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Digital Brands Group (NASDAQ: DBGI) takes $238K loan with equity conversion risk

Filing Impact
(Very High)
Filing Sentiment
(Neutral)
Form Type
8-K

Rhea-AI Filing Summary

Digital Brands Group, Inc. entered into a new financing arrangement with 1800 Diagonal Lending, LLC through a promissory note with an aggregate principal amount of $238,050.00, including an original issue discount of $13,050.00. The lender paid a purchase price of $207,000.00, which the Company received net of fees on June 10, 2026 for general working capital.

The note requires nine payments of $29,624.00, representing a one-time interest charge of 12% or $28,566.00, with the first payment due on July 15, 2026 and maturity on March 15, 2027. On default, the note becomes immediately due at 150% of outstanding principal and accrued interest, plus default interest at 22% per year, and 1800 Diagonal may convert the balance into common stock at 61% of the lowest closing bid price over the prior ten trading days.

The note limits 1800 Diagonal and its affiliates to owning no more than 4.99% of outstanding common stock at any time and caps total shares issuable on conversion at 19.99% of shares outstanding as of June 9, 2026. Additional loan tranches of up to $1,015,000.00 over the next twelve months may be provided subject to further agreement.

Positive

  • None.

Negative

  • Highly punitive default terms and potential dilution: On default, the note becomes due at 150% of outstanding principal and accrued interest with 22% default interest, and the lender may convert at 61% of the lowest recent closing bid, creating significant downside risk for existing shareholders.

Insights

DBGI adds costly, highly structured debt with potential equity conversion on default.

The company obtained a $238,050.00 note, receiving $207,000.00 in cash after an original issue discount, plus potential additional tranches up to $1,015,000.00. The structure concentrates cash outflows into nine payments through March 15, 2027, funded by a one-time 12% interest charge.

If an event of default occurs, the obligation accelerates to 150% of outstanding principal and accrued interest, and default interest increases to 22% per year. The lender then gains the right to convert the balance into equity at 61% of the lowest closing bid over ten prior trading days, a substantial discount that can be dilutive.

The note includes a 4.99% beneficial ownership cap and a 19.99% cap on total shares issuable relative to shares outstanding as of June 9, 2026, framing the potential equity impact. Overall, the financing provides near-term liquidity but introduces meaningful default and dilution risk, so its net effect appears negative for existing shareholders.

Item 1.01 Entry into a Material Definitive Agreement Business
The company signed a significant contract such as a merger agreement, credit facility, or major partnership.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement Financial
The company incurred a new significant debt or off-balance-sheet obligation.
Item 3.02 Unregistered Sales of Equity Securities Securities
The company sold equity securities in a private placement or other unregistered transaction.
Item 9.01 Financial Statements and Exhibits Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Note principal $238,050.00 Aggregate principal amount of the promissory note
Purchase price $207,000.00 Cash paid by 1800 Diagonal for the note
Original issue discount $13,050.00 Discount embedded in the note principal
Potential additional tranches $1,015,000.00 Maximum additional funding over next 12 months
One-time interest charge $28,566.00 (12%) Financed via nine payments of $29,624.00
Default interest rate 22% per annum Applied upon an event of default
Default acceleration multiplier 150% Multiple of outstanding principal and interest due on default
Conversion discount 61% of lowest closing bid Conversion price basis for stock on default
original issue discount financial
"aggregate principal amount of $238,050.00, including an original issue discount of $13,050.00"
Original issue discount (OID) is the difference between a debt security’s face value and the lower price at which it is first sold, treated as additional interest that accrues over the life of the instrument. For investors it matters because OID raises the effective yield and changes taxable income and the holding’s cost basis over time — think of buying a $100 voucher for $90 and recognizing the $10 gain as earned interest as the voucher approaches maturity.
events of default financial
"The Note matures on March 15, 2027, and contains customary events of default."
Events of default are specific breaches or failures listed in a loan, bond, or credit agreement that give lenders the right to act, such as demanding immediate repayment, raising interest rates, or taking secured assets. They matter to investors because triggering one is like setting off a financial alarm: it raises the chance of foreclosure, restructuring, or bankruptcy and can sharply reduce the value of a company’s stock or bonds and increase borrowing costs.
Section 4(a)(2) of the Securities Act regulatory
"pursuant to Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder"
A legal exemption that allows a company to sell securities directly to a limited group of buyers without registering the offering with the Securities and Exchange Commission. Think of it like a private sale among known parties rather than a public auction: it can speed fundraising and reduce disclosure requirements, but it also means less public information, lower liquidity and resale restrictions—factors investors should consider when weighing risk and exit options.
Regulation D regulatory
"pursuant to Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder"
Regulation D is a set of rules that govern how companies can raise money from investors without going through the full process required for public stock offerings. It provides simplified options for private placements, making it easier for companies to seek investments from a smaller group of investors. For investors, it offers opportunities to invest in private companies, often with fewer restrictions, but also with different levels of risk and disclosure.
accredited investor financial
"each recipient is an accredited investor, each recipient acquired the securities for investment"
An accredited investor is an individual or entity that meets certain financial criteria, such as having a high income or significant net worth, allowing them to invest in private or less regulated investment opportunities. This status matters because it grants access to investments that are often riskier or less available to the general public, reflecting a higher level of financial knowledge or resources.
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Understanding 8-K Material Events →
false 0001668010 0001668010 2026-06-09 2026-06-09 iso4217:USD xbrli:shares iso4217:USD xbrli:shares

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported): June 9, 2026

 

DIGITAL BRANDS GROUP, INC.

(Exact name of registrant as specified in its charter)

 

Nevada   001-40400   46-1942864

(State or other jurisdiction

of incorporation)

  

(Commission

File Number)

  

(I.R.S. Employer

Identification Number)

 

350 Texas Ave, Suite 250, Round Rock, TX 78664

(Address of principal executive offices) (Zip Code)

 

(212) 524-6860

(Registrant’s telephone number, including area code)

 

N/A

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions.

 

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common Stock, par value $0.0001 per share   DBGI   The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

 

 

 

Item 1.01. Entry into a Material Definitive Agreement.

 

On June 9, 2026, Digital Brands Group, Inc., a Nevada corporation (the “Company”), entered into a securities purchase agreement (the “Purchase Agreement”) with 1800 Diagonal Lending, LLC (the “1800 Diagonal”), pursuant to which the 1800 Diagonal made a loan to the Company, evidenced by a promissory note in the aggregate principal amount of $238,050.00, including an original issue discount of $13,050.00 (the “Note”) with additional tranches of up to $1,015,000.00 during the next twelve (12) months subject to further agreement. The purchase price of the Note is $207,000.00 (the “Purchase Price”). The Purchase Agreement contains certain customary representations, warranties, and covenants made by the Company. Under the Note, the Company is required to make nine (9) payments of $29,624.00, which includes a one-time interest charge of twelve percent (12%) ($28,566.00). The first payment is due on July 15, 2026, with eight subsequent payments due each month thereafter. The Note matures on March 15, 2027, and contains customary events of default.

 

Upon the occurrence of any event of default under the Note, (i) the Note will become immediately due and payable in an amount equal to 150% times the outstanding principal and accrued interest under the Note plus default interest at the rate of twenty-two percent (22%) per annum (the “Default Amount”), and (ii) 1800 Diagonal will have the right to convert the balance owed under the Note, including the Default Amount, into shares of common stock of the Company (“Common Stock”) at a conversion price equal to 61% of the lowest closing bid price during the ten trading days prior to the conversion date. The Note provides that 1800 Diagonal and its affiliates may not own greater than 4.99% of the Company’s outstanding shares of Common Stock at any time, and that the total aggregate number of shares of Common Stock that may be issued upon conversion of the Note shall not exceed 19.99% of the shares of Common Stock outstanding as of June 9, 2026.

 

The Company received the Purchase Price minus applicable fees on June 10, 2026, and intends to use the proceeds from the Note for general working capital purposes.

 

The foregoing descriptions of the Note and Purchase Agreement do not purport to be complete and are subject to, and qualified in their entirety by, the full text of each document, attached hereto as Exhibits 10.1 and 10.2, respectively, and incorporated herein by reference.

 

Item 2.03. Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant.

 

The information set forth above in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

 

Item 3.02 Unregistered Sales of Equity Securities.

 

To the extent required by Item 3.02 of Form 8-K, the information contained in Item 1.01of this Current Report on Form 8-K is incorporated herein by reference. The Company claims an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), for the private placement of the securities pursuant to Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder because, among other things, the transaction did not involve a public offering, each recipient is an accredited investor, each recipient acquired the securities for investment and not resale, and the Company took appropriate measures to restrict the transfer of the securities.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit No.   Description
10.1   Securities Purchase Agreement between the Company and 1800 Diagonal, dated as of June 9, 2026
10.2   Promissory Note issued by the Company to 1800 Diagonal, dated June 9, 2026
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  DIGITAL BRANDS GROUP, INC.
   
Dated: June 12, 2026 By: /s/ John Hilburn Davis IV
  Name: John Hilburn Davis IV
  Title: President and Chief Executive Officer

 

 

Source: View Original Filing on SEC EDGAR

FAQ

What financing did Digital Brands Group (DBGI) enter into on June 9, 2026?

Digital Brands Group entered into a securities purchase agreement with 1800 Diagonal Lending for a promissory note with $238,050.00 principal, including an original issue discount, receiving $207,000.00 in cash to fund general working capital needs.

What are the payment terms of DBGI’s new promissory note?

The note requires DBGI to make nine payments of $29,624.00, covering a one-time 12% interest charge of $28,566.00. The first payment is due July 15, 2026, with eight monthly payments thereafter, and the note matures on March 15, 2027.

How can the new DBGI note convert into equity and at what price?

If a default occurs, 1800 Diagonal may convert the balance, including any default amount, into DBGI common stock at 61% of the lowest closing bid price during the ten trading days before conversion, representing a substantial discount to recent market prices.

What ownership and issuance limits apply to DBGI’s convertible note?

The note limits 1800 Diagonal and its affiliates to owning no more than 4.99% of DBGI’s outstanding common stock at any time and caps total shares issuable upon conversion at 19.99% of shares outstanding as of June 9, 2026.

Does Digital Brands Group (DBGI) have access to additional funding under this agreement?

Yes. Beyond the initial $238,050.00 principal note, the agreement allows for additional loan tranches of up to $1,015,000.00 over the next twelve months, subject to further agreement between DBGI and 1800 Diagonal.

Under what securities law exemption was DBGI’s note financing completed?

DBGI completed the transaction as a private placement exempt from registration under Section 4(a)(2) of the Securities Act and/or Regulation D, noting that each recipient is an accredited investor and that transfer restrictions were applied.

Filing Exhibits & Attachments

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Agreements & Contracts

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