Digital Brands Group Faces Issuance Error: Shares to Be Cancelled

Digital Brands Group, Inc. (NASDAQ: DBGI) recently reported an issuance error in a filing with the Securities and Exchange Commission. Between October 3, 2024, and October 15, 2024, the company issued 1,311,345 shares of its common stock to a note holder in relation to the conversion of a promissory note issued around October 1, 2023. This issuance brought the total count of the company’s common stock to 9,415,783 shares by October 16, 2024.

However, on October 16, 2024, Digital Brands Group discovered that the issuance of these shares was not allowed under the terms of the note. The terms required stockholder approval before issuing more than 19.9% of the company’s pre-transaction shares outstanding during the conversion of the note, as mandated by Nasdaq Listing Rule 5635(d. As a result, the company informed the note holder that the shares must be returned to the company’s transfer agent for cancellation.

In light of this error, the note holder is currently in the process of returning the shares for cancellation. Once these shares are cancelled, Digital Brands Group’s issued and outstanding common stock count is anticipated to be around 8,104,438 shares. The company is actively engaged in discussions with The Nasdaq Stock Market LLC regarding the improper issuance of shares and the subsequent corrective actions.

This experience underscores the importance of adhering to strict regulatory and compliance standards within the financial markets. The company aims to resolve the matter promptly and ensure compliance with all relevant regulations moving forward.

This article was generated by an automated content engine and was reviewed by a human editor prior to publication. For additional information, read Digital Brands Group’s 8K filing here.

Digital Brands Group Company Profile

Digital Brands Group, Inc engages in the provision of apparel products under various brands on direct-to-consumer and wholesale basis. It operates through DSTLD, Bailey, H&J, Stateside, and Sundry segments. The company designs, manufactures, and sells women's apparel, such as tops, sweaters, dresses, jumpsuits, bottoms, sets, jackets, rompers, suiting, sportswear, shirts, jackets, pants, shorts, polos, T-shirts, skirts, athleisure bottoms, denims, and other accessory products, as well as suiting for men.