Business Context and Reporting Period
Company: Digital Brands Group, Inc. (DBGI)
Filing Type: Form 8-K (Current Report)
Date of Report: March 12, 2026
Reporting Period: Event date March 12, 2026; Agreement effective date March 12, 2026.
The Company entered into a material definitive agreement to facilitate its participation in The Pennsylvania State University's name, image, and likeness (NIL) program for student-athletes.
Key Financial Metrics and Transaction Details
This filing reports a specific transaction rather than periodic financial performance. Key metrics related to the agreement include:
- Consulting Fee Value: $3,000,000 (to be paid in common stock).
- Share Calculation: Number of shares equals $3 million divided by the lower of the 5-day VWAP or the closing price immediately preceding the Share Delivery Date.
- Share Delivery Date: April 11, 2026.
- Additional Cash Commitment: $500,000 per year for three years ($1.5 million total) to be invested in University student athlete funds.
- Term: Three years (March 12, 2026 to March 12, 2029).
Note: The filing text does not provide clear values for revenue, profit, cash flow, margins, debt, or liquidity for the reporting period.
Material Changes and Agreements
The primary material change is the execution of a Consulting Agreement with Athlete Capital Sports LLC. Key provisions include:
- Make-Whole Provision: A guaranteed make-whole clause ensures the total dollar value of shares issued equals the $3 million fee. If the realized value from the sale of shares is less than the fee, the Company must pay the difference in cash.
- Voting Rights: The Company's CEO, John Hilburn Davis IV, was appointed as proxy and attorney-in-fact for voting all shares held by Athlete Capital Sports under this agreement.
- Registration: The Company agreed to file a Resale Registration Statement by April 26, 2026.
- Exemption: Shares were offered and sold in reliance on the Section 4(a)(2) exemption from registration.
Outlook, Risks, and Contingencies
Management Commentary: The agreement is designed to support the Company's NIL program participation at Penn State. The structure includes a cash investment component directed by Athlete Capital Sports.
Risks and Contingencies:
- Share Price Volatility: The number of shares issued is inversely related to the share price at the time of delivery; a lower share price results in a higher share issuance.
- Cash Obligation: The make-whole provision creates a potential future cash outflow if the market value of the issued shares declines before they are sold by Athlete Capital Sports.
- Regulatory Timing: The Company is contractually obligated to file the resale registration statement by April 26, 2026.
Investor Verification Checklist
- Verify the exact number of shares to be issued on April 11, 2026, based on the share price calculation formula.
- Confirm the status of the Resale Registration Statement filing by the April 26, 2026 deadline.
- Review the full text of the Consulting Agreement (Exhibit 10.1) for specific service deliverables and termination clauses.
- Assess the impact of the $500,000 annual cash commitment on the Company's future liquidity.
- Monitor the make-whole provision for potential cash liabilities if the stock price declines post-issuance.