Business Context and Reporting Period
Company: Digital Brands Group, Inc. (DBGI)
Filing Type: Form 8-K (Current Report)
Date of Report: November 19, 2025
Event: Entry into a Material Definitive Agreement (Item 1.01)
On November 19, 2025, DBGI entered into an Exclusive Private Label Manufacturing Agreement with The Grove Collective, LLC ("Client"). The Client acts as a Name, Image, and Likeness (NIL) marketing agent for student-athletes at the University of Mississippi. Under the agreement, DBGI will manufacture exclusive private label knit apparel for the University, excluding specific categories such as jerseys and t-shirts featuring NIL or team-related content.
Key Financial Metrics and Deal Terms
This filing details a strategic agreement rather than standard periodic financial results. Key financial terms include:
- Consideration: DBGI agreed to issue $3,000,000 worth of common stock to the Client for the initial 3-year term.
- Extension Consideration: An additional $1,000,000 of common stock will be issued for each one-year renewal term.
- Share Pricing: The number of shares is based on the 5-day volume-weighted average price (VWAP) ending one day prior to issuance.
- Investment Commitments: DBGI committed to invest approximately $500,000 per year for 3 years into specific student-athlete funds and spend $500,000 per year on digital advertising and influencer marketing.
- Price Protection: For the first 15 months, if the stock price declines, DBGI must issue additional shares or pay cash to make up the difference.
Note: The filing text does not provide current revenue, profit, cash flow, margins, debt, or liquidity figures for the company.
Material Changes and Agreements
The primary material change is the execution of the 3-year exclusive manufacturing agreement. Key structural elements include:
- Exclusivity: The Client has agreed to engage only DBGI for the production of the defined "Exclusive Apparel Products" during the term.
- Voting Rights: The Client assigned all voting interests regarding the issued shares via proxy to John Hilburn Davis IV, the Company's President and CEO.
- Registration: DBGI agreed to file a registration statement for the resale of shares by January 2, 2026.
Outlook, Risks, and Contingencies
Management Commentary: The agreement grants DBGI general discretion to develop designs and prototypes. The company is obligated to use best efforts to meet the investment and marketing spend targets.
Risks and Contingencies:
- Dilution Risk: The issuance of $3,000,000 in stock (plus potential extensions and price protection adjustments) represents a significant potential dilution to existing shareholders.
- Market Price Volatility: The price protection clause for the first 15 months creates a contingent liability that could increase the total equity or cash cost if the stock price falls.
- Operational Execution: The agreement relies on the successful manufacturing and sale of apparel through the Client's channels.
Investor Verification Checklist
- Verify the current share count and the impact of the $3,000,000 stock issuance on existing shareholder dilution.
- Review the full text of the Exclusive Private Label Manufacturing Agreement (Exhibit 10.1) for specific termination clauses and performance metrics.
- Monitor the upcoming registration statement filing deadline of January 2, 2026.
- Assess the financial impact of the $1,000,000 annual cash outflow ($500k athlete funds + $500k marketing) on the company's liquidity.
- Confirm the identity and financial standing of The Grove Collective, LLC, as the counterparty.