant and other professional advisor as to investment, legal, tax and other related matters concerning the investor’s proposed investment.
The offering materials may contain forward-looking statements and information relating to, among other things, the company, its business plan and strategy, and its industry. These forward-looking statements are based on the beliefs of, assumptions made by, and information currently available to the company’s management. When used in the offering materials, the words “estimate,” “project,” “believe,” “anticipate,” “intend,” “expect” and similar expressions are intended to identify forward-looking statements, which constitute forward looking statements. These statements reflect management’s current views with respect to future events and are subject to risks and uncertainties that could cause the company’s actual results to differ materially from those contained in the forward-looking statements. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The company does not undertake any obligation to revise or update these forward-looking statements to reflect events or circumstances after such date or to reflect the occurrence of unanticipated events.
The information presented in the offering materials was prepared by the company solely for the use by prospective investors in connection with this offering. No representations or warranties are made as to the accuracy or completeness of the information contained in any offering materials, and nothing contained in the offering materials is or should be relied upon as a promise or representation as to the future performance of the company.
The company reserves the right in its sole discretion and for any reason whatsoever to modify, amend and/or withdraw all or a portion of the offering and/or accept or reject in whole or in part any prospective investment in the securities or to allot to any prospective investor less than the amount of securities such investor desires to purchase. Except as otherwise indicated, the offering materials speak as of their date. Neither the delivery nor the purchase of the securities shall, under any circumstances,
Our future success depends on the efforts of a small management team. The loss of services of the members of the management team may have an adverse effect on the company. There can be no assurance that we will be successful in attracting and retaining other personnel we require to successfully grow our business.
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