The Digital Brand Group (DBG) has completed its acquisition of Stateside, a privately-owned elevated basics brand, for an aggregate base purchase price of $10,000,000. As a result of the transaction, Stateside has become a wholly owned subsidiary of the company. DBG offers apparel through numerous brands on a both direct-to-consumer and wholesale basis.
The purchase price was evenly split between $5,000,000 million in common stock based on the 30-trading day period volume-weighted average of the closing of the company’s share price, and $5,000,000 in cash. The company announced that it has raised gross proceeds of $5,000,000 through the issuance of a senior secured convertible promissory note to Oasis Capital, a Puerto Rico limited liability company. The proceeds were used to fund the Stateside acquisition mentioned above, the company said in a media statement.The Digital Brand Group (DBG) has completed its acquisition of Stateside, a privately-owned elevated basics brand, for an aggregate base purchase price of $10,000,000. As a result of the transaction, Stateside has become a wholly owned subsidiary of the company. DBG offers apparel through numerous brands on a both direct-to-consumer and wholesale basis.#
The Note, in the principal amount of $5,265,000, bears interest at 6 per cent per annum and is due and payable 18 months from the date of issuance, unless sooner converted. The Note is convertible at the option of Oasis Capital into shares of the company’s Common Stock at a conversion price which is the lesser of $3.601, and 90 per cent of the average of the two lowest VWAPs during the five consecutive trading day period preceding the delivery of the notice of conversion. Oasis is not permitted to submit conversion notices in any thirty-day period having conversion amounts equalling, in the aggregate, in excess of $500,000.
The company announced that it has entered into an equity purchase agreement with Oasis Capital. Under the purchase agreement, the company has the right to sell up to $17.5 million of its common stock to Oasis Capital over a 24-month period, upon satisfaction of the conditions in the equity purchase agreement including the effectiveness of a resale registration statement which the company will file on or before December 31, 2021. The company will control the timing and amount of any sales to Oasis Capital, and Oasis Capital is obligated to make purchases in accordance with the equity purchase agreement. The equity purchase agreement allows the company to fund its needs in a more expedient and cost-effective manner, according to DBG.
"Stateside is expected to be accretive to DBG’s revenue and earnings per share in both the third quarter and fiscal year of 2021. Additionally, we believe the Stateside brand will drive meaningful near and long-term shareholder value. The acquisition of the Stateside brand accelerates and validates DBG’s recent IPO and our vision and strategy to grow our brand portfolio, revenue and cash flow through acquisitions. With this equity line established, the financial road ahead for Digital Brands has truly begun to smooth out. This equity line alleviates the immediate need to go to the capital markets for operational financing although we expect to further access the capital markets to fund future acquisitions,” Hil Davis, DBG’s chief executive officer said.
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