DBGI Announces Purchase of Existing Convertible Notes and Note Conversion Extension by Holders
Rhea-AI Summary
Digital Brands Group (NASDAQ:DBGI) disclosed that holders of its Series D preferred shares entered into private shareholder agreements affecting conversion and resale of Series D shares and related pre-funded warrants.
An aggregate of 9,375 Series D Shares are subject to a conversion standstill until May 31, 2026 and daily "leak-out" sale caps; an additional 2,434 Series D Shares are subject to separate leak-out limits.
The company is not a party to these agreements and says it cannot enforce their terms.
Positive
- Conversion standstill delays conversion of 9,375 Series D Shares until May 31, 2026
- Leak-out caps limit immediate daily sales of common shares issuable on conversion, reducing short-term supply pressure
Negative
- The company is not a party to the shareholder agreements and cannot enforce their terms
- 2,434 Series D Shares remain subject to separate Extending Holders’ leak-out limitations that may allow staggered future selling
Key Figures
Market Reality Check
Peers on Argus
DBGI gained 39.65% on high volume while key apparel peers were mixed: BRIA (-2.17%), TLYS (-0.14%), DXLG (-2.81%), AKA (+1.09%), CATO (+1.66%). Momentum scanner shows CURV (+2.53%) and DXLG (+9.59%) up, but no broad, matching sector move, pointing to DBGI-specific dynamics.
Historical Context
| Date | Event | Sentiment | Move | Catalyst |
|---|---|---|---|---|
| Feb 09 | NIL expansion update | Positive | -20.9% | Announced four campus photo shoots, expanding NIL initiative and market focus. |
| Feb 05 | NIL expansion update | Positive | -17.5% | Detailed four campus photo shoots and growth within $36.4B sports merchandise market. |
| Dec 29 | Index inclusion | Positive | +2.1% | Added to S&P Total Market Index, highlighting increased market visibility. |
| Dec 22 | AI tools initiative | Positive | -4.0% | Announced AI-driven suite for brand protection and eCommerce support. |
| Dec 17 | NIL activation launch | Positive | +6.0% | First AVO activation at Ole Miss playoff game and related capsule launch. |
Recent history shows mixed reactions: several seemingly positive operational updates led to selloffs, while index inclusion and select NIL activations saw modest gains.
Over the last few months, DBGI focused on NIL-driven growth and capital markets positioning. In Dec 2025, it launched its first AVO activation at Ole Miss, with a 5.96% next-day gain, and reported addition to the S&P Total Market Index with a 2.14% rise. However, two February 2026 announcements expanding NIL photo shoots into a $36.4B licensed sports market saw -17.54% and -20.88% reactions. Today’s focus on preferred conversions and leak-out limits fits an ongoing effort to manage capital structure alongside brand initiatives.
Regulatory & Risk Context
An effective S-3 shelf filed on 2025-11-07 allows DBGI to offer up to $100,000,000 in various securities over time, providing flexibility to raise capital in tranches subject to baby shelf limits. No usage of this capacity is recorded yet.
Market Pulse Summary
This announcement outlines private agreements among DBGI’s Series D holders that temporarily restrict conversions and pace potential selling via detailed leak-out formulas tied to average trading volume. An aggregate 9,375 Series D Shares face a Conversion Standstill until May 31, 2026, with additional leak-out limits on other holders. In the context of DBGI’s existing $100,000,000 shelf and prior PIPE financings, investors may track how these constraints affect actual share issuance and secondary liquidity over time.
Key Terms
conversion price financial
pre-funded warrants financial
AI-generated analysis. Not financial advice.
Austin, Texas, Feb. 13, 2026 (GLOBE NEWSWIRE) -- Digital Brands Group, Inc. (“DBG” or the “Company”) (Ticker: [NASDAQ:DBGI]), a publicly traded company specializing in eCommerce and Fashion, today announced that existing holders of all of the Company’s Series D Preferred Stock (the “Series D Shares”) have advised the Company that these holders have entered into various private agreements regarding their respective ownership of, and rights with respect to, the Series D Shares (the “Shareholder Agreements”). Each Series D Share is convertible, at the discretion of the holder thereof, into shares of the Company’s common stock (the “Common Stock”) at a conversion price equal to, as of the date of a conversion,
The Company is not party to any of the Shareholder Agreements, but has been advised of the following with respect to their terms. Because the Company is not a party to any of the Shareholder Agreements it would have no ability to enforce their terms.
Conversion Standstill placed Certain Series D Shares
In exchange for one holder’s transfer (the “Transferring Holder”) of 4,687 Series D Shares (the “Transferred Shares”) to another holder (the “Transferee Holder”), the Transferee Holder agreed not to convert any of the 9,375 Series D Shares it currently owns, including the Transferred Shares, into shares of Common Stock until on or after 5:00 p.m. on May 31, 2026 (the “Conversion Standstill”). In further consideration for the Transferee Holder agreeing to the Conversion Standstill, the Transferring Holder also agreed to transfer and assign to the Transferee Holder certain pre-funded warrants of the Company (the “Pre-Funded Warrants”).
Based on the information provided by these holders, the Company currently understands that an aggregate of 9,375 Series D Shares are currently subject to the Conversion Standstill.
Leak-out Limitations placed on Certain total Series D Shares
In addition, the Transferee Holder agreed that from and after the expiration of the Conversion Standstill on May 31, 2026, the Transferee Holder shall not sell or transfer shares of the Common Stock issued upon conversion of its Series D Shares or exercise of the Pre-Funded Warrants to the extent that the proposed number of shares of Common Stock to be sold by the Transferee Holder would exceed, in the aggregate, on any trading day, the greater of: (A) (i) 5,000 shares or (ii)
Based on the information provided by these holders, the Company currently understands that the shares of Common Stock issuable upon conversion of 9,375 Series D Shares are currently subject to the Leak-Out Limitation.
In another instance, two existing holders (the “Extending Holders”) that, at such time, collectively owned 2,500 Series D Shares (collectively, the “Extending Holder Shares”), granted another holder (the “Optionee Holder”) an option to purchase all of the Extending Holder Shares, and as partial consideration for granting such option, the Extending Holders received certain Pre-Funded Warrants from the Optionee Holder. Notwithstanding the fact that such proposed sale was abandoned, each Extending Holder agreed not to sell shares of Common Stock issuable upon conversion of its respective Series D Shares or upon exercise of its respective Pre-Funded Warrants on any single trading day in an amount that would exceed, in the aggregate, the greater of (X)
Based on the information provided by certain existing holders, the Company currently understands that the shares of Common Stock issuable upon conversion of 2,434 Series D Shares are currently subject to the Extending Holders’ Leak-out.
About Digital Brands Group
We offer a wide variety of apparel through numerous brands on a both direct-to-consumer and wholesale basis. We have created a business model derived from our founding as a digitally native-first vertical brand. We focus on owning the customer's "closet share" by leveraging their data and purchase history to create personalized targeted content and looks for that specific customer cohort.
Digital Brands Group, Inc. Company Contact
Hil Davis, CEO
Email: invest@digitalbrandsgroup.co
https://ir.digitalbrandsgroup.co
Forward-looking Statements
Certain statements included in this release are "forward-looking statements" within the meaning of the federal securities laws. Forward-looking statements are made based on our expectations and beliefs concerning future events impacting DBG and therefore involve several risks and uncertainties. You can identify these statements by the fact that they use words such as “will,” “anticipate,” “estimate,” “expect,” “should,” and “may” and other words and terms of similar meaning or use of future dates, however, the absence of these words or similar expressions does not mean that a statement is not forward-looking. All statements regarding DBG’s plans, objectives, projections and expectations relating to DBG’s operations or financial performance, and assumptions related thereto are forward-looking statements. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements. DBG undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Potential risks and uncertainties that could cause the actual results of operations or financial condition of DBG to differ materially from those expressed or implied by forward-looking statements include, but are not limited to: risks arising from DBG not being party to any of the Shareholder Agreement and not being able to enforce any of the provisions contained therein; the accuracy of information provided by certain holders to the Company concerning the Shareholder Agreements; DBG’s ability to add and retain strategic partners and customers; disruption to DBGs distribution system; the financial strength of DBG’s customers; fluctuations in the price, availability and quality of raw materials and contracted products; disruption and volatility in the global capital and credit markets; perception of DBG by consumers and in the markets in which it operates; DBG’s response to changing fashion trends, evolving consumer preferences and changing patterns of consumer behavior; intense competition from online retailers; manufacturing and product innovation; increasing pressure on margins; DBG’s ability to implement its business strategy; DBG’s ability to grow its wholesale and direct-to-consumer businesses; retail industry changes and challenges; DBG’s and its vendors’ ability to maintain the strength and security of information technology systems; the risk that DBG’s facilities and systems and those of our third-party service providers may be vulnerable to and unable to anticipate or detect data security breaches and data or financial loss; DBG’s ability to properly collect, use, manage and secure consumer and employee data; stability of DBG’s manufacturing facilities and foreign suppliers; continued use by DBG’s suppliers of ethical business practices; DBG’s ability to accurately forecast demand for products; continuity of members of DBG’s management; DBG’s ability to protect trademarks and other intellectual property rights; possible goodwill and other asset impairment; DBG’s ability to execute and integrate acquisitions; changes in tax laws and liabilities; legal, regulatory, political and economic risks; adverse or unexpected weather conditions; DBG's indebtedness and its ability to obtain financing on favorable terms, if needed, could prevent DBG from fulfilling its financial obligations; and climate change and increased focus on sustainability issues. More information on potential factors that could affect DBG’s financial results is included from time to time in DBG’s public reports filed with the SEC, including DBG’s Annual Report on Form 10-K, and Quarterly Reports on Form 10-Q, and Curren Reports on Forms8-K filed or furnished with the U.S. Securities and Exchange Commission.
FAQ
What does the May 31, 2026 conversion standstill mean for DBGI shareholders?
How do the DBGI leak-out limitations restrict daily sales after May 31, 2026?
Why can DBGI not enforce the shareholder agreements affecting Series D conversions?
How many Series D Shares are covered by the Extending Holders’ leak-out for DBGI?
Do the pre-funded warrants affect DBGI dilution or resale timing?
