Business Context and Reporting Period
Company: Digital Brands Group, Inc. (DBGI)
Filing Type: Form 8-K (Current Report)
Date of Report: December 4, 2025
Event: Entry into a Material Definitive Agreement (Item 1.01)
The Company entered into a Marketing and Sponsorship Agreement with Buffalo Sports Properties, LLC ("Buffalo Sports") to secure marketing benefits for its products at the University of Colorado athletics department. The agreement became a binding obligation upon full execution on December 4, 2025, with an effective date of December 1, 2025.
Key Financial Metrics and Agreement Terms
This filing details a specific contractual obligation rather than general financial performance metrics. Key financial terms of the agreement include:
- Term: 3 years (December 1, 2025 to December 31, 2028).
- Annual Sponsorship Fee: $550,000 per year.
- Fee Structure:
- $350,000 payable in Company common stock (subject to a make-whole provision).
- $200,000 payable in cash.
- Revenue Share: 7% of gross revenue generated under the Company's separate licensing agreement with the University of Colorado.
- Make-Whole Provision: A guaranteed value for the stock portion for 18 months; if stock price declines, the Company must issue additional shares or cash to maintain the $350,000 value.
Liquidity and Debt: The filing text does not provide clear values for the Company's overall cash flow, total debt, or liquidity position outside of the specific cash obligations in this agreement.
Material Changes and Unusual Items
Material Change: The Company has incurred a new multi-year financial commitment totaling $1.65 million in aggregate sponsorship fees ($550,000 annually) plus a variable revenue share component.
Unusual Items:
- Stock Valuation Risk: The agreement includes a make-whole provision that could increase the number of shares issued or cash outflow if the Company's stock price declines within the first 18 months.
- Voting Rights: Buffalo Sports assigned all voting interests regarding the issued shares via proxy to John Hilburn Davis IV, the Company's President and CEO.
Guidance, Outlook, and Risks
Management Commentary: The filing states the agreement is intended to provide marketing benefits at the University of Colorado athletics department. The revenue share component is designated to fund University of Colorado name, image, and likeness activities.
Risks and Contingencies:
- Registration Requirement: The Company must file a registration statement covering the resale of the shares by January 17, 2026.
- Market Risk: The make-whole provision exposes the Company to potential dilution or additional cash liability if the stock price falls below the implied valuation used to calculate the $350,000 share component.
Investor Verification Checklist
- Verify the current market price of DBGI stock to assess the immediate dilution impact of the $350,000 annual share issuance.
- Review the Company's cash position to confirm ability to meet the $200,000 annual cash payment obligation.
- Monitor the filing of the registration statement for share resale by the January 17, 2026 deadline.
- Examine the separate licensing agreement with the University of Colorado to understand the base for the 7% revenue share calculation.
- Confirm the impact of the proxy assignment on the Company's voting structure and corporate governance.