Digital Brands Group was not aware that it would end up in bankruptcy when it became a listed company on May 20, 2021.

The group operates the brands DSTLD and ACE Studios, Bailey 44, Harper & Jones, and Stateside raised 10 million dollars in its offering. However, the group is now warning that it needs to raise more capital to improve its financial position.

The company suffered losses of 10.7 million dollars in 2021, a 30% decrease from its 32.4 million loss in 2020. In a recent filing, it stated that it may file for bankruptcy protection if it cannot find the funding it needs to continue operating.

DBG stated in its filing that “we may continue to incur substantial losses in the future because of a variety of reasons, including unforeseen expenses, difficulties and complications, delays and other unknown events including the length of COVID-19-related restrictions impacting the business.”

DBG purchased the Stateside brand last August for 10 million dollars. DBG expects Stateside to add to its revenue and earnings per share during the third quarter as well as the fiscal year 2021. “We believe that the Stateside brand will create meaningful long-term shareholder value,” Hil DBG’s Chief Executive Officer stated in a statement.

In August, DBG also acquired an equity credit line with Oasis capital. At the time, Mr. Davis stated that “With this equity credit, the financial path ahead for Digital Brands is truly smoothing out.” Although this equity line eliminates the immediate need for capital markets financing, we plan to continue accessing capital markets to finance future acquisitions.

DBG’s fourth-quarter revenue for 2021 rose from 425 to 4 million dollars to be a substantial increase, but it wasn’t enough to cover its debts. Retail Dive has listed DBG on the S&P Global Market Intelligence list of most vulnerable retail businesses. It’s currently struggling to fund operations while growing through acquisitions.

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