|
Delaware
|
| |
5699
|
| |
46-1942864
|
|
|
(State or other jurisdiction of
incorporation or organization) |
| |
(Primary Standard Industrial
Classification Code Number) |
| |
(I.R.S. Employer
Identification Number) |
|
|
Thomas J. Poletti
Veronica Lah Manatt, Phelps & Phillips, LLP 695 Town Center Drive, 14th Floor Costa Mesa, CA 92646 (714) 312-7500 |
| |
Andrew M. Tucker
Nelson Mullins Riley & Scarborough LLP 101 Constitution Avenue, NW Suite 900 Washington, D.C. 20001 (202) 689-2000 |
|
| Large accelerated filer ☐ | | | Accelerated filer ☐ | | | Non-accelerated filer ☒ | | |
Smaller reporting company ☒
Emerging growth company ☒ |
|
| | |
Per Share
and Warrant |
| |
Total
|
| ||||||
Public offering price
|
| | | $ | 5.00 | | | | | $ | 10,000,000 | | |
Underwriting discount and commissions(1)
|
| | | $ | 0.40 | | | | | $ | 800,000 | | |
Proceeds, before expenses, to us
|
| | | $ | 4.60 | | | | | $ | 9,200,000 | | |
| | | | | 6 | | | |
| | | | | 18 | | | |
| | | | | 19 | | | |
| | | | | 39 | | | |
| | | | | 41 | | | |
| | | | | 42 | | | |
| | | | | 43 | | | |
| CAPITALIZATION | | | | | 44 | | |
| DILUTION | | | | | 46 | | |
| | | | | 48 | | | |
| | | | | 49 | | | |
| | | | | 56 | | | |
| BUSINESS | | | | | 75 | | |
| | | | | 88 | | | |
| MANAGEMENT | | | | | 92 | | |
| | | | | 96 | | | |
| | | | | 100 | | | |
| | | | | 102 | | | |
| | | | | 104 | | | |
| | | | | 110 | | | |
| | | | | 112 | | | |
| | | | | 118 | | | |
| | | | | 125 | | | |
| EXPERTS | | | | | 126 | | |
| | | | | 126 | | | |
| | | | | F-1 | | |
| | |
Year Ended December 31,
|
| |||||||||||||||
| | |
2020
Pro Forma |
| |
2020
Actual |
| |
2019
Actual |
| |||||||||
| | |
(unaudited)
|
| | | | | | | | | | | | | |||
Net revenues
|
| | | $ | 9,801,981 | | | | | $ | 5,239,437 | | | | | $ | 3,034,216 | | |
Cost of net revenues
|
| | | | 6,603,865 | | | | | | 4,685,755 | | | | | | 1,626,505 | | |
Gross profit
|
| | | | 3,198,116 | | | | | | 553,682 | | | | | | 1,407,711 | | |
Operating expenses
|
| | | | 15,316,886 | | | | | | 9,701,572 | | | | | | 6,255,180 | | |
Operating loss
|
| | | | (12,118,771) | | | | | | (9,147,890) | | | | | | (4,847,469) | | |
Other expenses
|
| | | | (2,214,320) | | | | | | (1,566,764) | | | | | | (805,704) | | |
Loss before provision for income taxes
|
| | | | (14,333,091) | | | | | | (10,714,654) | | | | | | (5,653,173) | | |
Provision for income taxes
|
| | | | 13,641 | | | | | | 13,641 | | | | | | 800 | | |
Net loss
|
| | | $ | (14,346,732) | | | | | $ | (10,728,295) | | | | | $ | (5,653,973) | | |
Pro forma earnings per share – basic and diluted(1)
|
| | | | | | | | | | | | | | | | | | |
Basic
|
| | | $ | (1.50) | | | | | | | | | | | | | | |
Diluted
|
| | | $ | (1.50) | | | | | | | | | | | | | | |
Pro forma number of common shares outstanding – basic and
diluted(1) |
| | | | | | | | | | | | | | | | | | |
Basic
|
| | | | 9,569,349 | | | | | | | | | | | | | | |
Diluted
|
| | | | 9,569,349 | | | | | | | | | | | | | | |
| | |
As of December 31, 2020
|
| |||||||||||||||
| | |
Actual
|
| |
Pro Forma
|
| |
Pro Forma as
Adjusted |
| |||||||||
| | | | | | | | |
(unaudited)
|
| |
(unaudited)
|
| ||||||
Total cash
|
| | | $ | 575,986 | | | | | $ | 627,301 | | | | | $ | 6,047,801 | | |
Total current assets
|
| | | | 2,008,656 | | | | | | 2,226,773 | | | | | | 7,647,273 | | |
Total assets
|
| | | | 16,352,169 | | | | | | 23,832,676 | | | | | | 29,253,176 | | |
Total current liabilities including current portion of long-term debt
|
| | | | 20,278,690 | | | | | | 21,991,487 | | | | | | 20,011,987 | | |
Total long-term obligations
|
| | | | 1,931,124 | | | | | | 2,342,878 | | | | | | 1,342,878 | | |
Total liabilities
|
| | | | 22,209,814 | | | | | | 24,334,365 | | | | | | 21,354,865 | | |
Total stockholders’ deficit
|
| | | | (5,857,645) | | | | | | (501,689) | | | | | | 7,898,311 | | |
Total liabilities and stockholders’ deficit
|
| | | $ | 16,352,169 | | | | | $ | 23,832,676 | | | | | $ | 29,253,176 | | |
| | |
as of December 31, 2020
|
| |||||||||||||||||||||||||||
| | |
DBG
|
| |
H&J
|
| |
Total
|
| |
Pro Forma
|
| |
Pro Forma
as Adjusted |
| |||||||||||||||
Cash and cash equivalents
|
| | | $ | 575,986 | | | | | $ | 51,315 | | | | | $ | 627,301 | | | | | $ | 5,420,500 | | | | | $ | 6,047,801 | | |
Indebtedness, including current portion
|
| | | $ | 22,209,814 | | | | | $ | 1,544,551 | | | | | $ | 23,754,365 | | | | | | | | | | | $ | 21,354,865 | | |
Debt
|
| | | $ | 14,109,041 | | | | | $ | 972,695 | | | | | | 15,081,736 | | | | | $ | (3,415,815) | | | | | | 11,665,921 | | |
DBG preferred stock, $0.0001 par
value, 125,000,000 shares authorized (actual), 10,000,000 shares authorized (pro forma and pro forma as adjusted), 62,924,710 shares issued and outstanding (actual), no shares issued and outstanding (pro forma as adjusted) |
| | | | 6,291 | | | | | | — | | | | | | 6,291 | | | | | | (6,291) | | | | | | — | | |
DBG common stock, $0.0001 par
value: 200,000,000 shares authorized (actual), 200,000,000 shares authorized (pro forma and pro forma as adjusted), 664,167 shares issued and outstanding (actual); 7,549,349 issued and outstanding (pro forma); 9,549,349 (pro forma as adjusted) |
| | | | 66 | | | | | | — | | | | | | 66 | | | | | | 889 | | | | | | 955 | | |
Additional paid-in capital
|
| | | | 27,481,995 | | | | | | 102,083 | | | | | | 27,583,106 | | | | | | 19,421,217 | | | | | | 47,005,295 | | |
Accumulated deficit
|
| | | | (33,345,997) | | | | | | (1,284,027) | | | | | | (34,630,024) | | | | | | — | | | | | | (34,630,024) | | |
Total stockholders’ equity (deficit)
|
| | | $ | (5,857,645) | | | | | $ | (1,181,944) | | | | | $ | (7,039,589) | | | | | $ | 19,415,815 | | | | | $ | 12,376,226 | | |
Total capitalization
|
| | | $ | 8,251,396 | | | | | $ | (209,249) | | | | | $ | 8,042,147 | | | | | $ | 16,000,000 | | | | | $ | 24,042,147 | | |
|
Assumed public offering price per share
|
| | | | | | | | | $ | 5.00 | | |
|
Pro forma net tangible book value per share as of December 31, 2020
|
| | | $ | (2.91) | | | | | | | | |
|
Increase in pro forma net tangible book value in this offering
|
| | | $ | 1.49 | | | | | | | | |
|
Pro forma net tangible book value per share after this offering
|
| | | | | | | | | $ | (1.42) | | |
|
Dilution in pro forma net tangible book value per share to new investors in this
offering |
| | | | | | | | | $ | 3.58 | | |
| | |
Shares Purchased
|
| |
Total Consisderation
|
| |
Average
Price Per Share |
| |||||||||||||||||||||
| | |
Number
|
| |
Percentage
|
| |
Number
|
| |
Percentage
|
| ||||||||||||||||||
Existing Stockholders
|
| | | | 7,569,349 | | | | | | 79.1% | | | | | $ | 19,453,996 | | | | | | 66.0% | | | | | $ | 2.57 | | |
New investors in this offering
|
| | | | 2,000,000 | | | | | | 20.9% | | | | | | 10,000,000 | | | | | | 34.0% | | | | | $ | 5.00 | | |
Total capitalization
|
| | | | 9,569,349 | | | | | | 100.0% | | | | | $ | 29,453,996 | | | | | | 100.0% | | | | | | | | |
| | | | | | | | |
Year Ended
December 31, |
| |||||||||
| | |
2020
Pro Forma |
| |
2020
Actual |
| |
2019
Actual |
| |||||||||
| | | | | (unaudited) | | | | | | | | | | | | | | |
Net revenues
|
| | | $ | 9,801,981 | | | | | $ | 5,239,437 | | | | | $ | 3,034,216 | | |
Cost of net revenues
|
| | | | 6,603,865 | | | | | | 4,685,755 | | | | | | 1,626,505 | | |
Gross profit
|
| | | | 3,198,116 | | | | | | 553,682 | | | | | | 1,407,711 | | |
Operating expenses
|
| | | | 15,316,886 | | | | | | 9,701,572 | | | | | | 6,255,180 | | |
Operating loss
|
| | | | (12,118,771) | | | | | | (9,147,890) | | | | | | (4,847,469) | | |
Other expenses
|
| | | | (2,214,320) | | | | | | (1,566,764) | | | | | | (805,704) | | |
Loss before provision for income taxes
|
| | | | (14,333,091) | | | | | | (10,714,654) | | | | | | (5,653,173) | | |
Provision for income taxes
|
| | | | 13,641 | | | | | | 13,641 | | | | | | 800 | | |
Net loss
|
| | | $ | (14,346,732) | | | | | $ | (10,728,295) | | | | | $ | (5,653,973) | | |
| | |
As of
December 31, 2020 |
| |||||||||
| | |
Actual
|
| |
Pro Forma
|
| ||||||
| | | | | | | | |
(unaudited)
|
| |||
Total cash
|
| | | $ | 575,986 | | | | | $ | 627,301 | | |
Total current assets
|
| | | | 2,008,656 | | | | | | 2,226,773 | | |
Total assets
|
| | | | 16,352,169 | | | | | | 23,832,676 | | |
Total current liabilities including current portion of long-term debt
|
| | | | 20,278,690 | | | | | | 21,997,487 | | |
Total long-term obligations
|
| | | | 1,931,124 | | | | | | 2,342,878 | | |
Total liabilities
|
| | | | 22,209,814 | | | | | | 24,334,365 | | |
Total stockholders’ deficit
|
| | | | (5,857,645) | | | | | | (501,689) | | |
Total liabilities and stockholders’ deficit
|
| | | $ | 16,352,169 | | | | | $ | 23,832,676 | | |
| | |
DBG
|
| |
Bailey
|
| |
H&J
|
| |
Total
|
| |
Pro Forma
Adjustments |
| |
Pro Forma
Combined |
| ||||||||||||||||||
Net revenues
|
| | | $ | 5,239,437 | | | | | $ | 2,019,823 | | | | | $ | 2,542,721 | | | | | $ | 9,801,981 | | | | | $ | — | | | | | $ | 9,801,981 | | |
Cost of net revenues
|
| | | | 4,685,755 | | | | | | 1,020,237 | | | | | | 897,873 | | | | | | 6,603,865 | | | | | | — | | | | | | 6,603,865 | | |
Gross profit
|
| | | | 553,682 | | | | | | 999,586 | | | | | | 1,644,848 | | | | | | 3,198,116 | | | | | | — | | | | | | 3,198,116 | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
General and administrative
|
| | | | 7,149,210 | | | | | | 1,439,879 | | | | | | 1,044,397 | | | | | | 9,633,486 | | | | | | 1,484,257(a) | | | | | | 11,117,743 | | |
Sales and marketing
|
| | | | 576,469 | | | | | | 483,657 | | | | | | 1,163,124 | | | | | | 2,223,251 | | | | | | — | | | | | | 2,223,251 | | |
Distribution
|
| | | | 342,466 | | | | | | — | | | | | | — | | | | | | 342,466 | | | | | | — | | | | | | 342,466 | | |
Loss on disposal of property and equipment
|
| | | | 848,927 | | | | | | — | | | | | | — | | | | | | 848,927 | | | | | | — | | | | | | 848,927 | | |
Impairment of intangible assets
|
| | | | 784,500 | | | | | | — | | | | | | — | | | | | | 784,500 | | | | | | — | | | | | | 784,500 | | |
Total operating expenses
|
| | | | 9,701,572 | | | | | | 1,923,536 | | | | | | 2,207,521 | | | | | | 13,832,629 | | | | | | 1,484,257 | | | | | | 15,316,886 | | |
Loss from operations
|
| | | | (9,147,890) | | | | | | (923,950) | | | | | | (562,673) | | | | | | (10,634,514) | | | | | | (1,484,257) | | | | | | (12,118,771) | | |
Other income (expense): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest expense
|
| | | | (1,599,518) | | | | | | (25,396) | | | | | | (92,270) | | | | | | (1,717,184) | | | | | | (540,000)(b) | | | | | | (2,257,184) | | |
Gain on forgiveness of debt
|
| | | | — | | | | | | — | | | | | | 225,388 | | | | | | 225,388 | | | | | | (225,388)(d) | | | | | | — | | |
Other non-operating income (expenses)
|
| | | | 32,754 | | | | | | — | | | | | | 10,110 | | | | | | 42,864 | | | | | | — | | | | | | 42,864 | | |
Total other income (expense), net
|
| | | | (1,566,764) | | | | | | (25,396) | | | | | | 143,228 | | | | | | (1,448,932) | | | | | | (765,388) | | | | | | (2,214,320) | | |
Provision for income taxes
|
| | | | 13,641 | | | | | | — | | | | | | — | | | | | | 13,641 | | | | | | — | | | | | | 13,641 | | |
Net loss
|
| | | $ | (10,728,295) | | | | | $ | (949,346) | | | | | $ | (419,446) | | | | | $ | (12,097,087) | | | | | $ | (2,249,645) | | | | | $ | (14,346,732) | | |
| | |
DBG
|
| |
Bailey
|
| |
H&J
|
| |
Total
|
| |
Pro Forma
Adjustments |
| |
Pro Forma
Combined |
| ||||||||||||||||||
Net revenues
|
| | | $ | 3,034,216 | | | | | $ | 27,099,718 | | | | | $ | 3,325,761 | | | | | $ | 33,459,695 | | | | | $ | — | | | | | $ | 33,459,695 | | |
Cost of net revenues
|
| | | | 1,626,505 | | | | | | 12,663,514 | | | | | | 1,202,819 | | | | | | 15,492,838 | | | | | | — | | | | | | 15,492,838 | | |
Gross profit
|
| | | | 1,407,711 | | | | | | 14,436,204 | | | | | | 2,122,943 | | | | | | 17,966,858 | | | | | | — | | | | | | 17,966,858 | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
General and administrative
|
| | | | 4,584,010 | | | | | | 14,524,832 | | | | | | 717,901 | | | | | | 19,826,743 | | | | | | 1,797,781(a) | | | | | | 21,624,524 | | |
Sales and marketing
|
| | | | 869,285 | | | | | | 4,535,276 | | | | | | 1,577,478 | | | | | | 6,982,039 | | | | | | — | | | | | | 6,982,039 | | |
Distribution
|
| | | | 801,885 | | | | | | — | | | | | | — | | | | | | 801,885 | | | | | | — | | | | | | 801,885 | | |
Loss on disposal of property and equipment
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Impairment of intangible assets
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total operating
expenses |
| | | | 6,255,180 | | | | | | 19,060,108 | | | | | | 2,295,379 | | | | | | 27,610,667 | | | | | | 1,797,781 | | | | | | 29,408,449 | | |
Loss from operations
|
| | | | (4,847,469) | | | | | | (4,623,904) | | | | | | (172,437) | | | | | | (9,643,810) | | | | | | (1,797,781) | | | | | | (11,441,591) | | |
Other income (expense): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest expense
|
| | | | (772,592) | | | | | | (103,520) | | | | | | (53,955) | | | | | | (930,067) | | | | | | (540,000)(b) | | | | | | (1,470,067) | | |
Other non-operating income (expenses)
|
| | | | (33,112) | | | | | | (49,558) | | | | | | 50,000 | | | | | | (32,670) | | | | | | — | | | | | | (32,670) | | |
Total other income (expense), net
|
| | | | (805,704) | | | | | | (153,078) | | | | | | (3,955) | | | | | | (962,737) | | | | | | (540,000) | | | | | | (1,502,737) | | |
Provision for income taxes
|
| | | | 800 | | | | | | 14,890 | | | | | | — | | | | | | 15,690 | | | | | | — | | | | | | 15,690 | | |
Net loss
|
| | | $ | (5,653,973) | | | | | $ | (4,791,872) | | | | | $ | (176,391) | | | | | $ | (10,622,236) | | | | | $ | (2,337,781) | | | | | $ | (12,960,018) | | |
| | |
DBG
|
| |
H&J
|
| |
Total
|
| |
Pro Forma
Adjustments |
| | | | |
Pro Forma
Combined |
| |||||||||||||||
ASSETS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 575,986 | | | | | $ | 51,315 | | | | | $ | 627,301 | | | | | $ | — | | | | | | | | $ | 627,301 | | |
Accounts receivable, net
|
| | | | 35,532 | | | | | | 38,689 | | | | | | 74,221 | | | | | | — | | | | | | | | | 74,221 | | |
Due from factor, net
|
| | | | 210,033 | | | | | | — | | | | | | 210,033 | | | | | | — | | | | | | | | | 210,033 | | |
Inventory
|
| | | | 1,163,279 | | | | | | 73,690 | | | | | | 1,236,969 | | | | | | — | | | | | | | | | 1,236,969 | | |
Prepaid expenses
|
| | | | 23,826 | | | | | | 54,423 | | | | | | 78,249 | | | | | | — | | | | | | | | | 78,249 | | |
Total current assets
|
| | | | 2,008,656 | | | | | | 218,117 | | | | | | 2,226,773 | | | | | | — | | | | | | | | | 2,226,773 | | |
Deferred offering costs
|
| | | | 214,647 | | | | | | — | | | | | | 214,647 | | | | | | — | | | | | | | | | 214,647 | | |
Property, equipment and software, net
|
| | | | 62,313 | | | | | | 140,074 | | | | | | 202,387 | | | | | | (202,387) | | | |
(a)
|
| | | | — | | |
Goodwill
|
| | | | 6,479,218 | | | | | | — | | | | | | 6,479,218 | | | | | | 2,995,407 | | | |
(c)
|
| | | | 9,474,625 | | |
Intangible assets, net
|
| | | | 7,494,667 | | | | | | — | | | | | | 7,494,667 | | | | | | 4,324,880 | | | |
(a), (c)
|
| | | | 11,819,547 | | |
Deposits
|
| | | | 92,668 | | | | | | 4,416 | | | | | | 97,084 | | | | | | — | | | | | | | | | 97,084 | | |
Total assets
|
| | | $ | 16,352,169 | | | | | $ | 362,607 | | | | | $ | 16,714,776 | | | | | $ | 7,117,900 | | | | | | | | $ | 23,832,676 | | |
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accounts payable
|
| | | $ | 5,668,703 | | | | | $ | 187,516 | | | | | $ | 5,856,219 | | | | | $ | — | | | | | | | | $ | 5,856,219 | | |
Accrued expenses and other liabilities
|
| | | | 1,245,646 | | | | | | 119,538 | | | | | | 1,365,184 | | | | | | — | | | | | | | | | 1,365,184 | | |
Deferred revenue
|
| | | | 1,667 | | | | | | 264,802 | | | | | | 266,469 | | | | | | — | | | | | | | | | 266,469 | | |
Due to related parites
|
| | | | 441,453 | | | | | | — | | | | | | 441,453 | | | | | | — | | | | | | | | | 441,453 | | |
Convertible notes, current
|
| | | | 700,000 | | | | | | — | | | | | | 700,000 | | | | | | — | | | | | | | | | 700,000 | | |
Accrued interest payable
|
| | | | 737,039 | | | | | | — | | | | | | 737,039 | | | | | | 1,080,000 | | | |
(b)
|
| | | | 1,817,039 | | |
Note payable – related party
|
| | | | 137,856 | | | | | | — | | | | | | 137,856 | | | | | | — | | | | | | | | | 137,856 | | |
Venture debt, net of discount
|
| | | | 5,854,326 | | | | | | — | | | | | | 5,854,326 | | | | | | — | | | | | | | | | 5,854,326 | | |
Loan payable, current
|
| | | | 992,000 | | | | | | 60,941 | | | | | | 1,052,941 | | | | | | — | | | | | | | | | 1,052,941 | | |
Promissory note payable
|
| | | | 4,500,000 | | | | | | — | | | | | | 4,500,000 | | | | | | — | | | | | | | | | 4,500,000 | | |
Total current liabilities
|
| | | | 20,278,690 | | | | | | 632,797 | | | | | | 20,911,487 | | | | | | 1,080,000 | | | | | | | | | 21,991,487 | | |
Convertible notes
|
| | | | 1,215,815 | | | | | | — | | | | | | 1,215,815 | | | | | | — | | | | | | | | | 1,215,815 | | |
Note payable – related party
|
| | | | — | | | | | | 635,000 | | | | | | 635,000 | | | | | | (500,000) | | | |
(c)
|
| | | | 135,000 | | |
Loan payable
|
| | | | 709,044 | | | | | | 276,754 | | | | | | 985,798 | | | | | | — | | | | | | | | | 985,798 | | |
Warrant liability
|
| | | | 6,265 | | | | | | — | | | | | | 6,265 | | | | | | — | | | | | | | | | 6,265 | | |
Total liabilities
|
| | | | 22,209,814 | | | | | | 1,544,551 | | | | | | 23,754,365 | | | | | | 580,000 | | | | | | | | | 24,334,365 | | |
Commitments and contingencies (Note 13)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Stockholders’ deficit: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Series Seed convertible preferred
stock |
| | | | 2,071 | | | | | | — | | | | | | 2,071 | | | | | | — | | | | | | | | | 2,071 | | |
Series A convertible preferred stock
|
| | | | 565 | | | | | | — | | | | | | 565 | | | | | | — | | | | | | | | | 565 | | |
Series A-2 convertible preferred
stock |
| | | | 593 | | | | | | — | | | | | | 593 | | | | | | — | | | | | | | | | 593 | | |
Series A-3 convertible preferred
stock |
| | | | 904 | | | | | | — | | | | | | 904 | | | | | | — | | | | | | | | | 904 | | |
Series CF convertible preferred stock
|
| | | | 83 | | | | | | — | | | | | | 83 | | | | | | — | | | | | | | | | 83 | | |
Series B convertible preferred stock
|
| | | | 2,075 | | | | | | — | | | | | | 2,075 | | | | | | — | | | | | | | | | 2,075 | | |
Common stock
|
| | | | 66 | | | | | | — | | | | | | 66 | | | | | | 15,167 | | | |
(c)
|
| | | | 15,233 | | |
Additional paid-in capital
|
| | | | 27,481,995 | | | | | | 102,083 | | | | | | 27,584,078 | | | | | | 8,982,750 | | | |
(c)
|
| | | | 36,566,828 | | |
Accumulated deficit
|
| | | | (33,345,997) | | | | | | (1,284,027) | | | | | | (34,630,024) | | | | | | (2,460,017) | | | | | | | | | (37,090,041) | | |
Total stockholders’ deficit
|
| | | | (5,857,645) | | | | | | (1,181,944) | | | | | | (7,039,589) | | | | | | 6,537,900 | | | | | | | | | (501,689) | | |
Total liabilities and stockholders’ deficit
|
| | | $ | 16,352,169 | | | | | $ | 362,607 | | | | | $ | 16,714,776 | | | | | $ | 7,117,900 | | | | | | | | $ | 23,832,676 | | |
|
Series B preferred stock
|
| | | $ | 11,000,000 | | |
|
Promissory note payable
|
| | | | 4,500,000 | | |
|
Purchase price consideration
|
| | | $ | 15,500,000 | | |
| | |
Preliminary
Purchase Price Allocation |
| |||
Assets acquired
|
| | | $ | 4,705,086 | | |
Goodwill
|
| | | | 6,479,218 | | |
Intangible assets
|
| | | | 8,600,000 | | |
Liabilities assumed
|
| | | | (4,284,304) | | |
Purchase price consideration
|
| | | $ | 15,500,000 | | |
|
Common stock
|
| | | $ | 9,100,000 | | |
|
Purchase price consideration
|
| | | $ | 9,100,000 | | |
| | |
Preliminary
Purchase Price Allocation |
| |||
Assets acquired
|
| | | $ | 362,607 | | |
Goodwill
|
| | | | 2,995,407 | | |
Intangible assets
|
| | | | 6,888,620 | | |
Liabilities assumed
|
| | | | (1,146,634) | | |
Purchase price consideration
|
| | | $ | 9,100,000 | | |
| | |
Year Ended
December 31, |
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Net revenues
|
| | | $ | 5,239,437 | | | | | $ | 3,034,216 | | |
Cost of net revenues
|
| | | | 4,685,755 | | | | | | 1,626,505 | | |
Gross profit
|
| | | | 553,682 | | | | | | 1,407,711 | | |
Operating expenses
|
| | | | 9,701,572 | | | | | | 6,255,180 | | |
Operating loss
|
| | | | (9,147,890) | | | | | | (4,847,469) | | |
Other expenses
|
| | | | (1,566,764) | | | | | | (805,704) | | |
Loss before provision for income taxes
|
| | | | (10,714,654) | | | | | | (5,653,173) | | |
Provision for income taxes
|
| | | | 13,641 | | | | | | 800 | | |
Net loss
|
| | | $ | (10,728,295) | | | | | $ | (5,653,973) | | |
| | |
Year Ended
December 31, |
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Net cash provided by operating activities: | | | | ||||||||||
Net loss
|
| | | $ | (10,728,295) | | | | | $ | (5,653,973) | | |
Non-cash adjustments
|
| | | $ | 2,413,918 | | | | | $ | 371,324 | | |
Change in operating assets and liabilities
|
| | | $ | 6,252,790 | | | | | $ | 1,413,284 | | |
Net cash used in operating activities
|
| | | $ | (2,061,587) | | | | | $ | (3,869,365) | | |
Net cash used in investing activities
|
| | | $ | 204,884 | | | | | $ | 6,642 | | |
Net cash provided by financing activities
|
| | | $ | 2,392,220 | | | | | $ | 3,318,711 | | |
Net change in cash
|
| | | $ | 535,517 | | | | | $ | (544,012) | | |
| | |
December 31,
|
| |||||||||
Statement of Operations
|
| |
2019
|
| |
2018
|
| ||||||
Net revenue
|
| | | $ | 27,099,718 | | | | | $ | 29,037,497 | | |
Cost of net revenue
|
| | | $ | 12,663,514 | | | | | $ | 13,451,654 | | |
Gross profit
|
| | | $ | 14,436,204 | | | | | $ | 15,585,843 | | |
Operating expenses
|
| | | $ | 19,060,108 | | | | | $ | 17,756,807 | | |
Operating income
|
| | | $ | (4,623,904) | | | | | $ | (2,170,964) | | |
Other expense
|
| | | $ | (153,078) | | | | | $ | (531,599) | | |
Loss before provision for income taxes
|
| | | $ | (4,776,982) | | | | | $ | (2,702,563) | | |
Provision for income taxes
|
| | | $ | (14,890) | | | | | $ | (13,390) | | |
Net loss
|
| | | $ | (4,791,872) | | | | | $ | (2,715,953) | | |
| | |
December 31,
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Net cash used in operating activities: | | | | | | | | | | | | | |
Net loss
|
| | | $ | (4,791,872) | | | | | $ | (2,715,953) | | |
Non-cash adjustments
|
| | | $ | 636,401 | | | | | $ | 469,318 | | |
Change in operating assets and liabilities
|
| | | $ | 2,269,173 | | | | | $ | 1,622,885 | | |
Net cash used in operating activities
|
| | | $ | (1,886,298) | | | | | $ | (623,750) | | |
Net cash used in investing activities
|
| | | $ | (557,328) | | | | | $ | (185,970) | | |
Net cash provided by financing activities
|
| | | $ | 1,840,039 | | | | | $ | 349,514 | | |
Net change in cash
|
| | | $ | (603,587) | | | | | $ | (460,206) | | |
| | |
Year Ended
December 31, |
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Net revenues
|
| | | $ | 2,542,721 | | | | | $ | 3,325,761 | | |
Cost of net revenues
|
| | | | 897,873 | | | | | | 1,202,819 | | |
Gross profit
|
| | | | 1,644,848 | | | | | | 2,122,943 | | |
Operating expenses
|
| | | | 2,207,521 | | | | | | 2,295,379 | | |
Operating loss
|
| | | | (562,673) | | | | | | (172,437) | | |
Other expenses
|
| | | | 143,228 | | | | | | (3,955) | | |
Loss before provision for income taxes
|
| | | | (419,446) | | | | | | (176,391) | | |
Provision for income taxes
|
| | | | — | | | | | | — | | |
Net loss
|
| | | $ | (419,446) | | | | | $ | (176,391) | | |
| | |
Year Ended
December 31, |
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Net cash provided by operating activities: | | | | | | | | | | | | | |
Net Loss
|
| | | $ | (419,446) | | | | | $ | (176,391) | | |
Non-cash adjustments
|
| | | $ | (33,742) | | | | | $ | 82,422 | | |
Change in operating assets and liabilities
|
| | | $ | 61,146 | | | | | $ | 115,377 | | |
Net cash used in operating activities
|
| | | $ | (392,042) | | | | | $ | 21,407 | | |
Net cash used in investing activities
|
| | | $ | (65,750) | | | | | $ | (254,437) | | |
Net cash provided by financing activities
|
| | | $ | 490,598 | | | | | $ | 237,002 | | |
Net change in cash
|
| | | $ | 32,806 | | | | | $ | 3,972 | | |
| | |
Year Ended
December 31, |
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Net revenues
|
| | | $ | 9,801,981 | | | | | $ | 33,459,695 | | |
Cost of net revenues
|
| | | | 6,603,865 | | | | | | 15,492,838 | | |
Gross profit
|
| | | | 3,198,116 | | | | | | 17,966,858 | | |
Operating expenses
|
| | | | 15,316,886 | | | | | | 29,408,449 | | |
Operating loss
|
| | | | (12,118,771) | | | | | | (11,441,591) | | |
Other expenses
|
| | | | (2,214,320) | | | | | | (1,502,737) | | |
Loss before provision for income taxes
|
| | | | (14,333,091) | | | | | | (12,944,328) | | |
Provision for income taxes
|
| | | | 13,641 | | | | | | 15,690 | | |
Net loss
|
| | | $ | (14,346,732) | | | | | $ | (12,960,018) | | |
| | |
Year Ended
December 31, |
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Net cash provided by operating activities: | | | | | | | | | | | | | |
Net Loss
|
| | | $ | (14,121,344) | | | | | $ | (12,960,017) | | |
Non-cash adjustments
|
| | | $ | 3,913,836 | | | | | $ | 2,887,928 | | |
Change in operating assets and liabilities
|
| | | $ | 6,952,663 | | | | | $ | 4,337,833 | | |
Net cash used in operating activities
|
| | | $ | (3,254,845) | | | | | $ | (5,734,256) | | |
Net cash used in investing activities
|
| | | $ | 139,134 | | | | | $ | (805,123) | | |
Net cash provided by financing activities
|
| | | $ | 3,382,818 | | | | | $ | 5,395,752 | | |
Net change in cash
|
| | | $ | 267,107 | | | | | $ | (1,143,627) | | |
Location
|
| |
Type
|
| |
Square
Footage (approximate) |
| |
Lease
Expiration |
| ||||||
Vernon, California
|
| |
Corporate Warehouse and Distribution Center
|
| | | | 42,206 | | | | | | 2023 | | |
Los Angeles, California
|
| | Showroom | | | | | 2,000 | | | | | | 2020(1) | | |
Austin, Texas
|
| | Interim Corporate Headquarters | | | | | 500 | | | | | | 2021(2) | | |
Dallas, Texas
|
| | Office Space and Showroom | | | | | 2,860 | | | | | | 2022 | | |
Houston, Texas
|
| | Showroom | | | | | 1,117 | | | | | | 2021 | | |
New Orleans, Louisiana
|
| | Showroom | | | | | 1,015 | | | | | | 2021 | | |
Name
|
| |
Age
|
| |
Position
|
|
Executive Officers and Directors | | | | | | | |
John “Hil” Davis
|
| | 48 | | | President and Chief Executive Officer | |
Laura Dowling
|
| | 42 | | | Chief Marketing Officer | |
Reid Yeoman
|
| | 38 | | | Chief Financial Officer | |
Mark T. Lynn
|
| | 37 | | | Director | |
Trevor Pettennude
|
| | 53 | | | Director | |
Director Nominees | | | | | | | |
Jameeka Aaron
|
| | 40 | | | Director Nominee | |
Moise Emquies
|
| | 59 | | | Director Nominee | |
Name and Principal Position
|
| |
Fiscal
Year |
| |
Salary(1)
|
| |
Bonus
|
| |
Option
Awards |
| |
All Other
Compensation |
| |
Total
|
| ||||||||||||||||||
John “Hil” Davis
|
| | | | 2020 | | | | | $ | 222,500 | | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | ||||
President and Chief Executive Officer
|
| | | | 2019 | | | | | $ | 180,000 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | | | |
Laura Dowling
|
| | | | 2020 | | | | | $ | 258,231 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | | | |
Chief Marketing Officer
|
| | | | 2019 | | | | | $ | 211,538 | | | | | $ | — | | | | | $ | 16,836 | | | | | $ | — | | | | | $ | | | |
Reid Yeoman
|
| | | | 2020 | | | | | $ | 225,000 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | | | |
Chief Financial Officer(1)
|
| | | | 2019 | | | | | $ | 34,615 | | | | | $ | — | | | | | $ | 12,078 | | | | | $ | — | | | | | $ | | | |
Name
|
| |
Title
|
| |
Description
|
| |
Total amount
owed as of March 2021 |
| |
Cash be paid
with net proceeds |
| |
Amounts to be
converted |
| |
Shares to
be issued upon conversion |
| ||||||||||||
Mark Lynn
|
| | Director | | | Salary owed | | | | $ | 194,568 | | | | | $ | 144,568 | | | | | $ | 50,000 | | | | | | 14,286 | | |
Hil Davis
|
| |
Chief Executive
Officer / Chairman |
| |
Salary / expenses not reimbursed;
short term loan payable |
| | | $ | 369,741 | | | | | | | | | | | $ | 369,741 | | | | | | 105,641 | | |
Laura Dowling
|
| |
Chief Marketing
Officer |
| | Unreimbursed moving / relocation expenses; additional outstanding sign-on bonus | | | | $ | 127,706 | | | | | $ | 127,706 | | | | | | — | | | | | | — | | |
Trevor Pettennude
|
| | Director | | | Short-term loan payable | | | | $ | 22,856 | | | | | | | | | | | $ | 22,856 | | | | | | 6,530 | | |
| | |
Immediately Before Offering
|
| |
Immediately After Offering
|
| ||||||||||||||||||
Name of Beneficial Owner
|
| |
Number of
Shares Beneficially Owned |
| |
Percentage of
Shares Outstanding |
| |
Number of
Shares Beneficially Owned |
| |
Percentage of
Shares Outstanding |
| ||||||||||||
Executive Officers and Directors | | | | | | | | | | | | | | | | | | | | | | | | | |
John “Hil” Davis(1)(2)
|
| | | | 1,713,641 | | | | | | 18.8% | | | | | | 1,713,641 | | | | | | 15.4% | | |
Laura Dowling(1)(3)
|
| | | | 334,667 | | | | | | 4.3% | | | | | | 334,667 | | | | | | 3.4% | | |
Reid Yeoman(1)(4)
|
| | | | 114,000 | | | | | | 1.5% | | | | | | 114,000 | | | | | | 1.2% | | |
Mark Lynn(2)(5)
|
| | | | 507,386 | | | | | | 6.5% | | | | | | 507,386 | | | | | | 5.2% | | |
Trevor Pettennude(2)(6)
|
| | | | 328,625 | | | | | | 4.3% | | | | | | 328,625 | | | | | | 3.4% | | |
Director Nominees(7) | | | | | | | | | | | | | | | | | | | | | | | | | |
Jameeka Aaron
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Moise Emquies
|
| | | | | | | | | | | | | | | | | | | | | | | | |
All executive officers, directors and director nominees as a group (7 persons)(2)(8)
|
| | | | 2,998,319 | | | | | | 30.0% | | | | | | 2,998,319 | | | | | | 25.0% | | |
Additional 5% Stockholders | | | | | | | | | | | | | | | | | | | | | | | | | |
Drew Jones(9)
|
| | | | 1,820,000 | | | | | | 24.2% | | | | | | 1,820,000 | | | | | | 24.2% | | |
2736 Routh Street
Dallas, Texas 75201 |
| | | | | | | | | |
Underwriter
|
| |
Number of
Shares of common stock and warrants |
| |||
Kingswood Capital Markets, division of Benchmark Investments, Inc.
|
| | | | | | |
Total
|
| | | | 2,000,000 | | |
| | |
Per Share
and Warrant |
| |
Total
Without Exercise of Over- Allotment Option |
| |
Total With
Exercise of Over- Allotment Option |
| |||||||||
Public offering price
|
| | | $ | 5.00 | | | | | $ | | | | | $ | | | ||
Underwriting discount and commissions
|
| | | $ | | | | | $ | | | | | $ | | | |||
Nonaccountable expense allowance (1%)
|
| | | $ | | | | | | $ | | | | | | $ | | | |
Proceeds, before expenses, to DBG
|
| | | $ | | | | | $ | | | | | $ | | | |
| | |
Page
|
| |||
| | | | F-2 | | | |
CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 AND 2019 AND FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019:
|
| | | | | | |
| | | | F-3 – F-4 | | | |
| | | | F-5 | | | |
| | | | F-6 | | | |
| | | | F-7 | | | |
| | | | F-9 – F-32 | | |
|
/s/ dbbmckennon
|
| | | |
| | |
December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
ASSETS | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 575,986 | | | | | $ | 40,469 | | |
Accounts receivable, net
|
| | | | 35,532 | | | | | | — | | |
Due from factor, net
|
| | | | 210,033 | | | | | | — | | |
Inventory
|
| | | | 1,163,279 | | | | | | 1,061,969 | | |
Prepaid expenses
|
| | | | 23,826 | | | | | | 63,516 | | |
Total current assets
|
| | | | 2,008,656 | | | | | | 1,165,954 | | |
Deferred offering costs
|
| | | | 214,647 | | | | | | | | |
Property, equipment and software, net
|
| | | | 62,313 | | | | | | 72,593 | | |
Goodwill
|
| | | | 6,479,218 | | | | | | — | | |
Intangible assets, net
|
| | | | 7,494,667 | | | | | | — | | |
Deposits
|
| | | | 92,668 | | | | | | 43,510 | | |
Total assets
|
| | | $ | 16,352,169 | | | | | $ | 1,282,057 | | |
LIABILITIES AND STOCKHOLDERS’ DEFICIT | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable
|
| | | $ | 5,668,703 | | | | | $ | 1,597,770 | | |
Accrued expenses and other liabilities
|
| | | | 1,245,646 | | | | | | 1,121,317 | | |
Deferred revenue
|
| | | | 1,667 | | | | | | 15,231 | | |
Due to related parties
|
| | | | 441,453 | | | | | | 263,427 | | |
Convertible notes, current
|
| | | | 700,000 | | | | | | — | | |
Accrued interest payable
|
| | | | 737,039 | | | | | | 129,982 | | |
Note payable – related party
|
| | | | 137,856 | | | | | | 115,000 | | |
Venture debt, net of discount
|
| | | | 5,854,326 | | | | | | 4,382,549 | | |
Loan payable, current
|
| | | | 992,000 | | | | | | — | | |
Promissory note payable
|
| | | | 4,500,000 | | | | | | — | | |
Total current liabilities
|
| | | | 20,278,690 | | | | | | 7,625,276 | | |
Convertible notes
|
| | | | 1,215,815 | | | | | | 799,280 | | |
Loan payable
|
| | | | 709,044 | | | | | | — | | |
Warrant liability
|
| | | | 6,265 | | | | | | 7,700 | | |
Total liabilities
|
| | | | 22,209,814 | | | | | | 8,432,256 | | |
Commitments and contingencies (Note 13) | | | | | | | | | | | | | |
Stockholders’ deficit: | | | | | | | | | | | | | |
Series Seed convertible preferred stock, $0.0001 par, 20,714,518 shares
authorized, 20,714,518 shares issued and outstanding at both December 31, 2020 and 2019. Convertible into one share of common stock. Liquidation preference of $5,633,855 as of both December 31, 2020 and 2019(1) |
| | | | 2,071 | | | | | | 2,071 | | |
| | |
December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Series A convertible preferred stock, $0.0001 par, 14,481,413 shares
authorized, 5,654,072 shares issued and outstanding at both December 31, 2020 and 2019. Convertible into one share of common stock. Liquidation preference of $2,713,955 as of both December 31, 2020 and 2019(1) |
| | | | 565 | | | | | | 565 | | |
Series A-2 convertible preferred stock, $0.0001 par, 20,000,000 shares
authorized, 5,932,742 shares issued and outstanding at both December 31, 2020 and 2019. Convertible into one share of common stock. Liquidation preference of $2,966,371 as of both December 31, 2020 and 2019(1) |
| | | | 593 | | | | | | 593 | | |
Series A-3 convertible preferred stock, $0.0001 par, 18,867,925 shares
authorized, 9,032,330 and 8,223,036 shares issued and outstanding at December 31, 2020 and 2019, respectively. Convertible into one share of common stock. Liquidation preference of $4,787,135 and $4,358,209 as of December 31, 2020 and 2019, respectively(1) |
| | | | 904 | | | | | | 823 | | |
Series CF convertible preferred stock, $0.0001 par, 2,000,000 shares authorized, 836,331 and 126,641 shares
issued and outstanding at December 31, 2020 and 2019, respectively. Convertible into one share of common stock. Liquidation preference of $434,890 and $65,863 as of December 31, 2020 and 2019, respectively(1) |
| | | | 83 | | | | | | 12 | | |
Series B convertible preferred stock, $0.0001 par, 20,754,717 shares authorized, 20,754,717 and no shares
issued and outstanding at December 31, 2020 and 2019, respectively. Convertible into one share of common stock. Liquidation preference of $11,000,000 and $0 as of December 31, 2020 and 2019, respectively(1) |
| | | | 2,075 | | | | | | — | | |
Undesignated preferred stock, $0.0001 par, 936,144 shares authorized, 0 and
0 shares issued and outstanding as of December 31, 2020 and 2019, respectively |
| | | ||||||||||
Common stock, $0.0001 par, 200,000,000 shares authorized, 664,167 and
664,167 shares issued and outstanding as of both December 31, 2020 and 2019(1) |
| | | | 66 | | | | | | 66 | | |
Additional paid-in capital
|
| | | | 27,481,995 | | | | | | 15,486,050 | | |
Subscription receivable
|
| | | | — | | | | | | (22,677) | | |
Accumulated deficit
|
| | | | (33,345,997) | | | | | | (22,617,702) | | |
Total stockholders’ deficit
|
| | | | (5,857,645) | | | | | | (7,150,199) | | |
Total liabilities and stockholders’ deficit
|
| | | $ | 16,352,169 | | | | | $ | 1,282,057 | | |
|
| | |
Years Ended
December 31, |
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Net revenues
|
| | | $ | 5,239,437 | | | | | $ | 3,034,216 | | |
Cost of net revenues
|
| | | | 4,685,755 | | | | | | 1,626,505 | | |
Gross profit
|
| | | | 553,682 | | | | | | 1,407,711 | | |
Operating expenses: | | | | | | | | | | | | | |
General and administrative
|
| | | | 7,149,210 | | | | | | 4,584,010 | | |
Sales and marketing
|
| | | | 576,469 | | | | | | 869,285 | | |
Distribution
|
| | | | 342,466 | | | | | | 801,885 | | |
Loss on disposal of property and equipment
|
| | | | 848,927 | | | | | | — | | |
Impairment of intangible assets
|
| | | | 784,500 | | | | | | — | | |
Total operating expenses
|
| | | | 9,701,572 | | | | | | 6,255,180 | | |
Loss from operations
|
| | | | (9,147,890) | | | | | | (4,847,469) | | |
Other income (expense): | | | | | | | | | | | | | |
Interest expense
|
| | | | (1,599,518) | | | | | | (772,592) | | |
Other non-operating income (expenses)
|
| | | | 32,754 | | | | | | (33,112) | | |
Total other income (expense), net
|
| | | | (1,566,764) | | | | | | (805,704) | | |
Provision for income taxes
|
| | | | 13,641 | | | | | | 800 | | |
Net loss
|
| | | $ | (10,728,295) | | | | | $ | (5,653,973) | | |
Weighted average vested common shares outstanding – basic and diluted (1)
|
| | | | 664,167 | | | | | | 664,167 | | |
Net loss per common share – basic and diluted
|
| | | $ | (16.15) | | | | | $ | (8.51) | | |
| | |
Series Seed
Preferred Stock |
| |
Series A
Preferred Stock |
| |
Series A-2
Preferred Stock |
| |
Series A-3
Preferred Stock |
| |
Series CF
Preferred Stock |
| |
Series B
Preferred Stock |
| |
Common
Stock |
| |
Additional
Paid-in Capital |
| |
Subscription
Receivable |
| |
Accumulated
Deficit |
| |
Total
Stockholders’ Deficit |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | |
Shares(1)
|
| |
Amount
|
| |
Shares(1)
|
| |
Amount
|
| |
Shares(1)
|
| |
Amount
|
| |
Shares(1)
|
| |
Amount
|
| |
Shares(1)
|
| |
Amount
|
| |
Shares(1)
|
| |
Amount
|
| |
Shares(1)
|
| |
Amount
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances at December 31, 2018
|
| | | | 20,714,518 | | | | | $ | 2,071 | | | | | | 5,650,903 | | | | | $ | 565 | | | | | | 5,932,742 | | | | | $ | 593 | | | | | | 3,447,608 | | | | | $ | 345 | | | | | | 124,204 | | | | | $ | 12 | | | | | | — | | | | | $ | — | | | | | | 664,167 | | | | | $ | 66 | | | | | $ | 13,242,183 | | | | | $ | (8,283) | | | | | $ | (16,963,729) | | | | | $ | (3,726,177) | | |
Stock-based compensation
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 172,491 | | | | | | — | | | | | | — | | | | | | 172,491 | | |
Issuance of Series CF preferred stock
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,437 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 8,283 | | | | | | — | | | | | | 8,283 | | |
Shares issued to holders in
prior offerings |
| | | | — | | | | | | — | | | | | | 3,169 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Issuance of Series A-3 preferred stock
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 4,775,428 | | | | | | 478 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,530,499 | | | | | | (22,677) | | | | | | — | | | | | | 2,508,300 | | |
Offering costs
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (509,051) | | | | | | — | | | | | | — | | | | | | (509,051) | | |
Fair value of warrant issuances – venture debt
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 49,928 | | | | | | — | | | | | | — | | | | | | 49,928 | | |
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (5,653,973) | | | | | | (5,653,973) | | |
Balances at December 31, 2019
|
| | | | 20,714,518 | | | | | $ | 2,071 | | | | | | 5,654,072 | | | | | $ | 565 | | | | | | 5,932,742 | | | | | $ | 593 | | | | | | 8,223,036 | | | | | $ | 823 | | | | | | 126,641 | | | | | $ | 12 | | | | | | — | | | | | $ | — | | | | | | 664,167 | | | | | $ | 66 | | | | | $ | 15,486,050 | | | | | $ | (22,677) | | | | | $ | (22,617,702) | | | | | $ | (7,150,199) | | |
Stock-based compensation
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 144,775 | | | | | | — | | | | | | — | | | | | | 144,775 | | |
Issuance of Series CF preferred stock
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 709,690 | | | | | | 71 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 309,679 | | | | | | — | | | | | | — | | | | | | 309,750 | | |
Issuance of Series A-3 preferred stock
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 809,294 | | | | | | 81 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 428,845 | | | | | | 22,677 | | | | | | — | | | | | | 451,603 | | |
Issuance of Series B preferred stock
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 20,754,717 | | | | | | 2,075 | | | | | | — | | | | | | — | | | | | | 10,997,925 | | | | | | — | | | | | | — | | | | | | 11,000,000 | | |
Offering costs
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (69,470) | | | | | | — | | | | | | — | | | | | | (69,470) | | |
Fair value of warrant issuances – venture debt
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 184,191 | | | | | | — | | | | | | — | | | | | | 184,191 | | |
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (10,728,295) | | | | | | (10,728,295) | | |
Balances at December 31, 2020
|
| | | | 20,714,518 | | | | | $ | 2,071 | | | | | | 5,654,072 | | | | | $ | 565 | | | | | | 5,932,742 | | | | | $ | 593 | | | | | | 9,032,330 | | | | | $ | 904 | | | | | | 836,331 | | | | | $ | 83 | | | | | | 20,754,717 | | | | | $ | 2,075 | | | | | | 664,167 | | | | | $ | 66 | | | | | $ | 27,481,995 | | | | | $ | — | | | | | $ | (33,345,997) | | | | | $ | (5,857,645) | | |
| | |
Year Ended
December 31, |
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Cash flows from operating activities: | | | | | | | | | | | | | |
Net loss
|
| | | $ | (10,728,295) | | | | | $ | (5,653,973) | | |
Adjustments to reconcile net loss to net cash used in operating activities:
|
| | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 603,857 | | | | | | 48,885 | | |
Amortization of loan discount and fees
|
| | | | 241,878 | | | | | | 149,948 | | |
Stock-based compensation
|
| | | | 144,775 | | | | | | 172,491 | | |
Change in fair value of warrant liability
|
| | | | (2,353) | | | | | | — | | |
Impairment of intangible assets
|
| | | | 784,500 | | | | | | — | | |
Loss on disposal of property and equipment
|
| | | | 848,927 | | | | | | — | | |
Change in credit reserve
|
| | | | (207,666) | | | | | | — | | |
Changes in operating assets and liabilities:
|
| | | | | | | | | | | | |
Accounts receivable, net
|
| | | | 1,947 | | | | | | — | | |
Due from factor, net
|
| | | | 1,616,939 | | | | | | — | | |
Inventory
|
| | | | 3,202,350 | | | | | | 146,673 | | |
Other current assets
|
| | | | 168,589 | | | | | | 114,898 | | |
Accounts payable
|
| | | | 673,263 | | | | | | 610,216 | | |
Accrued expenses and other liabilities
|
| | | | (591,028) | | | | | | 602,384 | | |
Deferred revenue
|
| | | | (13,564) | | | | | | (259,728) | | |
Accrued compensation – related party
|
| | | | 178,026 | | | | | | 68,859 | | |
Accrued interest
|
| | | | 1,016,268 | | | | | | 129,982 | | |
Net cash used in operating activities
|
| | | | (2,061,587) | | | | | | (3,869,365) | | |
Cash flows from investing activities:
|
| | | | | | | | | | | | |
Cash acquired in business combination
|
| | | | 106,913 | | | | | | — | | |
Purchases of property and equipment
|
| | | | (864) | | | | | | (7,848) | | |
Deposits
|
| | | | 98,835 | | | | | | 14,490 | | |
Net cash provided by investing activities
|
| | | | 204,884 | | | | | | 6,642 | | |
Cash flows from financing activities:
|
| | | | | | | | | | | | |
Proceeds (repayment) – related party advances, net
|
| | | | 22,856 | | | | | | (105,812) | | |
Repayments to factor
|
| | | | (1,931,369) | | | | | | — | | |
Proceeds from venture debt
|
| | | | 1,050,000 | | | | | | 508,249 | | |
Proceeds from loans payable
|
| | | | 1,701,044 | | | | | | — | | |
Proceeds from convertible notes payable
|
| | | | 1,250,308 | | | | | | 799,280 | | |
Proceeds from sale of Series A-3 preferred stock
|
| | | | 428,926 | | | | | | 2,508,300 | | |
Subscription receivable from Series A-3 preferred stock
|
| | | | 22,677 | | | | | | — | | |
Proceeds from sale of Series CF preferred stock, net of fees
|
| | | | 309,750 | | | | | | 8,283 | | |
Offering costs
|
| | | | (461,972) | | | | | | (399,589) | | |
Net cash provided by financing activities
|
| | | | 2,392,220 | | | | | | 3,318,711 | | |
Net increase (decrease) in cash and cash equivalents
|
| | | | 535,517 | | | | | | (544,012) | | |
| | |
Year Ended
December 31, |
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Cash and cash equivalents at beginning of year
|
| | | | 40,469 | | | | | | 584,481 | | |
Cash and cash equivalents at end of year
|
| | | $ | 575,986 | | | | | $ | 40,469 | | |
Supplemental disclosure of cash flow information:
|
| | | | | | | | | | | | |
Cash paid for income taxes
|
| | | $ | — | | | | | $ | — | | |
Cash paid for interest
|
| | | $ | 264,177 | | | | | $ | 90,000 | | |
Supplemental disclosure of non-cash investing and financing activities:
|
| | | | | | | | | | | | |
Warrants issued for offering costs
|
| | | $ | 918 | | | | | $ | 6,600 | | |
Warrants issued with venture debt
|
| | | $ | 184,191 | | | | | $ | 49,928 | | |
Venture debt issued in exchange of forgiveness of accrued interest
|
| | | $ | 409,211 | | | | | $ | — | | |
Issuance of promissory note payable in acquisition
|
| | | $ | 4,500,000 | | | | | $ | — | | |
Issuance of Series B preferred stock in acquisition
|
| | | $ | 11,000,000 | | | | | $ | — | | |
| | |
Warrant
Liability |
| |||
Oustanding as of December 31, 2018
|
| | | $ | — | | |
Warrants granted
|
| | | | 7,700 | | |
Oustanding as of December 31, 2019
|
| | | | 7,700 | | |
Warrants granted
|
| | | | 918 | | |
Change in fair value
|
| | | | (2,353) | | |
Oustanding as of December 31, 2020
|
| | | $ | 6,265 | | |
| | |
December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Computer equipment
|
| | | $ | 57,810 | | | | | $ | 57,004 | | |
Furniture and fixtures
|
| | | | 207,140 | | | | | | 70,108 | | |
Leasehold improvements
|
| | | | 69,274 | | | | | | 40,351 | | |
| | | | | 334,224 | | | | | | 167,463 | | |
Accumulated depreciation
|
| | | | (334,224) | | | | | | (97,703) | | |
Property and equipment, net
|
| | | $ | — | | | | | $ | 69,760 | | |
Software
|
| | | $ | 278,405 | | | | | $ | 56,450 | | |
Accumulated amortization
|
| | | | (216,092) | | | | | | (53,617) | | |
Software, net
|
| | | $ | 62,313 | | | | | $ | 2,833 | | |
|
Customer relationships
|
| |
3 years
|
|
| | |
December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Series Seed Preferred Stock (convertible to common stock)
|
| | | | 20,714,518 | | | | | | 20,714,518 | | |
Series A Preferred Stock (convertible to common stock)
|
| | | | 5,654,072 | | | | | | 5,654,072 | | |
Series A-2 Preferred Stock (convertible to common stock)
|
| | | | 5,932,742 | | | | | | 5,932,742 | | |
Series CF Preferred Stock (convertible to common stock)
|
| | | | 836,331 | | | | | | 126,641 | | |
Series A-3 Preferred Stock (convertible to common stock)
|
| | | | 9,032,330 | | | | | | 8,223,036 | | |
Series B Preferred Stock (convertible to common stock)
|
| | | | 20,754,717 | | | | | | — | | |
Common stock warrants
|
| | | | 914,539 | | | | | | 417,962 | | |
Preferred stock warrants
|
| | | | 806,903 | | | | | | 806,903 | | |
Stock options
|
| | | | 1,163,103 | | | | | | 1,084,215 | | |
Total potentially dilutive shares
|
| | | | 65,809,254 | | | | | | 42,960,089 | | |
|
Series B preferred stock
|
| | | $ | 11,000,000 | | |
|
Promissory note payable
|
| | | | 4,500,000 | | |
|
Purchase price consideration
|
| | | $ | 15,500,000 | | |
| | |
Purchase Price
Allocation |
| |||
Cash and cash equivalents
|
| | | $ | 106,913 | | |
Accounts receivable
|
| | | | 37,479 | | |
Due from/(to) factor
|
| | | | (312,063) | | |
Inventory
|
| | | | 3,303,660 | | |
Prepaid expenses
|
| | | | 165,856 | | |
Deposits
|
| | | | 187,493 | | |
Property, equipment and software
|
| | | | 1,215,748 | | |
Goodwill
|
| | | | 6,479,218 | | |
Intangible assets (Note 6)
|
| | | | 8,600,000 | | |
Accounts payable
|
| | | | (3,397,547) | | |
Accrued expenses and other liabilities
|
| | | | (886,757) | | |
Purchase price consideration
|
| | | $ | 15,500,000 | | |
| | |
Year Ended December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Net revenues
|
| | | $ | 7,259,260 | | | | | $ | 30,133,934 | | |
Net loss
|
| | | $ | (12,786,695) | | | | | $ | (11,868,423) | | |
Net loss per common share
|
| | | $ | (19.25) | | | | | $ | (17.87) | | |
| | |
December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Outstanding receivables: | | | | | | | | | | | | | |
Without recourse
|
| | | $ | 151,158 | | | | | $ | — | | |
With recourse
|
| | | | 42,945 | | | | | | — | | |
Advances
|
| | | | 56,246 | | | | | | — | | |
Credits due customers
|
| | | | (40,316) | | | | | | — | | |
| | | | $ | 210,033 | | | | | $ | — | | |
| | |
Gross
Amount |
| |
Accumulated
Amortization |
| |
Carrying
Value |
| |||||||||
Amortized: | | | | | | | | | | | | | | | | | | | |
Customer relationships
|
| | | $ | 1,100,000 | | | | | $ | (320,833) | | | | | $ | 779,167 | | |
| | | | | 1,100,000 | | | | | | (320,833) | | | | | | 779,167 | | |
Indefinite-lived: | | | | | | | | | | | | | | | | | | | |
Brand name
|
| | | | 6,715,500 | | | | | | — | | | | | | 6,715,500 | | |
| | | | $ | 7,815,500 | | | | | $ | (320,833) | | | | | $ | 7,494,667 | | |
| Year Ending December 31, | | | | | | | |
|
2021
|
| | | | 366,667 | | |
|
2022
|
| | | | 366,667 | | |
|
2023
|
| | | | 45,833 | | |
| | | | | $ | 779,167 | | |
| | |
December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Accrued expenses
|
| | | $ | 92,074 | | | | | $ | 188,341 | | |
Reserve for returns
|
| | | | 5,229 | | | | | | 100,000 | | |
Payroll related liabilities
|
| | | | 843,704 | | | | | | 412,155 | | |
Sales tax liability
|
| | | | 196,410 | | | | | | 156,707 | | |
Other liabilities
|
| | | | 108,230 | | | | | | 264,114 | | |
| | | | $ | 1,245,646 | | | | | $ | 1,121,317 | | |
| | |
Year Ended December 31,
|
| |||
| | |
2020
|
| |
2019
|
|
Risk Free Interest Rate
|
| |
0.59 – 1.59%
|
| |
1.47 – 2.49%
|
|
Expected Dividend Yield
|
| |
0.00%
|
| |
0.00%
|
|
Expected Volatility
|
| |
58.0 – 100%
|
| |
58.0 – 100%
|
|
Expected Life (years)
|
| |
10.00
|
| |
5.00
|
|
| | |
Common
Stock Warrants |
| |
Weighted
Average Exercise Price |
| ||||||
Outstanding – December 31, 2018
|
| | | | 268,656 | | | | | $ | 2.50 | | |
Granted
|
| | | | 149,946 | | | | | | 3.28 | | |
Exercised
|
| | | | — | | | | | | — | | |
Forfeited
|
| | | | (640) | | | | | | — | | |
Outstanding – December 31, 2019
|
| | | | 417,962 | | | | | $ | 2.81 | | |
Granted
|
| | | | 496,577 | | | | | | 2.53 | | |
Exercised
|
| | | | — | | | | | | — | | |
Forfeited
|
| | | | — | | | | | | — | | |
Outstanding – December 31, 2020
|
| | | | 914,539 | | | | | $ | 2.66 | | |
Exercisable at December 31, 2020
|
| | | | 914,539 | | | | | $ | 2.66 | | |
| | |
2019
|
| |||
Risk Free Interest Rate
|
| | | | 2.49% | | |
Expected Dividend Yield
|
| | | | 0.00% | | |
Expected Volatility
|
| | | | 58.00% | | |
Expected Life (years)
|
| | | | 5.00 | | |
| | |
Preferred
Stock Warrants |
| |
Weighted
Average Exercise Price |
| ||||||
Outstanding – December 31, 2018
|
| | | | 545,473 | | | | | $ | 0.47 | | |
Granted
|
| | | | 261,430 | | | | | | 0.53 | | |
Exercised
|
| | | | — | | | | | | — | | |
Forfeited
|
| | | | — | | | | | | — | | |
Outstanding – December 31, 2019
|
| | | | 806,903 | | | | | $ | 0.49 | | |
Exercised
|
| | | | — | | | | | | — | | |
Forfeited
|
| | | | — | | | | | | — | | |
Outstanding – December 31, 2020
|
| | | | 806,903 | | | | | $ | 0.49 | | |
Exercisable at December 31, 2020
|
| | | | 806,903 | | | | | $ | 0.49 | | |
| | |
Options
|
| |
Weighted
Average Exercise Price |
| ||||||
Outstanding – December 31, 2018
|
| | | | 1,136,091 | | | | | $ | 2.34 | | |
Granted
|
| | | | 168,525 | | | | | | 3.28 | | |
Exercised
|
| | | | — | | | | | | — | | |
Forfeited
|
| | | | (220,401) | | | | | | — | | |
Outstanding – December 31, 2019
|
| | | | 1,084,215 | | | | | $ | 2.50 | | |
Granted
|
| | | | 91,688 | | | | | | 0.94 | | |
Exercised
|
| | | | — | | | | | | — | | |
Forfeited
|
| | | | (12,800) | | | | | | 3.28 | | |
Outstanding – December 31, 2020
|
| | | | 1,163,103 | | | | | $ | 2.34 | | |
Exercisable at December 31, 2020
|
| | | | 880,955 | | | | | $ | 2.34 | | |
Weighted average grant date fair value of options granted during period
|
| | | | | | | | | $ | 0.500 | | |
Weighted average duration (years) to expiration of outstanding options
at December 31, 2020 |
| | | | | | | | | | 6.02 | | |
| | |
Year Ended December 31,
|
| |||
| | |
2020
|
| |
2019
|
|
Risk Free Interest Rate
|
| |
0.42% – 0.51%
|
| |
1.59% – 2.55%
|
|
| | |
Year Ended December 31,
|
| |||
| | |
2020
|
| |
2019
|
|
Expected Dividend Yield
|
| |
0%
|
| |
0%
|
|
Expected Volatility
|
| |
58%
|
| |
58%
|
|
Expected Life (years)
|
| |
6.25
|
| |
6.25
|
|
Weighted Average fair value of stock options granted
|
| |
$0.50
|
| |
$0.26
|
|
| | |
December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Deferred tax assets: | | | | | | | | | | | | | |
Net operating loss carryforwards
|
| | | $ | 9,134,447 | | | | | $ | 6,060,102 | | |
Stock-based compensation
|
| | | | 40,467 | | | | | | 36,829 | | |
Deferred tax liabilities: | | | | | | | | | | | | | |
Depreciation timing differences
|
| | | | (5,103) | | | | | | (5,103) | | |
Other
|
| | | | (41,198) | | | | | | (44,711) | | |
Valuation allowance
|
| | | | (9,128,614) | | | | | | (6,047,117) | | |
Net deferred tax assets
|
| | | $ | — | | | | | $ | — | | |
| | |
Pages
|
| |||
| | | | F-34 | | | |
| | | | F-37 | | | |
| | | | F-38 | | | |
| | | | F-39 | | | |
| | | | F-40 | | | |
| | | | F-41 | | |
| | |
2019
|
| |
2018
|
| ||||||
Assets | | | | | | | | | |||||
Current assets:
|
| | | | | | | | | | | | |
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
| | | $ | 358,726 | | | | | $ | 962,313 | | |
Due from factor, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
| | | | — | | | | | | 1,312,743 | | |
Accounts receivable, net of allowance of $155,973 and $257,140 . . . . . . . . . .
|
| | | | 261,190 | | | | | | 456,510 | | |
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
| | | | 3,038,185 | | | | | | 3,643,298 | | |
Prepaid and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
| | | | 178,888 | | | | | | 236,746 | | |
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
| | | | 3,836,989 | | | | | | 6,611,610 | | |
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
| | | | 1,265,152 | | | | | | 1,242,158 | | |
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
| | | | 151,049 | | | | | | 240,919 | | |
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
| | | $ | 5,253,190 | | | | | $ | 8,094,687 | | |
Liabilities and members’ equity (deficit) | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
| | | $ | 3,462,200 | | | | | $ | 2,593,733 | | |
Due to factor, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
| | | | 101,251 | | | | | | — | | |
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
| | | | 595,611 | | | | | | 545,176 | | |
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
| | | | 4,159,062 | | | | | | 3,138,909 | | |
Deferred rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
| | | | 264,683 | | | | | | 184,461 | | |
Notes payable – related party member . . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
| | | | 850,000 | | | | | | — | | |
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
| | | | 5,273,745 | | | | | | 3,323,370 | | |
Members’ equity (deficit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
| | | | (20,555) | | | | | | 4,771,317 | | |
Total liabilities and members’ equity (deficit) . . . . . . . . . . . . . . . . . . . . . .
|
| | | $ | 5,253,190 | | | | | $ | 8,094,687 | | |
| | |
2019
|
| |
2018
|
| ||||||
Net sales
|
| | | $ | 27,099,718 | | | | | $ | 29,037,497 | | |
Cost of sales
|
| | | | 12,663,514 | | | | | | 13,451,654 | | |
Gross profit
|
| | | | 14,436,204 | | | | | | 15,585,843 | | |
Operating expenses: | | | | | | | | | | | | | |
Design, selling, and shipping
|
| | | | 4,535,276 | | | | | | 4,702,589 | | |
General and administrative
|
| | | | 14,524,832 | | | | | | 13,054,218 | | |
Total operating expenses
|
| | | | 19,060,108 | | | | | | 17,756,807 | | |
Loss from operations
|
| | | | (4,623,904) | | | | | | (2,170,964) | | |
Other expense: | | | | | | | | | | | | | |
Loss on disposal of property and equipment
|
| | | | 49,558 | | | | | | 506,280 | | |
Interest expense, net
|
| | | | 103,520 | | | | | | 25,319 | | |
Total other expense
|
| | | | 153,078 | | | | | | 531,599 | | |
Loss before provision for income taxes
|
| | | | (4,776,982) | | | | | | (2,702,563) | | |
Income tax expense
|
| | | | 14,890 | | | | | | 13,390 | | |
Net Loss
|
| | | $ | (4,791,872) | | | | | $ | (2,715,953) | | |
| | |
Members’
Equity (Deficit) |
| |||
December 31, 2017
|
| | | $ | 7,783,328 | | |
Distributions
|
| | | | (296,058) | | |
Net loss
|
| | | | (2,715,953) | | |
December 31, 2018
|
| | | | 4,771,317 | | |
Net loss
|
| | | | (4,791,872) | | |
December 31, 2019
|
| | | $ | (20,555) | | |
| | |
2019
|
| |
2018
|
| ||||||
| | |
(restated)
|
| | | | | | | |||
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | | | | |
Net loss
|
| | | $ | (4,791,872) | | | | | $ | (2,715,953) | | |
Adjustments to reconcile net loss to net cash used in operating activities:
|
| | | | | | | | | | | | |
Depreciation
|
| | | | 484,776 | | | | | | 358,526 | | |
Decrease in open credit reserve
|
| | | | 102,067 | | | | | | (395,488) | | |
Loss on sale of property and equipment
|
| | | | 49,558 | | | | | | 506,280 | | |
Changes in operating assets and liabilities:
|
| | | | | | | | | | | | |
Factor receivable
|
| | | | 321,888 | | | | | | 1,143,896 | | |
Accounts receivable
|
| | | | 195,320 | | | | | | (81,099) | | |
Inventory
|
| | | | 605,113 | | | | | | (171,393) | | |
Prepaid expenses and other current assets
|
| | | | 57,858 | | | | | | 212,700 | | |
Other assets
|
| | | | 89,870 | | | | | | (9,500) | | |
Accounts payable
|
| | | | 868,467 | | | | | | 685,642 | | |
Accrued liabilities
|
| | | | 50,435 | | | | | | (17,460) | | |
Deferred rent
|
| | | | 80,222 | | | | | | (139,901) | | |
Net cash used in operating activities
|
| | | | (1,886,298) | | | | | | (623,750) | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | | | | | |
Purchase of property and equipment
|
| | | | (557,328) | | | | | | (185,970) | | |
Net cash used in operating activities
|
| | | | (557,328) | | | | | | (185,970) | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | | | | |
Distributions to members
|
| | | | — | | | | | | (296,058) | | |
Proce eds – notes payable – related party member
|
| | | | 850,000 | | | | | | — | | |
Advances from Factor
|
| | | | 990,039 | | | | | | 645,572 | | |
Net cash provided by financing activities
|
| | | | 1,840,039 | | | | | | 349,514 | | |
Decrease in cash and cash equivalents
|
| | | | (603,587) | | | | | | (460,206) | | |
Cash and cash equivalents, beginning of year
|
| | | | 962,313 | | | | | | 1,422,519 | | |
Cash and cash equivalents, end of year
|
| | | $ | 358,726 | | | | | $ | 962,313 | | |
Supplemental disclosures of cash flow information:
|
| | | | | | | | | | | | |
Cash paid for interest
|
| | | $ | 91,887 | | | | | $ | 35,127 | | |
Cash paid for income taxes
|
| | | $ | 14,890 | | | | | $ | 13,390 | | |
Due to/from factor consist of the following at December 31, :
|
| |
2019
|
| |
2018
|
| ||||||
Outstanding receivables: | | | | | | | | | | | | | |
Without recourse
|
| | | $ | 2,058,298 | | | | | $ | 2,339,588 | | |
With recourse
|
| | | | 5,001 | | | | | | 45,599 | | |
Advances
|
| | | | (1,891,348) | | | | | | (901,309) | | |
Credits due customers
|
| | | | (273,202) | | | | | | (171,135) | | |
| | | | $ | (101,251) | | | | | $ | 1,312,743 | | |
Inventories consist of the following at December 31,:
|
| |
2019
|
| |
2018
|
| ||||||
Finished goods
|
| | | $ | 2,327,882 | | | | | $ | 2,766,476 | | |
Work-in process
|
| | | | 193,873 | | | | | | 351,246 | | |
Raw materials
|
| | | | 516,430 | | | | | | 525,576 | | |
| | | | $ | 3,038,185 | | | | | $ | 3,643,298 | | |
Property and equipment consists of the following at December 31,:
|
| |
2019
|
| |
2018
|
| ||||||
Machinery and equipment
|
| | | $ | 265,618 | | | | | $ | 312,846 | | |
Furniture and fixtures
|
| | | | 1,064,698 | | | | | | 962,218 | | |
Leasehold improvements
|
| | | | 1,307,976 | | | | | | 986,392 | | |
| | | | | 2,638,292 | | | | | | 2,261,456 | | |
Less accumulated depreciation and amortization
|
| | | | (1,373,140) | | | | | | (1,019,298) | | |
| | | | $ | 1,265,152 | | | | | $ | 1,242,158 | | |
| | | | | F-49 | | | |
| | | | | F-50 | | | |
| | | | | F-51 | | | |
| | | | | F-52 | | | |
| | | | | F-53 | | | |
| | | | | F-54 | | |
| | |
December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
ASSETS | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 51,315 | | | | | $ | 18,509 | | |
Accounts receivable, net
|
| | | | 38,689 | | | | | | 31,995 | | |
Inventory
|
| | | | 73,690 | | | | | | 42,643 | | |
Other current assets
|
| | | | 54,423 | | | | | | 129,162 | | |
Total current assets
|
| | | | 218,117 | | | | | | 222,309 | | |
Fixed assets, net
|
| | | | 138,040 | | | | | | 221,686 | | |
Intangible assets, net
|
| | | | 2,034 | | | | | | 2,206 | | |
Other assets
|
| | | | 4,416 | | | | | | 15,004 | | |
Total assets
|
| | | $ | 362,607 | | | | | $ | 461,205 | | |
LIABILITIES AND MEMBERS’ DEFICIT | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable
|
| | | $ | 187,516 | | | | | $ | 119,068 | | |
Accrued liabilities
|
| | | | 31,771 | | | | | | 21,297 | | |
Other current liabilities
|
| | | | 68,335 | | | | | | 66,437 | | |
Note payable, current portion
|
| | | | 60,941 | | | | | | 147,562 | | |
Related party notes payable, current portion
|
| | | | — | | | | | | 75,000 | | |
Deferred rent
|
| | | | 19,432 | | | | | | 23,161 | | |
Deferred revenue
|
| | | | 264,802 | | | | | | 286,255 | | |
Total current liabilities
|
| | | | 632,797 | | | | | | 738,780 | | |
Related party notes payable, net of current portion
|
| | | | 635,000 | | | | | | 425,000 | | |
Notes payable, net of current portion
|
| | | | 276,754 | | | | | | 49,441 | | |
Total liabilities
|
| | | | 1,544,551 | | | | | | 1,213,221 | | |
Commitments and contingencies (Note 8) | | | | | | | | | | | | | |
Members’ deficit: | | | | | | | | | | | | | |
Class A members units, $0.00001 par value, 100 authorized; 100 outstanding
at both December 31, 2020 and 2019 |
| | | | — | | | | | | — | | |
Class B members units, $0.00001 par value, 100 authorized; 87 and 100 outstanding at December 31, 2020 and 2019, respectively
|
| | | | — | | | | | | — | | |
Additional paid-in capital
|
| | | | 102,083 | | | | | | 112,565 | | |
Accumulated deficit
|
| | | | (1,284,027) | | | | | | (864,581) | | |
Total members’ deficit
|
| | | | (1,181,944) | | | | | | (752,016) | | |
Total liabilities and members’ deficit
|
| | | $ | 362,607 | | | | | $ | 461,205 | | |
| | |
Year Ended
December 31, |
| | | |||||||||||||
| | |
2020
|
| |
2019
|
| | | ||||||||||
Revenues
|
| | | $ | 2,542,721 | | | | | $ | 3,325,762 | | | | | ||||
Cost of goods sold
|
| | | | 897,873 | | | | | | 1,202,819 | | | | | ||||
Gross profit
|
| | | | 1,644,848 | | | | | | 2,122,943 | | | | | ||||
Operating expenses: | | | | | | | | | | | | | | | | | | | |
General and administrative
|
| | | | 1,044,397 | | | | | | 717,901 | | | | | ||||
Sales and marketing
|
| | | | 1,163,124 | | | | | | 1,577,478 | | | | | ||||
Total operating expenses
|
| | | | 2,207,521 | | | | | | 2,295,379 | | | | | ||||
Loss from operations
|
| | | | (562,673) | | | | | | (172,436) | | | | | ||||
Other income (expense): | | | | | | | | | | | | | | | | | | | |
Interest expense
|
| | | | (92,270) | | | | | | (53,955) | | | | | ||||
Gain on forgiveness of debt
|
| | | | 225,388 | | | | | | — | | | | | ||||
Other income
|
| | | | 10,109 | | | | | | 50,000 | | | | | ||||
Total other income (expense), net
|
| | | | 143,227 | | | | | | (3,955) | | | | | ||||
Provision for income taxes
|
| | | | — | | | | | | — | | | | | ||||
Net loss
|
| | | $ | (419,446) | | | | | $ | (176,391) | | | | |
| | |
Class A
Members’ Units |
| |
Class B
Members’ Units |
| |
Additional
Paid-in Capital |
| |
Accumulated
Deficit |
| |
Total
Members’ Deficit |
| |||||||||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| ||||||||||||||||||||||||||||||
Balances at December 31, 2018
|
| | | | 100 | | | | | $ | — | | | | | | 100 | | | | | $ | — | | | | | $ | 112,565 | | | | | $ | (688,190) | | | | | $ | (575,625) | | |
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (176,391) | | | | | | (176,391) | | |
Balances at December 31, 2019
|
| | | | 100 | | | | | $ | — | | | | | | 100 | | | | | $ | — | | | | | $ | 112,565 | | | | | $ | (864,581) | | | | | $ | (752,016) | | |
Contributions
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 771 | | | | | | — | | | | | | 771 | | |
Repurchase of members’ units
|
| | | | — | | | | | | — | | | | | | (13) | | | | | | — | | | | | | (11,253) | | | | | | — | | | | | | (11,253) | | |
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (419,446) | | | | | | (419,446) | | |
Balances at December 31, 2020
|
| | | | 100 | | | | | $ | — | | | | | | 87 | | | | | $ | — | | | | | $ | 102,083 | | | | | $ | (1,284,027) | | | | | $ | (1,181,944) | | |
| | |
Year Ended
December 31, |
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Cash flows from operating activities: | | | | | | | | | | | | | |
Net loss
|
| | | $ | (419,446) | | | | | $ | (176,391) | | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 149,568 | | | | | | 82,422 | | |
Gain on forgiveness of note payable
|
| | | | (225,388) | | | | | | — | | |
Bad debt expense
|
| | | | 42,078 | | | | | | — | | |
Changes in operating assets and liabilities:
|
| | | | | | | | | | | | |
Accounts receivable, net
|
| | | | (48,772) | | | | | | 968 | | |
Inventory
|
| | | | (31,047) | | | | | | (17,577) | | |
Deposits
|
| | | | — | | | | | | (5,438) | | |
Other assets
|
| | | | 85,327 | | | | | | (66,659) | | |
Accounts payable
|
| | | | 68,448 | | | | | | 79,266 | | |
Accrued expenses and other current liabilities
|
| | | | 12,372 | | | | | | (12,130) | | |
Deferrent rent
|
| | | | (3,729) | | | | | | 12,784 | | |
Deferred revenue
|
| | | | (21,453) | | | | | | 124,162 | | |
Net cash provided by (used in) operating activities
|
| | | | (392,042) | | | | | | 21,407 | | |
Cash flows from investing activities: | | | | | | | | | | | | | |
Purchases of property and equipment and intangibles
|
| | | | (65,750) | | | | | | (254,437) | | |
Net cash used in investing activities
|
| | | | (65,750) | | | | | | (254,437) | | |
Cash flows from financing activities: | | | | | | | | | | | | | |
Proceeds from related party notes payable
|
| | | | 210,000 | | | | | | 200,000 | | |
Proceeds from notes payable
|
| | | | 382,600 | | | | | | 200,000 | | |
Principal payments on line of credit
|
| | | | — | | | | | | (160,000) | | |
Proceeds from line of credit
|
| | | | 125,000 | | | | | | — | | |
Principal repayments of notes payable
|
| | | | (141,520) | | | | | | — | | |
Principal payments on related party notes payable
|
| | | | (75,000) | | | | | | (2,998) | | |
Member contributions
|
| | | | 771 | | | | | | — | | |
Repurchase of members’ units
|
| | | | (11,253) | | | | | | — | | |
Net cash provided by financing activities
|
| | | | 490,598 | | | | | | 237,002 | | |
Net increase in cash and cash equivalents
|
| | | | 32,806 | | | | | | 3,972 | | |
Cash and cash equivalents at beginning of year
|
| | | | 18,509 | | | | | | 14,537 | | |
Cash and cash equivalents at end of year
|
| | | $ | 51,315 | | | | | $ | 18,509 | | |
Supplemental disclosure of cash flow information: | | | | | | | | | | | | | |
Cash paid for income taxes
|
| | | $ | — | | | | | $ | — | | |
Cash paid for interest
|
| | | $ | 82,270 | | | | | $ | 53,955 | | |
Non cash investing and financing activities: | | | | ||||||||||
Conversion of line of credit to note payable
|
| | | $ | 125,000 | | | | | | — | | |
| | |
December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Leasehold improvements and showrooms
|
| | | $ | 375,677 | | | | | $ | 309,928 | | |
Accumulated amortization
|
| | | | (237,637) | | | | | | (88,242) | | |
Fixed Assets, net
|
| | | $ | 138,040 | | | | | $ | 221,686 | | |
| | |
December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Note payable to bank, principal due November 27, 2020 bearing interest at 1.75% over prime (4.75% at December 31, 2019)
|
| | | $ | — | | | | | $ | 123,917 | | |
Note payable to bank, principal due December 2025, bearing interest at 5.526%
|
| | | | 125,000 | | | | | | — | | |
Note payable to majority owner, principal due on or before December 31, 2020, variable monthly payments, interest at 8.5%
|
| | | | — | | | | | | 75,000 | | |
Note payable to a bank, monthly installments of $2,279 through November 26, 2022, bearing interest at 5.85%
|
| | | | 55,483 | | | | | | 73,086 | | |
PPP and EIDL Loans (see below for terms)
|
| | | | 157,212 | | | | | | — | | |
Note payable to a company owned by the majority owner of the Company, due on or before July 10, 2022, bearing interest at 12%
|
| | | | 635,000 | | | | | | 425,000 | | |
| | | | $ | 972,695 | | | | | $ | 697,003 | | |
Year Ending December 31,
|
| | | | | | |
2021
|
| | | $ | 60,941 | | |
2022
|
| | | | 686.007 | | |
2023
|
| | | | 28.119 | | |
2024
|
| | | | 29,654 | | |
2025
|
| | | | 31,171 | | |
Thereafter
|
| | | | 136,803 | | |
| | | | | 972,695 | | |
Less: current portion of note payable
|
| | | | (60,941) | | |
Notes payable, long-term
|
| | | $ | 911,754 | | |
|
2021
|
| | | $ | 95,617 | | |
|
2022
|
| | | | 42,996 | | |
| | | | | $ | 138,613 | | |
|
SEC registration fee
|
| | | $ | 2,702 | | |
|
FINRA filing fee
|
| | | | 4,273 | | |
|
NasdaqCM listing fee
|
| | | | 50,000 | | |
|
Printing and engraving costs
|
| | | | 75,000 | | |
|
Legal fees and expenses
|
| | | | 500,000 | | |
|
Accounting fees and expenses
|
| | | | 150,000 | | |
|
Transfer Agent and Registrar fees
|
| | | | 10,000 | | |
|
Miscellaneous expenses
|
| | | | 8,025 | | |
|
Total
|
| | | | 800,000 | | |
Exhibit
Number |
| |
Description
|
|
10.19** | | | | |
10.20** | | | | |
10.21** | | | | |
10.22** | | | | |
10.23** | | | | |
10.24** | | | | |
10.25** | | | Lease Agreement among 45th Street, LLC, Sister Sam, LLC and Bailey 44, LLC dated January 17, 2013 | |
10.26** | | | Amendment to Lease Agreement among 45th Street, LLC, Sister Sam, LLC and Bailey 44, LLC dated February 20, 2018 | |
10.27** | | | | |
10.28** | | | | |
10.29** | | | | |
10.30** | | | | |
21.1**
|
| | | |
23.1 | | | | |
23.2 | | | | |
23.3 | | | | |
23.4 | | | | |
23.5** | | | Consent of Moss Adams LLP for Bailey 44, LLC | |
24.1** | | | | |
99.1(a)** | | | | |
99.1(b)** | | | |
|
Signature
|
| |
Title
|
| |
Date
|
|
|
/s/ John Hilburn Davis IV
John Hilburn Davis IV
|
| |
President and Chief Executive Officer
(Principal Executive Officer) |
| |
May 12, 2021
|
|
|
*
Reid Yeoman
|
| |
Chief Financial Officer
(Principal financial and accounting officer) |
| |
May 12, 2021
|
|
|
*
Mark T. Lynn
|
| | Director | | |
May 12, 2021
|
|
|
*
Trevor Pettennude
|
| | Director | | |
May 12, 2021
|
|
|
*By
/s/ John Hilburn Davis IV
John Hilburn Davis IV
|
| | Attorney-in-fact | | |
Exhibit 3.3
STATE OF DELAWARE
SIXTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
DIGITAL BRANDS GROUP, INC.
DIGITAL BRANDS GROUP, INC., (the “Corporation”), a corporation organized and existing under the provisions of the General Corporation Law of the State of Delaware (the “DGCL”), does hereby certify that:
A. The name of this corporation is Digital Brands Group, Inc., and that this corporation was originally incorporated pursuant to the General Corporation Law on January 30, 2013, under the name Denim.LA, Inc. An Amended and Restated Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on February 12, 2020, which restated and amended the Certificate of Incorporation in its entirety, and on December 31, 2020, the Company filed a certificate of amendment changing its name from Denim.LA, Inc. to Digital Brands Group, Inc. (as may be further amended from time to time, the “Amended and Restated Certificate of Incorporation”).
B. This Sixth Amended and Restated Certificate of Incorporation was duly adopted in accordance with Sections 242 and 245 of the General Corporation Law, and has been duly approved by the written consent of the stockholders of the Corporation in accordance with Section 228 of the General Corporation Law, and restates, integrates and further amends the provisions of the Corporation’s Amended and Restated Certificate of Incorporation.
C. The text of the certificate of incorporation of the Corporation is hereby amended and restated in its entirety to read as follows:
FIRST: The name of the corporation is Digital Brands Group, Inc. (hereinafter called the “Corporation”).
SECOND: The address of the registered office of the Corporation in the State of Delaware is 1209 Orange Street in the City of Wilmington, County of New Castle, Delaware 19801. The name of its registered agent at such address is National Registered Agents, Inc.
THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized and incorporated under the DGCL or any applicable successor act thereto, as the same may be amended from time to time.
FOURTH: Upon this Sixth Amended and Restated Certificate of Incorporation (as amended or restated from time to time, this “Certificate of Incorporation”) becoming effective pursuant to the DGCL (the “Effective Time”), the total number of shares of capital stock which the Corporation has authority to issue is 210,000,000 consisting of: 200,000,000 shares of Common Stock, par value $0.0001 per share (“Common Stock”); and 10,000,000 shares of preferred stock, par value $0.0001 per share (“Preferred Stock”). Subject to the rights of the holders of any series of Preferred Stock, the number of authorized shares of any of the Common Stock or Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority in voting power of the capital stock of the Corporation entitled to vote thereon irrespective of the provisions of Section 242(b)(2) of the DGCL, and no vote of the holders of any of the Common Stock or Preferred Stock voting separately as a class shall be required therefor. Effective prior to the Effective Time, automatically and without any action on the part of the respective holders thereof, each 15.625 issued and outstanding shares of Common Stock shall be combined and reconstituted into one (1) fully paid and non-assessable share of issued and outstanding Common Stock (the “Reverse Stock Split”). The Reverse Stock Split shall be effected on a certificate-by-certificate basis, such that any fractional shares of Common Stock resulting from the Reverse Stock Split and held by a single record holder shall be aggregated. No fractional shares of Common Stock shall be issued upon the combination of any such shares in the Reverse Stock Split. If the Reverse Stock Split would result in the issuance of any fractional share, the Corporation shall, in lieu of issuing any fractional share, pay cash equal to the product of such fraction multiplied by the fair market value (as determined by the Corporation’s Board of Directors (the “Board”)) of one share of Common Stock as of the Effective Time (after giving effect to the foregoing Reverse Stock Split), rounded up to the nearest whole cent. The Reverse Stock Split shall occur whether or not the certificates representing such shares of Common Stock are surrendered to the Corporation or its transfer agent. All of the share amounts and par value of each share of capital stock following the Reverse Stock Split shall be as stated above in Article FOURTH.
A. Common Stock. The powers, preferences and relative participating, optional or other special rights, and the qualifications, limitations and restrictions of the Common Stock are as follows:
1. Ranking. The voting, dividend and liquidation rights of the holders of the Common Stock are subject to and qualified by the rights of the holders of the Preferred Stock of any series as may be designated by the Board upon any issuance of the Preferred Stock of any series.
2. Voting. Except as otherwise provided by law or by the resolution or resolutions providing for the issue of any series of Preferred Stock, the holders of outstanding shares of Common Stock shall have the exclusive right to vote for the election and removal of directors and for all other purposes. Notwithstanding any other provision of this Certificate of Incorporation to the contrary, the holders of Common Stock shall not be entitled to vote on any amendment to this Certificate of Incorporation (including any Preferred Stock Designation (as defined below)) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together as a class with the holders of one or more other such series, to vote thereon pursuant to this Certificate of Incorporation (including any Preferred Stock Designation (as defined below)) or the General Corporation Law.
3. Dividends. Subject to the rights of the holders of Preferred Stock, holders of shares of Common Stock shall be entitled to receive such dividends and distributions and other distributions in cash, stock or property of the Corporation when, as and if declared thereon by the Board from time to time out of assets or funds of the Corporation legally available therefor.
2
4. Liquidation. Subject to the rights of the holders of Preferred Stock, shares of Common Stock shall be entitled to receive the assets and funds of the Corporation available for distribution in the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary. A liquidation, dissolution or winding up of the affairs of the Corporation, as such terms are used in this Section A.4., shall not be deemed to be occasioned by or to include any consolidation or merger of the Corporation with or into any other person or a sale, lease, exchange or conveyance of all or a part of its assets.
B. Preferred Stock. Shares of Preferred Stock may be issued from time to time in one or more series. The Board is hereby authorized to provide by resolution or resolutions from time to time for the issuance, out of the unissued shares of Preferred Stock, of one or more series of Preferred Stock, without stockholder approval, by filing a certificate pursuant to the applicable law of the State of Delaware (the “Preferred Stock Designation”), setting forth such resolution and, with respect to each such series, establishing the number of shares to be included in such series, and fixing the voting powers, full or limited, or no voting power of the shares of such series, and the designation, preferences and relative, participating, optional or other special rights, if any, of the shares of each such series and any qualifications, limitations or restrictions thereof. The powers, designation, preferences and relative, participating, optional and other special rights of each series of Preferred Stock, and the qualifications, limitations and restrictions thereof, if any, may differ from those of any and all other series at any time outstanding. The authority of the Board with respect to each series of Preferred Stock shall include, but not be limited to, the determination of the following:
1. | the designation of the series, which may be by distinguishing number, letter or title; |
2. | the number of shares of the series, which number the Board may thereafter (except where otherwise provided in the Preferred Stock Designation) increase or decrease (but not below the number of shares thereof then outstanding); |
3. | the amounts or rates at which dividends will be payable on, and the preferences, if any, of shares of the series in respect of dividends, and whether such dividends, if any, shall be cumulative or noncumulative; |
4. | the dates on which dividends, if any, shall be payable; |
5. | the redemption rights and price or prices, if any, for shares of the series; |
6. | the terms and amount of any sinking fund, if any, provided for the purchase or redemption of shares of the series; |
7. | the amounts payable on, and the preferences, if any, of shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation; |
3
8. | whether the shares of the series shall be convertible into or exchangeable for, shares of any other class or series, or any other security, of the Corporation or any other corporation, and, if so, the specification of such other class or series or such other security, the conversion or exchange price or prices or rate or rates, any adjustments thereof, the date or dates at which such shares shall be convertible or exchangeable and all other terms and conditions upon which such conversion or exchange may be made; |
9. | restrictions on the issuance of shares of the same series or any other class or series; |
10. | the voting rights, if any, of the holders of shares of the series generally or upon specified events; and |
11. | any other powers, preferences and relative, participating, optional or other special rights of each series of Preferred Stock, and any qualifications, limitations or restrictions of such shares, |
all as may be determined from time to time by the Board and stated in the resolution or resolutions providing for the issuance of such Preferred Stock.
Without limiting the generality of the foregoing, the resolutions providing for issuance of any series of Preferred Stock may provide that such series shall be superior or rank equally or be junior to any other series of Preferred Stock to the extent permitted by law.
FIFTH: This Article FIFTH is inserted for the management of the business and for the conduct of the affairs of the Corporation.
A. General Powers. The business and affairs of the Corporation shall be managed by or under the direction of the Board, except as otherwise provided by law.
B. Number of Directors; Election of Directors. Subject to the rights of holders of any series of Preferred Stock to elect directors, the number of directors of the Corporation shall be fixed from time to time solely by the Board. No decrease in the number of directors constituting the Board shall shorten the term of any incumbent director.
C. Vacancies. Subject to the rights of holders of any series of Preferred Stock, any newly created directorship that results from an increase in the number of directors or any vacancy on the Board that results from the death, disability, resignation, disqualification or removal of any director or from any other cause shall be filled solely by the affirmative vote of a majority of the total number of directors then in office, even if less than a quorum, or by a sole remaining director and shall not be filled by the stockholders. Any director elected to fill a vacancy not resulting from an increase in the number of directors shall hold office for the remaining term of his or her predecessor.
D. Removal. Any director or the entire Board may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of at least 66 2/3% in voting power of the capital stock of the Corporation entitled to vote thereon.
4
SIXTH: Unless and except to the extent that the Bylaws shall so require, the election of directors of the Corporation need not be by written ballot.
SEVENTH: To the fullest extent permitted by the DGCL as it now exists and as it may hereafter be amended, no director of the Corporation shall be personally liable to the Corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director; provided, however, that nothing contained in this Article SEVENTH shall eliminate or limit the liability of a director (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to the provisions of Section 174 of the DGCL, or (iv) for any transaction from which the director derived an improper personal benefit. No repeal or modification of this Article SEVENTH shall apply to or have any adverse effect on any right or protection of, or any limitation of the liability of, a director of the Corporation existing at the time of such repeal or modification with respect to acts or omissions occurring prior to such repeal or modification.
EIGHTH: The Corporation shall indemnify, and advance expenses to, to the fullest extent permitted by law, any person who was or is a party to or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of the fact that the person is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise.
NINTH: Subject to the terms of any series of Preferred Stock or unless otherwise approved in advance by the Board, any action required or permitted to be taken by the stockholders of the Corporation must be effected at an annual or special meeting of the stockholders called in accordance with the Bylaws and may not be effected by written consent in lieu of a meeting.
TENTH: Special meetings of stockholders for any purpose or purposes may be called at any time by the majority of the directors then in office, the Chairman of the Board or the Chief Executive Officer or President of the Corporation or stockholders of record holding an aggregate of at least 25% in voting power of the then outstanding shares of stock of the Corporation entitled to vote, and may not be called by another other person or persons. Business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in the notice of meeting.
ELEVENTH: If any provision or provisions of this Certificate of Incorporation shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever: (i) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Certificate of Incorporation (including, without limitation, each portion of any paragraph of this Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (ii) to the fullest extent possible, the provisions of this Certificate of Incorporation (including, without limitation, each such portion of any paragraph of this Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Corporation to protect its directors, officers, employees and agents from personal liability in respect of their good faith service or for the benefit of the Corporation to the fullest extent permitted by law.
5
The Corporation reserves the right at any time from time to time to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, and any other provisions authorized by the DGCL may be added or inserted, in the manner now or hereafter prescribed by law; and all rights, preferences and privileges of whatsoever nature conferred upon stockholders, directors or any other persons whomsoever by and pursuant to this Certificate of Incorporation in its present form or as hereafter amended are granted subject to the right reserved in this Article ELEVENTH. Notwithstanding any other provision of this Certificate of Incorporation or any provision of law that might otherwise permit a lesser vote or no vote, but in addition to any affirmative vote of the holders of any series of Preferred Stock required by law, by this Certificate of Incorporation or by any Preferred Stock Designation, the affirmative vote of the holders of a majority in voting power of the stock of the Corporation entitled to vote thereon shall be required to amend, alter, change or repeal any provision of this Certificate of Incorporation, or to adopt any new provision of this Certificate of Incorporation; provided, however, that the affirmative vote of the holders of at least 66 2/3% in voting power of the stock of the Corporation entitled to vote thereon shall be required to amend, alter, change or repeal, or adopt any provision inconsistent with, any of Article FIFTH, Article SEVENTH, Article EIGHTH, Article NINTH, Article TENTH, Article TWELFTH, Article THIRTEENTH, and this sentence of this Certificate of Incorporation, or in each case, the definition of any capitalized terms used therein or any successor provision (including, without limitation, any such article or section as renumbered as a result of any amendment, alteration, change, repeal or adoption of any other provision of this Certificate of Incorporation). Any amendment, repeal or modification of any of Article SEVENTH, Article EIGHTH, and this sentence shall not adversely affect any right or protection of any person existing thereunder with respect to any act or omission occurring prior to such repeal or modification.
TWELFTH: In furtherance and not in limitation of the powers conferred upon it by law, the Board is expressly authorized and empowered to adopt, amend and repeal the Bylaws by the affirmative vote of a majority of the Board. Notwithstanding any other provision of this Certificate of Incorporation or any provision of law that might otherwise permit a lesser vote or no vote, but in addition to any affirmative vote of the holders of any series of Preferred Stock required by law, by this Certificate of Incorporation or by any Preferred Stock Designation, the Bylaws may also be amended, altered or repealed and new Bylaws may be adopted by the affirmative vote of the holders of at least a majority in voting power of the stock of the Corporation entitled to vote thereon.
THIRTEENTH:
Forum Selection. Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum for (1) any derivative action or proceeding brought on behalf of the Corporation, (2) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (3) any action arising pursuant to any provision of the DGCL or this Certificate of Incorporation or the Bylaws (as either may be amended from time to time), (4) any action or proceeding to interpret, apply, enforce or determine the validity of this Certificate of Incorporation or the Bylaws, (5) any action or proceeding as to which the DGCL confers jurisdiction to the Court of Chancery of the State of Delaware or (6) any action asserting a claim governed by the internal affairs doctrine. Unless the Corporation consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended. Any person or entity purchasing or otherwise acquiring or holding any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article THIRTEENTH. This Article THIRTEENTH shall not apply to suits brought to enforce a duty or liability created by the Securities Exchange Act of 1934, as amended, or any other claim for which the federal courts have exclusive jurisdiction.
6
E. Personal Jurisdiction. If any action the subject matter of which is within the scope of Section A immediately above is filed in a court other than a court located within the State of Delaware (a “Foreign Action”) in the name of any stockholder, such stockholder shall be deemed to have consented to (i) the personal jurisdiction of the state and federal courts located within the State of Delaware in connection with any action brought in any such court to enforce Section A immediately above (an “FSC Enforcement Action”) and (ii) having service of process made upon such stockholder in any such FSC Enforcement Action by service upon such stockholder's counsel in the Foreign Action as agent for such stockholder.
[Remainder of Page Intentionally Left Blank]
7
IN WITNESS WHEREOF, the Corporation has caused this Sixth Amended and Restated Certificate of Incorporation to be signed by the undersigned, the Chief Executive Officer and President of the Corporation, as of May __, 2021.
John Hilburn Davis, IV | |
Chief Executive Officer and President |
8
Exhibit 3.5
AMENDED AND RESTATED BYLAWS
OF
DIGITAL BRANDS GROUP, INC.
ARTICLE I
STOCKHOLDERS
1.1 Place of Meetings. All meetings of stockholders shall be held at such place (if any) within or without the State of Delaware as may be designated from time to time by the Board of Directors or the President and Chief Executive Officer. The Board of Directors may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211(a)(2) of the Delaware General Corporation Law. In the absence of any such designation or determination, stockholders’ meetings shall be held at the registered office of the corporation.
1.2 Annual Meeting. The annual meeting of stockholders for the election of directors and for the transaction of such other business as may properly be brought before the meeting shall be held on such date, time and place, either within or without the State of Delaware, as may be designation by resolution of the Board of Directors each year
1.3 Special Meetings. Special meetings of stockholders may be called for any purpose or purposes prescribed in the notice of the meeting at any time by the majority of the Board of Directors then in office, the Chairman of the Board, the Chief Executive Officer or President or the stockholders of record holding an aggregate of at least 25% in voting power of the then outstanding shares of stock of the corporation entitled to vote, and may not be called by any other person or persons. In lieu of holding a special meeting of stockholders at a designated place, the Board of Directors may, in its sole discretion, determine that any special meeting of stockholders may be held solely by means of remote communication. Business transacted at any special meeting of stockholders shall be confined to the purpose or purposes stated in the notice of meeting. Upon request in writing sent by registered mail to the President or Chief Executive Officer by any stockholder or stockholders entitled to request a special meeting of stockholders pursuant to this Section 1.3, and containing the information required pursuant to Sections 1.11 and 2.15, as applicable, the Board of Directors shall determine a place and time for such meeting, which time shall be not less than 10 nor more than 30 days after the receipt of such request, and a record date for the determination of stockholders entitled to vote at such meeting shall be fixed by the Board of Directors, in advance, which shall not be more that 15 days nor less than 10 days before the date of such meeting. Following such receipt of a request and determination by the Secretary of the validity thereof, it shall be the duty of the Secretary to present the request to the Board of Directors, and upon Board action as provided in this Section 1.3, to cause notice to be given to the stockholders entitled to vote at such meeting, in the manner set forth in Section 1.4, hereof, that a meeting will be held at the place, if any, and time so determined, for the purposes set forth in the stockholder’s request, as well as any purpose or purposes determined by the Board of Directors in accordance with this Section 1.3.
1.4 Notice of Meetings.
(a) Written notice of each meeting of stockholders, whether annual or special, shall be given not less than 10 nor more than 60 days before the date on which the meeting is to be held, to each stockholder entitled to vote at such meeting, except as otherwise provided herein or as required by law (meaning here and hereafter, as required from time to time by the Delaware General Corporation Law or the Certificate of Incorporation of the corporation, as amended from time to time (the “Certificate of Incorporation”). The notice of any meeting shall state the place, if any, date and hour of the meeting, and the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting. The notice of a special meeting shall state, in addition, the purpose or purposes for which the meeting is called. If mailed, notice is given when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the corporation.
(b) Notice to stockholders may be given by personal delivery, mail, or, with the consent of the stockholder entitled to receive notice, by facsimile or other means of electronic transmission. If mailed, such notice shall be delivered by postage prepaid envelope directed to each stockholder at such stockholder’s address as it appears in the records of the corporation and shall be deemed given when deposited in the United States mail. Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders may be given by electronic mail or other electronic transmission, in the manner provided in Section 232 of the Delaware General Corporation Law. An affidavit of the secretary or an assistant secretary or of the transfer agent or other agent of the corporation that the notice has been given by personal delivery, by mail, or by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
(c) Notice of any meeting of stockholders need not be given to any stockholder if waived by such stockholder either in a writing signed by such stockholder or by electronic transmission, whether such waiver is given before or after such meeting is held. If such a waiver is given by electronic transmission, the electronic transmission must either set forth or be submitted with information from which it can be determined that the electronic transmission was authorized by the stockholder.
1.5 Record Date for Stockholder Notice.
(a) In order that the corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date: (1) in the case of determination of stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, shall, unless otherwise required by law, not be more than 60 nor less than 10 days before the date of such meeting and, unless the Board of Directors determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for determining the stockholders entitled to vote at such meeting, the record date for determining the stockholders entitled to notice of such meeting shall also be the record date for determining the stockholders entitled to vote at such meeting; and (2) in the case of any other action, shall not be more than 60 days prior to such other action.
(b) If the Board of Directors does not so fixed a record date: (1) the record date for determining stockholders entitled to notice of and to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; and (2) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the determination of stockholders entitled to vote at the adjourned meeting, and in such case shall also fix as the record date for the stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for the determination of stockholders entitled to vote in accordance with the foregoing provisions of this Section 1.5 at the adjourned meeting.
1.6 Voting List. The officer who has charge of the stock ledger of the corporation shall prepare, at least 10 days before each meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order for each class of stock and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any such stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting, in the manner provided by law. The list shall also be produced and kept at the time and place of the meeting during the whole time of the meeting, and may be inspected by any stockholder who is present. This list shall determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them.
1.7 Quorum. Except as otherwise provided by law or these Bylaws, the holders of a majority of the shares of the capital stock of the corporation issued and outstanding and entitled to vote at the meeting, present in person or represented by proxy, shall constitute a quorum at all meetings for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum is not present or represented at any meeting of the stockholders, then either (a) the chairperson of the meeting or (b) holders of a majority of the shares of stock entitled to vote who are present, in person or by proxy, shall have the power to adjourn the meeting to another place, if any, date or time. Where a separate class vote by a class or classes or series is required, a majority of the shares of such class or classes or series present in person or represented by proxy shall constitute a quorum entitled to take action with respect to that vote on that matter.
1.8 Adjournments. When a meeting is adjourned to another place, date or time, written notice need not be given of the adjourned meeting if the date, time, and place, if any, thereof, and the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting, are announced at the meeting at which the adjournment is taken; provided, however, that if the date of any adjourned meeting is more than 30 days after the date for which the meeting was originally noticed, or if a new record date is fixed for the adjourned meeting, written notice of the place, if any, date, and time of the adjourned meeting and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting, shall be given in conformity herewith. At the adjourned meeting, the corporation may transact any business which might have been transacted at the original meeting.
1.9 Voting and Proxies. Each stockholder shall have one vote for each share of stock entitled to vote held of record by such stockholder unless otherwise provided by law or in the Certificate of Incorporation. Each stockholder of record entitled to vote at a meeting of stockholders may vote in person or may authorize any other person or persons to vote or act for him by written proxy executed by the stockholder or his authorized agent or by a transmission permitted by law and delivered to the Secretary of the corporation. A proxy shall be deemed signed if the stockholder’s name is placed on the proxy (whether by manual signature, typewriting, facsimile, electronic or telegraphic transmission or otherwise) by the stockholder or the stockholder’s attorney-in-fact, provided that such copy, facsimile transmission or other reproduction shall be a complete reproduction of the entire original writing or transmission. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212(e) of the Delaware General Corporation Law.
1.10 Action at Meeting. When a quorum is present at any meeting, all elections of directors shall be determined by a plurality of the votes cast by the stockholders entitled to vote at the election, and any other matter shall be determined by a majority in voting power of the shares entitled to vote on the matter (or if there are two or more classes of stock entitled to vote as separate classes, then in the case of each such class, a majority of the shares of each such class entitled to vote on the matter) shall decide such matter, except when a different vote is required by express provision of law, the Certificate of Incorporation or these Bylaws.
All voting, including on the election of directors, but excepting where otherwise required by law, may be by a voice vote; provided, however, that upon demand therefor by a stockholder entitled to vote or his or her proxy, a vote by ballot shall be taken. Each ballot shall state the name of the stockholder or proxy voting and such other information as may be required under the procedure established for the meeting. The corporation may, and to the extent required by law, shall, in advance of any meeting of stockholders, appoint one or more inspectors to act at the meeting and make a written report thereof. The corporation may designate one or more persons as an alternate inspector to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the person presiding at the meeting may, and to the extent required by law, shall, appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his duties, shall take and sign an oath to faithfully execute the duties of inspector with strict impartiality and according to the best of his or her ability.
1.11 Conduct of Business. At every meeting of the stockholders, the Chairman of the Board, or, in his or her absence, the President, or, in his or her absence, such other person as may be appointed by the Board of Directors, shall act as chairman. The Secretary of the corporation or a person designated by the chairman of the meeting shall act as secretary of the meeting. Unless otherwise approved by the chairman of the meeting, attendance at the stockholders’ meeting is restricted to stockholders of record, persons authorized in accordance with Section 1.9 of these Bylaws to act by proxy, and officers of the corporation.
The chairman of the meeting shall call the meeting to order, establish the agenda, and conduct the business of the meeting in accordance therewith or, at the chairman’s discretion, it may be conducted otherwise in accordance with the wishes of the stockholders in attendance. The date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at the meeting shall be announced at the meeting.
The chairman shall also conduct the meeting in an orderly manner, rule on the precedence of, and procedure on, motions and other procedural matters, and exercise discretion with respect to such procedural matters with fairness and good faith toward all those entitled to take part. Without limiting the foregoing, the chairman may (a) restrict attendance at any time to bona fide stockholders of record and their proxies and other persons in attendance at the invitation of the presiding officer or Board of Directors, (b) restrict use of audio or video recording devices at the meeting, and (c) impose reasonable limits on the amount of time taken up at the meeting on discussion in general or on remarks by any one stockholder. Should any person in attendance become unruly or obstruct the meeting proceedings, the chairman shall have the power to have such person removed from the meeting. Notwithstanding anything in the Bylaws to the contrary, no business shall be conducted at a meeting except in accordance with the procedures set forth in this Section 1.11. The chairman of a meeting may determine and declare to the meeting that any proposed item of business was not brought before the meeting in accordance with the provisions of this Section 1.11 and Section 1.10, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.
1.12 Stockholder Action Without Meeting. Subject to the terms of any series of Preferred Stock or unless otherwise approved in advance by the Board, any action required or permitted to be taken by the stockholders of the corporation must be effected at an annual or special meeting of the stockholders called in accordance with the Bylaws and may not be effected by written consent in lieu of a meeting.
1.13 Meetings by Remote Communication. If authorized by the Board of Directors, and subject to such guidelines and procedures as the Board may adopt, stockholders and proxy holders not physically present at a meeting of stockholders may, by means of remote communication, participate in the meeting and be deemed present in person and vote at the meeting, whether such meeting is to be held at a designated place or solely by means of remote communication, provided that (i) the corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxy holder, (ii) the corporation shall implement reasonable measures to provide such stockholders and proxy holders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings, and (iii) if any stockholder or proxy holder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action shall be maintained by the corporation.
ARTICLE II
BOARD OF DIRECTORS
2.1 General Powers. The business and affairs of the corporation shall be managed by or under the direction of a Board of Directors, who may exercise all of the powers of the corporation except as otherwise provided by law or the Certificate of Incorporation. In the event of a vacancy in the Board of Directors, the remaining directors, except as otherwise provided by law, may exercise the powers of the full Board until the vacancy is filled.
2.2 Number and Term of Office. The Board of Directors shall consist of one (1) or more members. Subject to the rights of the holders of any series of preferred stock to elect directors under specified circumstances, the number of directors shall be fixed from time to time solely by resolution of the majority of the Board of Directors. All directors shall hold office until the expiration of the term for which elected and until their respective successors are elected, except in the case of the death, resignation or removal of any director.
2.3 Vacancies and Newly Created Directorships. Subject to the rights of the holders of any series of Preferred Stock then outstanding, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification or other cause (including removal from office by a vote of the stockholders) may be filled only by the affirmative vote of a majority of the total number of directors then in office, though less than a quorum (and not by stockholders), or by the sole remaining director, or, to the extent required by the Certificate of Incorporation, and directors so chosen shall hold office for a term expiring at the next annual meeting of stockholders at which the term of office of the class to which they have been elected expires or until such director’s successor shall have been duly elected and qualified. No decrease in the number of authorized directors shall shorten the term of any incumbent director.
2.4 Resignation. Any director may resign by delivering notice in writing or by electronic transmission to the President, Chairman of the Board or Secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event.
2.5 Removal. Any director or the entire Board may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of at least 66 2/3% in voting power of the capital stock of the corporation entitled to vote thereon..
2.6 Regular Meetings. Regular meetings of the Board of Directors may be held without notice at such time and place, either within or without the State of Delaware, as shall be determined from time to time by the Board of Directors; provided that any director who is absent when such a determination is made shall be given notice of the determination. A regular meeting of the Board of Directors may be held without notice immediately after and at the same place as the annual meeting of stockholders.
2.7 Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board, the President or two or more directors and may be held at any time and place, within or without the State of Delaware.
2.8 Notice of Special Meetings. Notice of any special meeting of directors shall be given to each director by whom it is not waived by the Secretary or by the officer or one of the directors calling the meeting. Notice shall be duly given to each director by (i) giving notice to such director in person or by telephone, electronic transmission or voice message system at least 24 hours in advance of the meeting, (ii) sending a facsimile to his last known facsimile number, or delivering written notice by hand to his last known business or home address, at least 24 hours in advance of the meeting, or (iii) mailing written notice to his last known business or home address at least three days in advance of the meeting. A notice or waiver of notice of a meeting of the Board of Directors need not specify the purposes of the meeting. Unless otherwise indicated in the notice thereof, any and all business may be transacted at a special meeting.
2.9 Participation in Meetings by Telephone Conference Calls or Other Methods of Communication. Directors or any members of any committee designated by the directors may participate in a meeting of the Board of Directors or such committee by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation by such means shall constitute presence in person at such meeting.
2.10 Quorum. A majority of the total number of authorized directors shall constitute a quorum at any meeting of the Board of Directors. In the absence of a quorum at any such meeting, a majority of the directors present may adjourn the meeting from time to time without further notice other than announcement at the meeting, until a quorum shall be present. Interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or at a meeting of a committee which authorizes a particular contract or transaction.
2.11 Action at Meeting. At any meeting of the Board of Directors at which a quorum is present, the vote of a majority of those present shall be sufficient to take any action, unless a different vote is specified by law, the Certificate of Incorporation or these Bylaws. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for that meeting.
2.12 Action by Written Consent. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee of the Board of Directors may be taken without a meeting if all members of the Board or committee, as the case may be, consent to the action in writing or by electronic transmission, and the writings or electronic transmissions are filed with the minutes of proceedings of the Board or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.
2.13 Committees. The Board of Directors may designate one or more committees, each committee to consist of one or more of the directors of the corporation, with such lawfully delegated powers and duties as it therefor confers, to serve at the pleasure of the Board. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members of the committee present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors and subject to the provisions of the Delaware General Corporation Law, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation and may authorize the seal of the corporation to be affixed to all papers which may require it. Each such committee shall keep minutes and make such reports as the Board of Directors may from time to time request. Except as the Board of Directors may otherwise determine, any committee may make rules for the conduct of its business, but unless otherwise provided by such rules, its business shall be conducted as nearly as possible in the same manner as is provided in these Bylaws for the Board of Directors.
2.14 Compensation of Directors. Directors may be paid such compensation for their services and such reimbursement for expenses of attendance at meetings as the Board of Directors may from time to time determine. No such payment shall preclude any director from serving the corporation or any of its parent or subsidiary corporations in any other capacity and receiving compensation for such service.
2.15 Nomination of Director Candidates. Subject to the rights of holders of any class or series of Preferred Stock then outstanding, nominations for the election of Directors may be made by (i) the Board of Directors or a duly authorized committee thereof or (ii) any stockholder entitled to vote in the election of Directors.
ARTICLE III
OFFICERS
3.1 Enumeration. The officers of the corporation shall consist of a Chief Executive Officer, a President, a Secretary, a Treasurer, a Chief Financial Officer and such other officers with such other titles as the Board of Directors shall determine, including, at the discretion of the Board of Directors, a Chairman of the Board and one or more Vice Presidents and Assistant Secretaries. The Board of Directors may appoint such other officers as it may deem appropriate.
3.2 Election. Officers shall be elected annually by the Board of Directors at its first meeting following the annual meeting of stockholders. Officers may be appointed by the Board of Directors at any other meeting.
3.3 Qualification. No officer need be a stockholder. Any two or more offices may be held by the same person.
3.4 Tenure. Except as otherwise provided by law, by the Certificate of Incorporation or by these Bylaws, each officer shall hold office until his successor is elected and qualified, unless a different term is specified in the vote appointing him, or until his earlier death, resignation or removal.
3.5 Resignation and Removal. Subject to the rights (if any) of an officer under any contract of employment, any officer may be removed, either with or without cause, by an affirmative vote of the majority of the Board of Directors at any regular or special meeting of the board or, except in the case of an officer chosen by the Board of Directors, by any officer upon whom the power of removal is conferred by the Board of Directors.
Any officer may resign by delivering his written resignation to the corporation at its principal office or to the President or Secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event.
3.6 Chairman of the Board. The Board of Directors may appoint a Chairman of the Board. If the Board of Directors appoints a Chairman of the Board, he shall perform such duties and possess such powers as are assigned to him by the Board of Directors. Unless otherwise provided by the Board of Directors, he shall preside at all meetings of the Board of Directors.
3.7 Chief Executive Officer. The Chief Executive Officer of the corporation shall, subject to the direction of the Board of Directors, have general supervision, direction and control of the business and the officers of the corporation. He shall preside at all meetings of the stockholders and, in the absence or nonexistence of a Chairman of the Board, at all meetings of the Board of Directors. He shall have the general powers and duties of management usually vested in the chief executive officer of a corporation, including general supervision, direction and control of the business and supervision of other officers of the corporation, and shall have such other powers and duties as may be prescribed by the Board of Directors or these Bylaws.
3.8 President. Subject to the direction of the Board of Directors and such supervisory powers as may be given by these Bylaws or the Board of Directors to the Chairman of the Board or the Chief Executive Officer, if such titles be held by other officers, the President shall have general supervision, direction and control of the business and supervision of other officers of the corporation. Unless otherwise designated by the Board of Directors, the President shall be the Chief Executive Officer of the corporation. The President shall have such other powers and duties as may be prescribed by the Board of Directors or these Bylaws. He or she shall have power to sign stock certificates, contracts and other instruments of the corporation which are authorized and shall have general supervision and direction of all of the other officers, employees and agents of the corporation, other than the Chairman of the Board and the Chief Executive Officer.
3.9 Vice Presidents. Any Vice President shall perform such duties and possess such powers as the Board of Directors or the President may from time to time prescribe. In the event of the absence, inability or refusal to act of the President, the Vice President (or if there shall be more than one, the Vice Presidents in the order determined by the Board of Directors) shall perform the duties of the President and when so performing shall have at the powers of and be subject to all the restrictions upon the President. The Board of Directors may assign to any Vice President the title of Executive Vice President, Senior Vice President or any other title selected by the Board of Directors.
3.10 Secretary and Assistant Secretaries. The Secretary shall perform such duties and shall have such powers as the Board of Directors or the President may from time to time prescribe. In addition, the Secretary shall perform such duties and have such powers as are incident to the office of the Secretary, including, without limitation, the duty and power to give notices of all meetings of stockholders and special meetings of the Board of Directors, to keep a record of the proceedings of all meetings of stockholders and the Board of Directors, to maintain a stock ledger and prepare lists of stockholders and their addresses as required, to be custodian of corporate records and the corporate seal and to affix and attest to the same on documents.
Any Assistant Secretary shall perform such duties and possess such powers as the Board of Directors, the Chief Executive Officer, the President or the Secretary may from time to time prescribe. In the event of the absence, inability or refusal to act of the Secretary, the Assistant Secretary (or if there shall be more than one, the Assistant Secretaries in the order determined by the Board of Directors) shall perform the duties and exercise the powers of the Secretary.
In the absence of the Secretary or any Assistant Secretary at any meeting of stockholders or directors, the person presiding at the meeting shall designate a temporary secretary to keep a record of the meeting.
3.11 Treasurer. The Treasurer shall perform such duties and have such powers as are incident to the office of treasurer, including without limitation, the duty and power to keep and be responsible for all funds and securities of the corporation, to maintain the financial records of the corporation, to deposit funds of the corporation in depositories as authorized, to disburse such funds as authorized, to make proper accounts of such funds, and to render as required by the Board of Directors accounts of all such transactions and of the financial condition of the corporation.
3.12 Chief Financial Officer. The Chief Financial Officer shall perform such duties and shall have such powers as may from time to time be assigned to him by the Board of Directors, the Chief Executive Officer or the President. Unless otherwise designated by the Board of Directors, the Chief Financial Officer shall be the Treasurer of the corporation.
3.13 Salaries. Officers of the corporation shall be entitled to such salaries, compensation or reimbursement as shall be fixed or allowed from time to time by the Board of Directors.
3.14 Authority and Duties of Officers. In addition to the foregoing authority and duties, all officers of the corporation shall respectively have such authority and perform such duties in the management of the business of the corporation as may be designated from time to time by the Board of Directors or the stockholders
3.15 Delegation of Authority. The Board of Directors may from time to time delegate the powers or duties of any officer to any other officers or agents, notwithstanding any provision hereof.
ARTICLE IV
CAPITAL STOCK
4.1 Issuance of Stock. Subject to the provisions of the Certificate of Incorporation, the whole or any part of any unissued balance of the authorized capital stock of the corporation or the whole or any part of any unissued balance of the authorized capital stock of the corporation held in its treasury may be issued, sold, transferred or otherwise disposed of by vote of the Board of Directors in such manner, for such consideration and on such terms as the Board of Directors may determine.
4.2 Certificates of Stock. The shares of the corporation may be certificated or uncertificated, as provided under Delaware law, and shall be entered in the books of the corporation and recorded as they are issued. Any duly appointed officer of the corporation is authorized to sign share certificates. Any or all of the signatures on any certificate may be a facsimile or electronic signature. In case any officer, transfer agent or registrar who has signed or whose facsimile or electronic signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.
Each certificate for shares of stock which are subject to any restriction on transfer pursuant to the Certificate of Incorporation, the Bylaws, applicable securities laws or any agreement among any number of shareholders or among such holders and the corporation shall have conspicuously noted on the face or back of the certificate either the full text of the restriction or a statement of the existence of such restriction.
4.3 Transfers. Except as otherwise established by rules and regulations adopted by the Board of Directors, and subject to applicable law, shares of stock may be transferred on the books of the corporation: (i) in the case of shares represented by a certificate, by the surrender to the corporation or its transfer agent of the certificate representing such shares properly endorsed or accompanied by a written assignment or power of attorney properly executed, and with such proof of authority or authenticity of signature as the corporation or its transfer agent may reasonably require; and (ii) in the case of uncertificated shares, upon the receipt of proper transfer instructions from the registered owner thereof. Except as may be otherwise required by law, the Certificate of Incorporation or the Bylaws, the corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to vote with respect to such stock, regardless of any transfer, pledge or other disposition of such stock until the shares have been transferred on the books of the corporation in accordance with the requirements of these Bylaws.
4.4 Lost, Stolen or Destroyed Certificates. The corporation may issue a new certificate of stock in place of any previously issued certificate alleged to have been lost, stolen, or destroyed, or it may issue uncertificated shares if the shares represented by such certificate have been designated as uncertificated shares in accordance with Section 4.2, upon such terms and conditions as the Board of Directors may prescribe, including the presentation of reasonable evidence of such loss, theft or destruction and the giving of such indemnity as the Board of Directors may require for the protection of the corporation or any transfer agent or registrar.
4.5 Dividends. The directors of the corporation, subject to any restrictions contained in (a) the Delaware General Corporation Law or (b) the certificate of incorporation, may declare and pay dividends upon the shares of its capital stock. Dividends may be paid in cash, in property, or in shares of the corporation’s capital stock. The directors of the corporation may set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the corporation, and meeting contingencies.
4.6 Employee Stock Purchase and Option Plans. The corporation may adopt and carry out a stock purchase plan or agreement or stock option plan or agreement providing for the issue and sale for such consideration as may be fixed of its unissued shares, or of issued shares acquired or to be acquired, to one or more of the employees, officers or directors of the corporation or of a subsidiary or parent thereof or to a trustee on their behalf and for the payment for such shares in installments or at one time, and may provide for aiding any such persons in paying for such shares by compensation for services rendered, promissory notes or otherwise.
A stock purchase plan or agreement or stock option plan or agreement may include, among other features, the fixing of eligibility for participation therein, the class and price of shares to be issued or sold under the plan or agreement, the number of shares which may be subscribed for, the method of payment therefore, the reservation of title until full payment therefore, the effect of the termination of employment, an option or obligation on the part of the corporation to repurchase the shares upon termination of employment, subject to Delaware General Corporation Law, restrictions upon transfer of the shares and the time limits of and termination of the plan.
ARTICLE V
GENERAL PROVISIONS
5.1 Fiscal Year. The fiscal year of the corporation shall be as fixed by the Board of Directors.
5.2 Waiver of Notice. Whenever any notice whatsoever is required to be given by law, by the Certificate of Incorporation or by these Bylaws, a waiver of such notice either in writing signed by the person entitled to such notice or such person’s duly authorized attorney, or by electronic transmission or any other method permitted under the Delaware General Corporation Law, whether before, at or after the time stated in such waiver, or the appearance of such person or persons at such meeting in person or by proxy, shall be deemed equivalent to such notice. Neither the business nor the purpose of any meeting need be specified in such a waiver. Attendance at any meeting shall constitute waiver of notice except attendance for the sole purpose of objecting to the timeliness of notice.
5.3 Actions with Respect to Securities of Other Corporations. Except as the Board of Directors may otherwise designate, the Chief Executive Officer or President or any officer of the corporation authorized by the Chief Executive Officer or President shall have the power to vote and otherwise act on behalf of the corporation, in person or proxy, and may waive notice of, and act as, or appoint any person or persons to act as, proxy or attorney-in-fact to this corporation (with or without power of substitution) at any meeting of stockholders or shareholders (or with respect to any action of stockholders) of any other corporation or organization, the securities of which may be held by this corporation and otherwise to exercise any and all rights and powers which this corporation may possess by reason of this corporation’s ownership of securities in such other corporation or other organization.
5.4 Evidence of Authority. A certificate by the Secretary, or an Assistant Secretary, or a temporary Secretary, as to any action taken by the stockholders, directors, a committee or any officer or representative of the corporation shall as to all persons who rely on the certificate in good faith be conclusive evidence of such action.
5.5 Certificate of Incorporation. All references in these Bylaws to the Certificate of Incorporation shall be deemed to refer to the Certificate of Incorporation of the corporation, as amended and in effect from time to time.
5.6 Severability. Any determination that any provision of these Bylaws is for any reason inapplicable, illegal or ineffective shall not affect or invalidate any other provision of these Bylaws.
5.7 Pronouns. All pronouns used in these Bylaws shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the person or persons may require.
5.8 Notices. Except as otherwise specifically provided herein or required by law, all notices required to be given to any stockholder, director, officer, employee or agent shall be in writing and may in every instance be effectively given by hand delivery to the recipient thereof, by depositing such notice in the mails, postage paid, or by sending such notice by commercial courier service, or by facsimile or other electronic transmission, provided that notice to stockholders by electronic transmission shall be given in the manner provided in Section 232 of the Delaware General Corporation Law. Any such notice shall be addressed to such stockholder, director, officer, employee or agent at his or her last known address as the same appears on the books of the corporation. The time when such notice shall be deemed to be given shall be the time such notice is received by such stockholder, director, officer, employee or agent, or by any person accepting such notice on behalf of such person, if delivered by hand, facsimile, other electronic transmission or commercial courier service, or the time such notice is dispatched, if delivered through the mails. Without limiting the manner by which notice otherwise may be given effectively, notice to any stockholder shall be deemed given: (1) if by facsimile, when directed to a number at which the stockholder has consented to receive notice; (2) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice; (2) if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; (4) if by any other form of electronic transmission, when directed to the stockholder; and (5) if by mail, when deposited in the mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the records of the corporation.
5.9 Reliance Upon Books, Reports and Records. Each director, each member of any committee designated by the Board of Directors, and each officer of the corporation shall, in the performance of his duties, be fully protected in relying in good faith upon the books of account or other records of the corporation as provided by law, including reports made to the corporation by any of its officers, by an independent certified public accountant, or by an appraiser selected with reasonable care.
5.10 Time Periods. In applying any provision of these Bylaws which require that an act be done or not done a specified number of days prior to an event or that an act be done during a period of a specified number of days prior to an event, calendar days shall be used, the day of the doing of the act shall be excluded, and the day of the event shall be included.
5.11 Facsimile Signatures. In addition to the provisions for use of facsimile signatures elsewhere specifically authorized in these Bylaws, facsimile signatures of any officer or officers of the corporation may be used whenever and as authorized by the Board of Directors or a committee thereof.
5.12 Maintenance and Inspection of Records. The corporation shall, either at its principal executive offices or at such place or places as designated by the Board of Directors, keep a record of its stockholders listing their names and addresses and the number and class of shares held by each stockholder, a copy of these bylaws as amended to date, accounting books, and other records. Any director shall have the right to examine the corporation’s stock ledger, a list of its stockholders, and its other books and records for a purpose reasonably related to his or her position as a director. The Court of Chancery is hereby vested with the exclusive jurisdiction to determine whether a director is entitled to the inspection sought. The Court may summarily order the corporation to permit the director to inspect any and all books and records, the stock ledger, and the stock list and to make copies or extracts therefrom. The Court may, in its discretion, prescribe any limitations or conditions with reference to the inspection, or award such other and further relief as the Court may deem just and proper.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS AND OFFICERS
6.1 Right to Indemnification. Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative ("Proceeding"), by reason of the fact that he or she or a person of whom he or she is the legal representative, is or was a director or officer of the corporation or is or was serving at the request of the corporation as a director or officer of another corporation, or as a controlling person of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action in an official capacity as a director or officer, or in any other capacity while serving as a director or officer, shall be indemnified and held harmless by the corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the corporation to provide broader indemnification rights than said Law permitted the corporation to provide prior to such amendment) against all expenses, liability and loss reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that except as provided in Section 6.2 of this Article VI, the corporation shall indemnify any such person seeking indemnity in connection with a proceeding (or part thereof) initiated by such person only if (a) such indemnification is expressly required to be made by law, (b) the proceeding (or part thereof) was authorized by the Board of Directors of the corporation, (c) such indemnification is provided by the corporation, in its sole discretion, pursuant to the powers vested in the corporation under the Delaware General Corporation Law, or (d) the proceeding (or part thereof) is brought to establish or enforce a right to indemnification or advancement under an indemnity agreement or any other statute or law or otherwise as required under Section 145 of the Delaware General Corporation Law. The rights hereunder shall be contract rights and shall include the right to be paid expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that the payment of such expenses incurred by a director or officer of the corporation in his or her capacity as a director or officer (and not in any other capacity in which service was or is tendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of such proceeding, shall be made only upon delivery to the corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it should be determined ultimately by final judicial decision from which there is no further right to appeal that such director or officer is not entitled to be indemnified under this Section or otherwise.
6.2 Right of Claimant to Bring Suit. If a claim under Section 6.1 is not paid in full by the corporation within 60 days after a written claim has been received by the corporation, or 20 days in the case of a claim for advancement of expenses, the claimant may at any time thereafter bring suit against the corporation to recover the unpaid amount of the claim and, if such suit is not frivolous or brought in bad faith, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any, has been tendered to this corporation) that the claimant has not met the standards of conduct which make it permissible under the Delaware General Corporation Law for the corporation to indemnify the claimant for the amount claimed. Neither the failure of the corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the corporation (including its Board of Directors, independent legal counsel or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that claimant has not met the applicable standard of conduct. In any suit brought by the corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the corporation shall be entitled to recover such expenses upon a final judicial decision from which there is no further right to appeal that the indemnitee has not met any applicable standard for indemnification set forth in the Delaware General Corporation Law. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or brought by the corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, shall be on the corporation.
6.3 Indemnification of Employees and Agents. The corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification, and to the advancement of related expenses, to any employee or agent of the corporation to the fullest extent of the provisions of this Article with respect to the indemnification of and advancement of expenses to directors and officers of the corporation.
6.4 Non-Exclusivity of Rights. The rights conferred on any person in this Article VI shall not be exclusive of any other right which such persons may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, bylaw, agreement, vote of stockholders or disinterested directors or otherwise.
6.5 Indemnification Contracts. The Board of Directors is authorized to enter into a contract with any director, officer, employee or agent of the corporation, or any person serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including employee benefit plans, providing for indemnification rights equivalent to or, if the Board of Directors so determines, greater than, those provided for in this Article VI.
6.6 Insurance. The corporation may maintain insurance to the extent reasonably available, at its expense, to protect itself and any such director, officer, employee or agent of the corporation or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law.
6.7 Effect of Amendment. Any amendment, repeal or modification of any provision of this Article VI shall not adversely affect any right or protection of an indemnitee or his successor existing at the time of such amendment, repeal or modification.
ARTICLE VII
AMENDMENTS
7.1 By the Board of Directors. Except as otherwise set forth in these Bylaws or the Certificate of Incorporation, and subject to the rights of the holders of any series of Preferred Stock then outstanding, these Bylaws may be altered, amended or repealed or new Bylaws may be adopted by the affirmative vote of a majority of the directors present at any regular or special meeting of the Board of Directors at which a quorum is present.
7.2 By the Stockholders. Except as otherwise set forth in these Bylaws, and subject to the rights of the holders of any series of Preferred Stock then outstanding, these Bylaws may be altered, amended or repealed or new Bylaws may be adopted by the affirmative vote of the holders of at least a majority of the voting power of all of the shares of capital stock of the corporation issued and outstanding and entitled to vote generally in any election of directors, voting together as a single class. Such vote may be held at any annual meeting of stockholders, or at any special meeting of stockholders provided that notice of such alteration, amendment, repeal or adoption of new Bylaws shall have been stated in the notice of such special meeting.
Exhibit 5.1
May 12, 2021
Digital Brands Group, Inc.
1400 Lavaca Street
Austin, TX 78701
Re: | Registration Statement on Form S-1 |
Registration No. 333-255193
Ladies and Gentlemen:
We have acted as counsel to Digital Brands Group, Inc., a Delaware corporation (the “Company”), in connection with the preparation and filing of a Registration Statement on Form S-1 (File No. 333-255193) under the Securities Act of 1933, as amended (the “Securities Act”), including a related prospectus filed with the Registration Statement (the “Prospectus”), originally filed with the Securities and Exchange Commission (the “Commission”) on April 13, 2021 (as amended through the date hereof and including all exhibits thereto, the “Registration Statement”), in connection with the public offering (the “Offering”) by the Company of (i) up to 2,300,000 shares (the “Shares”) of Common Stock, par value $0.0001 per share, of the Company (the “Common Stock”), including up to 300,000 shares that may be sold pursuant to the underwriters’ over-allotment option; (ii) stock purchase warrants to purchase up to 2,300,000 shares of Common Stock (the “Warrants”), including Warrants to purchase up to 300,000 shares of Common Stock that may be sold pursuant to the underwriters’ over-allotment option; (iii) up to an aggregate of 2,300,000 shares of Common Stock issuable upon exercise of the Warrants (the “Warrant Shares”); (iv) the representative’s warrants that will be issued by the Company to the representative of the underwriters of the offering (the “Representative’s Warrants”); and (v) up to 160,000 shares of Common Stock issuable upon exercise of the Representative’s Warrants (the “Representative’s Warrant Shares”). This opinion is being furnished in accordance with the requirements of Item 601(b)(5) of Regulation S-K under the Securities Act.
As such counsel and for purposes of our opinions set forth below, we have examined originals or copies, certified or otherwise identified to our satisfaction, of such documents, resolutions, certificates and instruments of the Company and corporate records furnished to us by the Company, certificates of public officials, statutes, records and such other instruments and documents as we have deemed necessary or appropriate as a basis for the opinion set forth below, including without limitation (i) the Sixth Amended and Restated Certificate of Incorporation (the “Restated Charter”) of the Company, in the form filed as Exhibit 3.3 to the Registration Statement to be filed with the Secretary of State of the State of Delaware prior to the sale of the shares and warrants, (ii) the Amended and Restated Bylaws of the Company, in the form filed as Exhibit 3.5 to the Registration Statement to become effective prior to the sale of the shares and warrants, (iii) the form of Underwriting Agreement in the form filed as Exhibit 1.1 to the Registration Statement (the “Underwriting Agreement”), (iv) the form of Warrant Agent Agreement proposed to be entered into between the Company and VStock Transfer, LLC, as warrant agent (the “Warrant Agent”), in the form filed as Exhibit 4.2 to the Registration Statement (the “Warrant Agreement”), (v) the form of Warrant in the form filed as Exhibit 4.4 to the Registration Statement (vi) the form of Representative’s Warrant in the form filed as Exhibit 4.3 to the Registration Statement, (vii) resolutions of the board of directors and of the pricing committee of the Company with respect to the Offering; and (viii) the Registration Statement.
2049 Century Park East, Suite 1700, Los Angeles, California 90067 Telephone: 310.312.4000 Fax: 310.312.4224 Albany | Boston | Chicago | Los Angeles | New York | Orange County | Palo Alto | Sacramento | San Francisco | Washington |
Digital Brands Group, Inc.
May 12, 2021
Page 2
In such examination and in rendering the opinions expressed below, we have assumed, without independent investigation or verification: (i) the genuineness of all signatures on all agreements, instruments, corporate records, certificates and other documents submitted to us, (ii) the legal capacity and authority of all persons or entities (other than the Company) executing all agreements, instruments, corporate records, certificates and other documents submitted to us, (iii) the authenticity and completeness of all agreements, instruments, corporate records, certificates and other documents submitted to us as originals, (iv) that all agreements, instruments, corporate records, certificates and other documents submitted to us as certified, electronic, facsimile, conformed, photostatic or other copies conform to authentic originals thereof, and that such originals are authentic and complete, (v) the due authorization, execution and delivery of all agreements, instruments, certificates and other documents by all parties thereto (other than the Company), (vi) that the statements contained in the certificates and comparable documents of public officials, officers and representatives of the Company and other persons on which we have relied for the purposes of this opinion set forth below are true and correct, (vii) that the officers and directors of the Company have properly exercised their fiduciary duties, (viii) that the Warrant Agent under the Warrant Agreement to be entered into for the Warrants is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization; (ix) that the Warrant Agent is duly qualified to engage in the activities contemplated by the Warrant Agreement, (x) that the Warrant Agreement will be duly authorized, executed and delivered by the Warrant Agent and constitute the legal, valid and binding obligation of the Warrant Agent, enforceable against the Warrant Agent in accordance with their respective terms, (xi) that the Warrant Agent will be in compliance with respect to performance of its obligations under such Warrant Agreement with all applicable laws and regulations; (xii) and that the Warrant Agent has the requisite organizational and legal power and authority to perform its obligations under the Warrant Agreement. We also have obtained from the officers of the Company certificates as to certain factual matters necessary for the purpose of this opinion and, insofar as this opinion is based on such matters of fact, we have relied solely on such certificates without independent investigation.
2049 Century Park East, Suite 1700, Los Angeles, California 90067 Telephone: 310.312.4000 Fax: 310.312.4224 Albany | Boston | Chicago | Los Angeles | New York | Orange County | Palo Alto | Sacramento | San Francisco | Washington |
Digital Brands Group, Inc.
May 12, 2021
Page 3
We have also assumed that (i) the Shares, Warrants, Warrant Shares and Representative’s Warrant will be issued and sold as described in the Registration Statement and the Underwriting Agreement, (ii) the Warrant Shares will be issued and sold pursuant to the terms of the Registration Statement and the Representative’s Warrant, and (iii) shares of Common Stock of the Company will remain authorized and available for issuance of the Warrant Shares upon exercise of the Warrants and of the Representative’s Warrant Shares upon exercise of the Representative’s Warrant.
Based upon and subject to the foregoing qualifications, assumptions and limitations and the further limitations set forth below, we are of the opinion that:
1. The Shares have been duly authorized by the Company and, when the Restated Charter is filed with the Secretary of State of the State of Delaware and when the Shares are issued and sold in accordance with the Registration Statement and the Prospectus, with payment received by the Company in the manner described in the Underwriting Agreement, the Shares will be validly issued, fully paid and nonassessable.
2. The Warrants have been duly authorized and when such Warrants are duly executed and delivered in accordance with the Underwriting Agreement and issued, delivered and paid for, as contemplated by the Registration Statement and the Underwriting Agreement, the Warrants will constitute a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms.
3. The Representative’s Warrant has been duly authorized and when such Representative’s Warrant is duly executed and delivered in accordance with the Underwriting Agreement and issued, delivered and paid for, as contemplated by the Registration Statement and the Underwriting Agreement, the Representative’s Warrant will constitute a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms.
4. The Warrant Shares have been duly authorized by the Company and, upon exercise of the Warrants, when the Warrant Shares are issued and sold in accordance with the terms of the Warrants, with payment received by the Company in the manner described therein, the Warrant Shares will be validly issued, fully paid and nonassessable.
5. The Representative’s Warrant Shares have been duly authorized by the Company and, upon exercise of the Representative’s Warrant, when the Representative’s Warrant Shares are issued and sold in accordance with the terms of the Representative’s Warrant, with payment received by the Company in the manner described therein, the Representative’s Warrant Shares will be validly issued, fully paid and nonassessable.
2049 Century Park East, Suite 1700, Los Angeles, California 90067 Telephone: 310.312.4000 Fax: 310.312.4224 Albany | Boston | Chicago | Los Angeles | New York | Orange County | Palo Alto | Sacramento | San Francisco | Washington |
Digital Brands Group, Inc.
May 12, 2021
Page 4
The opinions expressed in this opinion letter are limited to (i) with respect to opinion paragraphs 1, 4 and 5 below, the General Corporation Law of the State of Delaware (the “DGCL”), and (ii) with respect to opinion paragraphs 2 and 3, the internal laws of the State of New York. We express no opinion as to whether the laws of any jurisdiction are applicable to the subject matter hereof. This opinion is expressly limited to the matters set forth above and we render no opinion, whether by implication or otherwise, as to any other matters relating to the Company or the Common Stock. We are not rendering any opinion as to compliance with any federal or state law, rule or regulation relating to securities, or to the sale or issuance thereof.
With respect to the enforceability of the Warrants and the Representative’s Warrant, opinion paragraphs 2 and 3 above are subject to the following qualifications:
(a) the effect of applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws (including, without limitation, applicable state and federal laws relating to fraudulent or voidable transfers) and court decisions of general application, and other legal or equitable principles of general application, relating to, limiting, or affecting the enforcement of creditors’ rights generally;
(b) the discretion of any court of competent jurisdiction in awarding equitable remedies, including but not limited to specific performance or injunctive relief and limitations imposed by applicable federal or state securities laws;
(c) limitations imposed by applicable law or public policy on the enforceability of the indemnification and/or contribution provisions of the Representative’s Warrant;
(d) the net impact or result of any conflict of laws between or among laws of competing jurisdictions;
(f) the unenforceability, under certain circumstances, of contractual provisions respecting various self-help or summary remedies, especially if their operation would work a substantial forfeiture or impose a substantial penalty upon the burdened party;
(g) the effects of the implied covenant of good faith, reasonableness and fair dealing and standards of immateriality, commercial reasonableness; and
(h) the enforceability of provisions in the Representative’s Warrant to the effect that the terms of the Representative’s Warrant not be waived or modified except in writing may be limited under certain circumstances..
2049 Century Park East, Suite 1700, Los Angeles, California 90067 Telephone: 310.312.4000 Fax: 310.312.4224 Albany | Boston | Chicago | Los Angeles | New York | Orange County | Palo Alto | Sacramento | San Francisco | Washington |
Digital Brands Group, Inc.
May 12, 2021
Page 5
We express no opinion with respect to the enforceability of (a) consents to, or restrictions upon, judicial relief or jurisdiction; (b) advance waivers of claims, defenses, rights granted by law, or notice, opportunity for hearing evidentiary requirements, statutes of limitation, or other procedural rights; (c) provisions for exclusivity, election or cumulation of rights or remedies; (d) provisions authorizing or validating conclusive or discretionary determinations; (e) provisions for the payment of attorneys’ fees where such payment is contrary to law or public policy; (f) provisions that waive the right of a party to object to jurisdiction or venue, or to assert any defense based on lack of jurisdiction or venue; or any provision purporting to waive the right to a jury trial.
We hereby consent to the filing of this opinion with the Commission as an exhibit to the Registration Statement and the use of our name therein under the caption “Legal Matters.” In giving this consent, we do not thereby admit that we are experts with respect to any part of the Registration Statement or the Prospectus within the meaning of the term “expert” as used in Section 11 of the Securities Act or the rules and regulations promulgated thereunder by the Commission, nor we do not admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission adopted under the Securities Act.
The opinions included herein are expressed as of the date hereof unless otherwise expressly stated, and we disclaim any undertaking to advise you of any subsequent changes in the facts stated or assumed herein or of any subsequent changes in applicable laws.
Very truly yours, | |
/s/ MANATT, PHELPS & PHILLIPS, LLP | |
Manatt, Phelps & Phillips, LLP |
2049 Century Park East, Suite 1700, Los Angeles, California 90067 Telephone: 310.312.4000 Fax: 310.312.4224 Albany | Boston | Chicago | Los Angeles | New York | Orange County | Palo Alto | Sacramento | San Francisco | Washington |
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the use, in this Registration Statement on Form S-1, of our report dated April 12, 2021, except for the effects of the reverse stock split discussed in Note 14 to the consolidated financial statements, as to which the date is May 12, 2021, related to the consolidated financial statements of Digital Brands Group, Inc (the “Company”) as of December 31, 2020 and 2019, and for the years then ended, which includes an explanatory paragraph regarding the substantial doubt about the Company’s ability to continue as a going concern. We also consent to the reference to us under the heading “Experts” in such Registration Statement.
/s/ dbbmckennon | |
Newport Beach, California | |
May 12, 2021 |
Exhibit 23.2
Consent of Independent Auditor
We consent to the use, in this Registration Statement on Form S-1, of our report dated April 9, 2021 related to the financial statements of Harper & Jones, LLC (the “Company”) as of December 31, 2020 and 2019, and for the years then ended, which includes an explanatory paragraph regarding the substantial doubt about the Company’s ability to continue as a going concern.
/s/ dbbmckennon | |
Newport Beach, California | |
May 12, 2021 |
Exhibit 23.3
Consent of Independent Auditor
We consent to the use, in this Registration Statement on Form S-1, of our report dated December 29, 2020, except as described in Note 2 under Restatement, for which the date is February 16, 2021, related to the financial statements of Bailey 44, LLC (the “Company”) as of December 31, 2019, and for the year then ended, which includes an explanatory paragraph regarding the substantial doubt about the Company’s ability to continue as a going concern.
/s/ dbbmckennon | |
Newport Beach, California | |
May 12, 2021 |