What changed in this filing

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Item 9A. Controls and Procedures

2026-04-15 compared with 2025-04-09 · 1582 added, 1321 removed, 1031 unchanged (74% of the section changed)

AND PROCEDURES

CONTROLS AND PROCEDURES

of Disclosure Controls and Procedures

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disclosure controls and procedures were not effective as of such date.

did not maintain effective controls over:

overall design of internal controls over financial reporting, including insufficient policies

and procedures, lack of management review of key account reconciliations, and inadequate

technical accounting analysis for complex transactions.

accrual of liabilities and accounts payable cut-off, resulting in expenses not being recorded

in the proper period.

issuances and share-based payment accounting, including determination of measurement dates,

valuation, and completeness and accuracy of shares issued.

recognition and classification of prepaid expenses, including evaluation of future economic

benefit and timely expense recognition.

recognition and evaluation of intangible assets and asset acquisitions, including documentation

supporting capitalization, valuation, and impairment assessments.

● Information

provided by third-party service providers, including sufficient review of completeness and

accuracy of such information used in financial reporting.

have initiated various remediation efforts, including the hiring of additional financial personnel/consultants with the appropriate public

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the following:

have made an assessment of the basis of accounting, revenue recognition policies and accounting period cutoff procedures.

cases, we made the necessary adjustments to convert the basis of accounting from cash basis to accrual basis.

In all cases we have

done the required analytical work to ensure the proper cutoff of the financial position and results of operations for the presented

accounting periods.

have made an assessment of the current accounting personnel, financial reporting and information system environments and capabilities.

Based on our preliminary findings, we have found these resources and systems lacking and have concluded that these resources and

systems will need to be supplemented and/or upgraded.

We are in the process of identifying a single, unified accounting and reporting

system that can be used by the Company and Bailey, with the goal of ensuring consistency and timeliness in reporting, real time access

to data while also ensuring ongoing data integrity, backup and cyber security procedures and processes.

engaged external consultants with public company and technical accounting experience to facilitate accurate and timely accounting

closes and to accurately prepare and review the financial statements and related footnote disclosures.

We plan to retain these financial

consultants until such time that the internal resources of the Company have been upgraded and the required financial controls have

been fully implemented.

have made an assessment on significant judgments and estimates, including impairment of long-lived assets and inventory valuation.

We plan to take the steps as noted above to have the proper resources to conduct proper analyses on areas requiring judgments and

We have made an assessment

of the basis of accounting, revenue recognition policies and accounting period cutoff procedures.

In some cases, we made the necessary

adjustments to convert the basis of accounting from cash basis to accrual basis.

In all cases we have done the required analytical

work to ensure the proper cutoff of the financial position and results of operations for the presented accounting periods.

We have made an assessment

of the current accounting personnel, financial reporting and information system environments and capabilities.

Based on our preliminary

findings, we have found these resources and systems lacking and have concluded that these resources and systems will need to be supplemented

and/or upgraded.

We are in the process of identifying a single, unified accounting and reporting system that can be used by the Company

and Bailey, with the goal of ensuring consistency and timeliness in reporting, real time access to data while also ensuring ongoing

data integrity, backup and cyber security procedures and processes.

We engaged external consultants

with public company and technical accounting experience to facilitate accurate and timely accounting closes and to accurately prepare

and review the financial statements and related footnote disclosures.

We plan to retain these financial consultants until such time

that the internal resources of the Company have been upgraded and the required financial controls have been fully implemented.

We have made an assessment

on significant judgments and estimates, including impairment of long-lived assets and inventory valuation.

We plan to take the steps

as noted above to have the proper resources to conduct proper analyses on areas requiring judgments and estimates.

actions that have been taken are subject to continued review, implementation and testing by management, as well as audit committee oversight.

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change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred

during the quarter ended December 31, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control

during the year ended December 31, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control

over financial reporting.

REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

OTHER INFORMATION

DISCLOSURE REGARDING

FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

DIRECTORS, EXECUTIVE

OFFICERS AND CORPORATE GOVERNANCE

following table sets forth the names, ages and titles of our directors, director nominees, executive officers and key personnel:

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following table sets forth certain information with respect to our executive officers and directors as of December 31, 2025.

Hilburn Davis IV

Chief Executive Officer and Chairman of the Board

Financial Officer

Executive Officers and

John Hilburn Davis IV

President and Chief Executive

Chief Financial Officer

Trevor Pettennude

Jameeka Aaron

board of directors may establish the authorized number of directors from time to time by resolution.

Our Board currently consists of five members.

current or pending member of our board of directors or Compensation Committee serves as a member of the board of directors or the compensation

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The composition and functioning of all of our committees will comply

with all applicable requirements of the Sarbanes-Oxley Act, and SEC rules and regulations.

with all applicable requirements of the Sarbanes-Oxley Act, NasdaqCM and SEC rules and regulations, if applicable.

Each committee’s

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by reference of the information contained at or available through our website.

Board and c ommittee m eetings

During the year ended December 31, 2024, the Board held 4 meetings and acted by unanimous written consent 4 times.

The audit committee held 4 meetings.

The compensation committee held 4 meetings and acted by unanimous written consent 4 times.

The nominating

and corporate governance committee held 4 meetings.

During 2024, each director attended more than 75% of the combined meetings of the

Board and each committee on which he or she served.

Pettennude, Jameeka Green Aaron and Huong Doan serve on the audit committee, which is chaired by Huong Doan.

Pettennude, Jameeka Green Aaron and Hong Doan serve on the audit committee, which is chaired by Trevor Pettennude.

Our board of directors

has determined that each are “independent” for audit committee purposes as that term is defined by the rules of the SEC and

Nasdaq, and that each has sufficient knowledge in financial and auditing matters to serve on the audit committee.

NasdaqCM, and that each has sufficient knowledge in financial and auditing matters to serve on the audit committee.

Our Board of directors

has designated Huong Doan as an “audit committee financial expert,” as defined under the applicable rules of the SEC.

has designated Trevor Pettennude as an “audit committee financial expert,” as defined under the applicable rules of the SEC.

The audit committee’s responsibilities include:

approving the compensation of, and assessing the independence of our independent registered public accounting firm;

pre-approving

auditing and permissible non-audit services, and the terms of such services, to be provided by our independent registered public

accounting firm;

the overall audit plan with our independent registered public accounting firm and members of management responsible for preparing

our financial statements;

and discussing with management and our independent registered public accounting firm our annual and quarterly financial statements

and related disclosures as well as critical accounting policies and practices used by us;

the oversight and reviewing the adequacy of our internal control over financial reporting;

policies and procedures for the receipt and retention of accounting-related complaints and concerns;

recommending,

based upon the audit committee’s review and discussions with management and our independent registered public accounting firm,

whether our audited financial statements shall be included in our Annual Report on Form 10-K;

the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to our financial

statements and accounting matters;

the audit committee report required by SEC rules to be included in our annual proxy statement;

all related person transactions for potential conflict of interest situations and approving all such transactions;

quarterly earnings releases.

Pettennude, Jameeka Green Aaron and Huong Doan serve on the compensation committee, which is chaired by Jameeka Green Aaron.

of directors has determined that each member of the compensation committee is “independent” as defined in the Nasdaq rules.

appointing, approving the

compensation of, and assessing the independence of our independent registered public accounting firm;

pre-approving auditing

and permissible non-audit services, and the terms of such services, to be provided by our independent registered public accounting

reviewing the overall audit

plan with our independent registered public accounting firm and members of management responsible for preparing our financial statements;

reviewing and discussing

with management and our independent registered public accounting firm our annual and quarterly financial statements and related disclosures

as well as critical accounting policies and practices used by us;

coordinating the oversight

and reviewing the adequacy of our internal control over financial reporting;

establishing policies and

procedures for the receipt and retention of accounting-related complaints and concerns;

recommending, based upon

the audit committee’s review and discussions with management and our independent registered public accounting firm, whether

our audited financial statements shall be included in our Annual Report on Form 10-K;

monitoring the integrity

of our financial statements and our compliance with legal and regulatory requirements as they relate to our financial statements

and accounting matters;

preparing the audit committee

report required by SEC rules to be included in our annual proxy statement;

reviewing all related person

transactions for potential conflict of interest situations and approving all such transactions;

reviewing quarterly earnings

Pettennude, Jameeka Green Aaron and Hong Doan serve on the compensation committee, which is chaired by Jameeka Green Aaron.

of directors has determined that each member of the compensation committee is “independent” as defined in the applicable

NasdaqCM rules.

The compensation committee’s responsibilities include:

reviewing and recommending to the board of directors the corporate goals and objectives relevant to the compensation of our Chief

Executive Officer;

the performance of our Chief Executive Officer in light of such corporate goals and objectives and based on such evaluation:

recommending to the board of directors the cash compensation of our Chief Executive Officer, and (ii) reviewing and approving grants

and awards to our Chief Executive Officer under equity-based plans;

and recommending to the board of directors the cash compensation of our other executive officers;

and establishing our overall management compensation, philosophy and policy;

and administering our compensation and similar plans;

and approving the retention or termination of any consulting firm or outside advisor to assist in the evaluation of compensation

matters and evaluating and assessing potential and current compensation advisors in accordance with the independence standards identified

in the applicable rules;

and approving the compensation of any compensation advisors;

and approving our policies and procedures for the grant of equity-based awards;

and recommending to the board of directors the compensation of our directors;

the compensation committee report required by SEC rules, if and when required, to be included in our annual proxy statement.

annually reviewing and

recommending to the board of directors the corporate goals and objectives relevant to the compensation of our Chief Executive Officer;

evaluating the performance

of our Chief Executive Officer in light of such corporate goals and objectives and based on such evaluation:

(i) recommending to

the board of directors the cash compensation of our Chief Executive Officer, and (ii) reviewing and approving grants and awards to

our Chief Executive Officer under equity-based plans;

reviewing and recommending

to the board of directors the cash compensation of our other executive officers;

reviewing and establishing

our overall management compensation, philosophy and policy;

overseeing and administering

our compensation and similar plans;

reviewing and approving

the retention or termination of any consulting firm or outside advisor to assist in the evaluation of compensation matters and evaluating

and assessing potential and current compensation advisors in accordance with the independence standards identified in the applicable

NasdaqCM rules;

retaining and approving

the compensation of any compensation advisors;

reviewing and approving

our policies and procedures for the grant of equity-based awards;

reviewing and recommending

to the board of directors the compensation of our directors;

preparing the compensation

committee report required by SEC rules, if and when required, to be included in our annual proxy statement.

of the members of our compensation committee has at any time during the prior three years been one of our officers or employees.

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and corporate governance committee

Pettennude, Jameeka Green Aaron and Huong Doan serve on the nominating and corporate governance committee, which is chaired by Huong Doan.

Pettennude, Jameeka Green Aaron and Hong Doan serve on the nominating and corporate governance committee, which is chaired by Hong Doan.

Our board of directors has determined that each member of the nominating and corporate governance committee is “independent”

as defined in the Nasdaq rules.

as defined in the applicable NasdaqCM rules.

The nominating and corporate governance committee’s responsibilities include:

and recommending to the board of directors’ criteria for board and committee membership;

procedures for identifying and evaluating board of director candidates, including nominees recommended by stockholders;

the composition of the board of directors to ensure that it is composed of members containing the appropriate skills and expertise

to advise us.

developing and recommending

to the board of directors’ criteria for board and committee membership;

establishing procedures

for identifying and evaluating board of director candidates, including nominees recommended by stockholders;

reviewing the composition

of the board of directors to ensure that it is composed of members containing the appropriate skills and expertise to advise us.

in Certain Legal Proceedings

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director, is a party adverse to us or any of our or has a material interest adverse to us or any of our subsidiaries.

of Ethics and Business Conduct

Company’s Code of Ethics and Business Conduct applies to all of its employees, officers and directors, including those

officers responsible for financial reporting.

The Code of Ethics and Business Conduct is available on its website at

www.digitalbrandsgroup.co.

Information contained on or accessible through such website is not a part of this Annual Report, and the

inclusion of the website address in this Annual Report is an inactive textual reference only.

The Company intends to disclose any

amendments to the Code of Business Conduct and Ethics, or any waivers of its requirements, on its website to the extent required by

the applicable rules and exchange requirements.

Compensation Recovery Policy

In 2023, the Board of Directors

approved a new compensation recovery policy (the “Clawback Policy”) in compliance with SEC and then-applicable rules and regulations.

The Clawback Policy provides that in the event we are required to prepare an “Accounting Restatement” (as defined in the Clawback

Policy), we shall, subject to certain limited exceptions as described in the Clawback Policy, recover certain incentive-based compensation

from executive officers who are or have been designated as an “officer” by the Board of Directors in accordance with Exchange

Act Rule 16a-1(f).

Compensation that shall be recovered under the Clawback Policy generally includes “Incentive-Based Compensation”

(as defined in the Clawback Policy) received during the three-year period prior to the “Accounting Restatement Determination Date”

(as defined in the Clawback Policy) that exceeds the amount that otherwise would have been received by the “officer” had such

compensation been determined based on the restated amounts in the financial restatement.

Under the Clawback Policy, “Incentive-Based

Compensation” includes any compensation that is granted, earned, or vested based, in whole or in part, upon the attainment of a

Financial Reporting Measure (as defined in the Clawback Policy).

Insider Trading Arrangements

We have adopted an

insider trading policy that governs the purchase, sale, and/or other transactions of our securities by our directors, officers and employees.

A copy of our insider trading policy is filed as Exhibit 19.1 to this Annual Report on Form 10-K for the fiscal year ended December 31,

In addition, with regard to us trading in our own securities, it is our policy to comply with the federal securities laws and the

applicable exchange listing requirements in all respects.

Anti-Hedging Policy

Under the terms of our insider trading policy, we prohibit each officer, director and employee, and each of their

family members and controlled entities, from engaging in certain forms of hedging or monetization transactions.

Such transactions include

those, such as zero-cost collars and forward sale contracts, that would allow them to lock in much of the value of their stock holdings,

often in exchange for all or part of the potential for upside appreciation in the stock, and to continue to own the covered securities

but without the full risks and rewards of ownership.

Company’s Code of Conduct applies to all of its employees, officers and directors, including those officers responsible for financial

The Code of Conduct is available on its website at www.digitalbrandsgroup.co.

Information contained on or accessible through

such website is not a part of this Annual Report, and the inclusion of the website address in this Annual Report is an inactive textual

reference only.

The Company intends to disclose any amendments to the Code of Business Conduct and Ethics, or any waivers of its requirements,

on its website to the extent required by the applicable rules and exchange requirements.

Section 16(a) Reports

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filing requirements for fiscal year 2025.

Board Oversight of Risk Management

The Board of Directors considers

oversight of the Company’s risk management efforts, including enterprise risk management, to be a responsibility of the entire Board

(as reported by and through the appropriate committee in the case of risks under the purview of a particular committee).

Management regularly

updates the full Board on major Company initiatives, strategies, and related risks.

At least annually, management reviews with the Board

risks to the enterprise and efforts to address them.

In addition, presentations are made in the ordinary course at scheduled Board meetings

regarding operations, finance, market trends, and the various other risks that face the Company.

On an ongoing basis, the various committees

of the Board address risk in the areas germane to their scope.

The nominating and corporate governance committee evaluates Board effectiveness, succession planning, and general corporate best practices;

The compensation committee oversees the Company’s policies to attract, retain, and motivate talented employees and ties compensation to actual performance, including risks associated with executive compensation;

The audit committee provides risk oversight of the Company’s financial statements, the Company’s compliance with legal and regulatory requirements and corporate policies and controls, including controls over financial reporting, computerized information systems and cyber security, the independent auditor’s selection, retention, qualifications, objectivity and independence, and the performance of the Company’s internal audit function.

The chairperson of the relevant

Board committee reports on the committee’s discussions to the entire Board during the committee reports portion of the applicable

Board meeting.

Leadership Structure and Role in Risk Oversight

Board of Directors has a Chairman, Mr.

The Chairman has authority, among other things, to preside over Board meetings and set the

agenda for Board meetings.

Accordingly, the Chairman has substantial ability to shape the work of our Board of Directors.

We believe that

separation of the roles of Chairman and Chief Executive Officer is not necessary at this time to ensure appropriate oversight by the Board

of Directors of our business and affairs.

However, no single leadership model is right for all companies and at all times.

Directors recognizes that depending on the circumstances, other leadership models, such as the appointment of a lead independent director,

might be appropriate.

Accordingly, the Board of Directors may periodically review its leadership structure.

In addition, the Board of

Directors will hold executive sessions in which only independent directors are present.

Our Board of Directors is

generally responsible for the oversight of corporate risk in its review and deliberations relating to our activities.

Our audit committee

oversees management of financial risks;

our Board of Directors regularly reviews information regarding our cash position, liquidity and

operations, as well as the risks associated with each.

The Board of Directors regularly reviews plans, results and potential risks related

to our product development and commercialization efforts.

Our compensation committee oversees risk management as it relates to our compensation

plans, policies and practices for all employees including executives and directors, particularly whether our compensation programs may

create incentives for our employees to take excessive or inappropriate risks which could have a material adverse effect on us.

Executive Sessions of Independent Directors

The independent directors of the

Board and each standing committee meet regularly in executive sessions without management present.

Stockholders wishing to communicate

with the independent directors may contact them by writing to Independent Directors, c/o Corporate Secretary, Digital Brands Group, Inc.,

1400 Lavaca Street, Austin, TX 78701.

Any such communication will be promptly distributed by our Corporate Secretary to the individual

independent director or directors named in the communication in the same manner as described below in “Communications with the Board.”

Communications with the Board

Stockholders and other interested

parties can send communications to one or more members of the Board by writing to the Board or specific directors or group of directors

at the following address:

c/o Corporate Secretary, Digital Brands Group, Inc., 1400 Lavaca Street, Austin, TX 78701.

Any communication

will be promptly distributed by our Corporate Secretary to the individual director or directors named in the communication or to all directors

if addressed to the entire Board.

EXECUTIVE COMPENSATION

of Named Executive Officers

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Davis was entitled to receive under his agreement with the Company.

$34,483.85 of such

amount has been paid to Mr.

This amount represents the amount of salary Mr.

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not yet been paid to Mr.

Outstanding Equity Awards at 2024 Fiscal Year-End

Officer Outstanding Equity Awards at Fiscal Year-End

following table provides certain information concerning any common share purchase options, stock awards or equity incentive plan awards

held by each of our named executive officers that were outstanding as of December 31, 2024.

Option Awards

The number of shares of common stock referred

to in this “Executive Compensation” section gives effect to the one-for-100 reverse stock split that we effectuated on November

3, 2022, unless the context clearly indicates otherwise.

On August 21, 2023, the Board of Directors approved a one - for - 25 reverse

stock split of its issued and outstanding shares of common stock and a proportional adjustment to the existing conversion ratios for

each series of the Company’s preferred stock.

On December 11, 2024, the Board of Directors approved a one - for - 50 reverse stock

split of its issued and outstanding shares of common stock and a proportional adjustment to the existing conversion ratios for each series

of the Company’s preferred stock.

Unexercisable

John “Hil” Davis

December 2020, we entered into an offer letter with Mr.

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Yeoman is an at-will employee and does not have a fixed employment term.

non-employee directors currently do not receive any compensation for their services.

Directors who are also our employees do not receive any additional compensation for their service on our board of

obligations with respect to compensation for non-employee directors have been accrued or paid for any periods presented.

forward, our board of directors believes that attracting and retaining qualified non-employee directors will be critical to the future

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On the effective date of the previous offerings,

each of our director nominees was granted options to purchase 400 shares of common stock at a per

each of our director nominees was granted options to purchase 400 shares (after effect of reverse stock split) of common stock at a per

share exercise price equal to the price of the shares of common stock per the offering.

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We may in the future grant additional options to our non-employee directors although there are no current plans to do so.

do not currently intend to provide any cash compensation to our non- employee directors.

who are also our employees will not receive any additional compensation for their service on our board of directors.

Incentive Stock Plan

have adopted a 2020 Omnibus Incentive Stock Plan (the “2020 Plan”).

An aggregate of 26 shares of our common stock is reserved for issuance and available for awards under the 2020 Plan, including incentive stock options

An aggregate of 26 shares(after taking reverse stock

split effect) of our common stock is reserved for issuance and available for awards under the 2020 Plan, including incentive stock options

granted under the 2020 Plan.

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its subsidiaries.

To date, 22 grants have been made under the 2020 Plan and 4 shares remain

eligible for issuance under the 2020 Plan.

To date, 22 grants (as adjusted for the Reverse

Split) have been made under the 2020 Plan and 4 shares remain eligible for issuance under the Plan.

2020 Plan is currently administered by the Compensation Committee of the Board as the Plan administrator.

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which will detail the terms and conditions of the awards, including any applicable vesting and payment terms and post-termination exercise

Policies and Practices

Related to the Grant of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information

not have any formal policy that requires us to grant, or avoid granting, stock options at particular times.

Consistent with its annual

compensation cycle, if options are to be granted, the Compensation Committee generally seeks to grant annual stock option awards after

its Annual Report on Form 10-K has been filed.

The timing of any stock option grants in connection with new hires, promotions, or other

non-routine grants is tied to the event giving rise to the award (such as an employee’s commencement of employment or promotion

effective date).

As a result, in all cases, the timing of grants of stock options occurs independent of the release of any material nonpublic

information, and we do not time the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation.

options were issued to executive officers in 2024 during any period beginning four business days before the filing of a periodic report

or current report disclosing material non-public information and ending one business day after the filing or furnishing of such report

with the SEC.

No Pension Benefits

not maintain any plan that provides for payments or other benefits to its executive officers at, following or in connection with retirement

and including, without limitation, any tax-qualified defined benefit plans or supplemental executive retirement plans.

No Nonqualified Deferred

We do not maintain any defined contribution or other plan that provides for the deferral of compensation on a basis

that is not tax-qualified.

OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

table below sets forth information regarding the projected beneficial ownership of our common stock as of April 9, 2025 by the

SECURITY OWNERSHIP OF

CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

table below sets forth information regarding the projected beneficial ownership of our common stock as of March [●], 2025 by the

following individuals or groups:

person or entity who is known by us to own beneficially more than 5% of our outstanding stock;

of our executive officers;

of our directors and director nominees;

of our directors, director nominees and executive officers as a group.

each person or entity who

is known by us to own beneficially more than 5% of our outstanding stock;

each of our executive officers;

each of our directors and

director nominees;

all of our directors, director

nominees and executive officers as a group.

ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to the

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John “Hil” Davis(1)

Trevor Pettennude

Trevor Pettenude(4)

Jameeka Aaron

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All executive officers, directors and director nominees as a group (6 persons) (5)

than one percent.

options exercisable at $518,750 per share, and 1 share of common stock.

an option to acquire 1 share of common stock, exercisable at $518,750 per share.

options to acquire up to 3 shares of common stock, exercisable between $195,000 and $410,000 per share, and 1 share of common stock.

an option to acquire 1 share of common stock, exercisable at $195,000 per share, and 1 share of common stock.

options to acquire up to 23 shares of common stock.

RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

of December 31, 2024 and 2023, the Company made net repayments for amounts due to related parties totaling $11,909 and $130,205, respectively.

As of December 31, 2024 and 2023, amounts due to related parties were $411,921 and $400,012, respectively.

The advances are unsecured,

non-interest bearing and due on demand.

Amounts due to related parties consist of current and former executives, and a board member.

of December 31, 2024 and 2023, due to related parties includes advances from the former officer, Mark Lynn, who also serves as a director,

totaling $104,568 and $104,568, respectively, and accrued salary and expense reimbursements of $87,221 and $87,221, respectively, to

current officers.

Less than one percent.

Represents options exercisable

at $518,750 per share.

Represents options to acquire

up to 1 share of common stock, exercisable at $518,750 per share.

Includes options to acquire

up to 3 shares of common stock exercisable between $195,000 and $410,000 per share.

Includes options to acquire

up to 1 share of common stock exercisable between $195,000.

Represents options to acquire

up to 23 shares of common stock.

CERTAIN RELATIONSHIPS

AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

of December 31, 2025 and 2024, amounts due to related parties was $370,921 and $411,921, respectively.

The advances are unsecured, non-interest

bearing and due on demand.

Amounts due to related parties consist of amounts due to current and former executives, and a board member.

of December 31, 2025 and 2024, due to related parties includes $87,221 in advances from Mark Lynn, a director and former officer of the

company, and accrued salary and expense reimbursements of $134,670 to current officers of the company.

October 2022, the Company received advances from a director, Trevor Pettennude, totaling $325,000.

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bearing and due on demand.

As of December 31, 2024 and 2023, $190,000 and $175,000, respectively, were outstanding.

As of December 31, 2025 and 2024, $149,000 and $190,000, respectively, was outstanding.

and Procedures for Related Person Transactions

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ACCOUNTING FEES AND SERVICES

following table provides information regarding the fees billed to us by Macias Gini & O’Connell LLP in the fiscal years ended

December 31, 2024 and 2023, respectively.

following table provides information regarding the fees billed to us by dbb mckennon and Macias Gini & O’Connell LLP

in the fiscal years ended December 31, 2025 and 2024, respectively.

All fees described below were approved by the Board:

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All other fees (2)

fees include fees associated with the annual audits of our financial statements, quarterly reviews of our financial statements,

and services that are normally provided by the independent registered public accounting firm in connection with statutory and regulatory

filings or engagements.

audit fees paid for pre-acquisition audits of the Company’s subsidiaries and other targets.

Audit fees includes fees

associated with the annual audits of our financial statements, quarterly reviews of our financial statements, and services that are

normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements.

Includes audit fees paid

for pre-acquisition audits of the Company’s subsidiaries and other targets.

audit committee is responsible for approving or pre-approving all auditing services (including comfort letters and statutory audits)

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scheduled meeting or as soon as practicable thereafter.

FINANCIAL STATEMENT SCHEDULES

EXHIBITS, FINANCIAL

STATEMENT SCHEDULES

Financial Statements

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following is a list of exhibits filed as part of this Annual Report on Form 10-K.

Interest Purchase Agreement dated October 14, 2020 among D.

Jones Tailored Collection, LTD and Digital Brands Group (formerly known

as Denim.LA, Inc.) (incorporated by reference to Exhibit 2.1 of Digital Brands Group Inc.’s Registration Statement on Form

Plan of Conversion of Digital Brands Group, Inc.

(incorporated by reference to Exhibit 2.1 of Digital Brands Group Inc.’s Current Report on Form 8-K filed with the SEC on January 5, 2026).

Membership Interest Purchase Agreement dated October 14, 2020 among D.

Jones Tailored Collection, LTD and Digital Brands Group (formerly known as Denim.LA, Inc.) (incorporated by reference to Exhibit 2.1 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the SEC on January 6, 2022).

Amendment to Membership Interest Purchase Agreement dated December 31, 2020 among D.

Jones Tailored Collection, LTD and Digital Brands

Group (formerly known as Denim.LA, Inc) (incorporated by reference to Exhibit 2.2 of Digital Brands Group Inc.’s Registration

Statement on Form S-1/A (Reg.

First Amendment to Membership Interest Purchase Agreement dated December 31, 2020 among D.

Jones Tailored Collection, LTD and Digital Brands Group (formerly known as Denim.LA, Inc) (incorporated by reference to Exhibit 2.2 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the SEC on January 6, 2022).

and Plan of Merger with Bailey 44, LLC dated February 12, 2020 among Bailey 44, LLC, Norwest Venture Partners XI, and Norwest Venture

Partners XII, LP and Digital Brands Group (formerly known as Denim.LA, Inc) (incorporated by reference to Exhibit 2.3 of Digital

Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

Agreement and Plan of Merger with Bailey 44, LLC dated February 12, 2020 among Bailey 44, LLC, Norwest Venture Partners XI, and Norwest Venture Partners XII, LP and Digital Brands Group (formerly known as Denim.LA, Inc) (incorporated by reference to Exhibit 2.3 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the SEC on January 6, 2022).

Amendment to Membership Interest Purchase Agreement Dated May 10, 2021 among D.

Jones Tailored

Collection, LTD and Digital Brands Group (formerly known as Denim.

LA, Inc.) (incorporated

by reference to Exhibit 2.4 of Digital Brands Group Inc.’s Registration Statement on

Form S-1/A (Reg.

Second Amendment to Membership Interest Purchase Agreement Dated May 10, 2021 among D.

Jones Tailored Collection, LTD and Digital Brands Group (formerly known as Denim.

LA, Inc.) (incorporated by reference to Exhibit 2.4 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the SEC on January 6, 2022).

Interest Purchase Agreement, dated August 30, 2021, by and between Moise Emquies and Digital Brands Group, Inc.

(incorporated by

reference to Exhibit 2.5 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with

the SEC on January 6, 2022).

Interest Purchase Agreement, dated January 18, 2022, by and among Moise Emquies, George Levy, Matthieu Leblan and Carol Ann Emquies,

Sunnyside, LLC, and George Levy as the Sellers’ representative (incorporated by reference to Exhibit 1.1 of Digital Brands

Group Inc.’s Form 8-K filed with the SEC on January 20, 2022).

and Restated Membership Interest Purchase Agreement, dated June 17, 2022, by and among Digital Brands Group, Inc.

and Moise Emquies,

George Levy, Matthieu Leblan and Carol Ann Emquies (incorporated by reference to Exhibit 2.1 of Digital Brands Group Inc.’s

Form 8-K filed with the SEC on June 23, 2022).

Amended and Restated Membership Interest Purchase Agreement, dated October 13, 2022, by and among Digital Brands Group, Inc.

Moise Emquies, George Levy, Matthieu Leblan and Carol Ann Emquies (incorporated by reference to Exhibit 2.1 of Digital Brands Group

Inc.’s Form 8-K filed with the SEC on October 18, 2022).

Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.3 of Digital Brands Group

Inc.’s Registration Statement on Form S-1/A (Reg.

Membership Interest Purchase Agreement, dated August 30, 2021, by and between Moise Emquies and Digital Brands Group, Inc.

(incorporated by reference to Exhibit 2.5 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the SEC on January 6, 2022).

of Designation of Series A Preferred Stock, dated August 31, 2022 (incorporated by reference to Exhibit 3.1 of Digital Brands Group

Inc.’s Form 8-K filed with the SEC on August 31, 2022).

of Designation of Series A Convertible Preferred Stock, dated September 29, 2022 (incorporated by reference to Exhibit 3.1 of Digital

Brands Group Inc.’s Form 8-K filed with the SEC on October 5, 2022).

of Correction of Series A Convertible Preferred Stock, dated October 3, 2022 (incorporated by reference to Exhibit 3.2 of Digital

Brands Group Inc.’s Form 8-K filed with the SEC on October 5, 2022).

of Amendment of Certificate of Incorporation of Digital Brands Group, Inc.

dated October 13, 2022 (incorporated by reference to Exhibit

3.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on October 18, 2022).

of Amendment of Certificate of Incorporation of Digital Brands Group, Inc.

dated October 21, 2022 (incorporated by reference to Exhibit

3.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on October 26, 2022).

and Restated Bylaws of Registrant (incorporated by reference to Exhibit 3.5 of Digital Brands Group Inc.’s Registration Statement

on Form S-1/A (Reg.

Membership Interest Purchase Agreement, dated January 18, 2022, by and among Moise Emquies, George Levy, Matthieu Leblan and Carol Ann Emquies, Sunnyside, LLC, and George Levy as the Sellers’ representative (incorporated by reference to Exhibit 1.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on January 20, 2022).

Amended and Restated Membership Interest Purchase Agreement, dated June 17, 2022, by and among Digital Brands Group, Inc.

and Moise Emquies, George Levy, Matthieu Leblan and Carol Ann Emquies (incorporated by reference to Exhibit 2.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on June 23, 2022).

Second Amended and Restated Membership Interest Purchase Agreement, dated October 13, 2022, by and among Digital Brands Group, Inc.

and Moise Emquies, George Levy, Matthieu Leblan and Carol Ann Emquies (incorporated by reference to Exhibit 2.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on October 18, 2022).

Articles of Incorporation of Digital Brands Group, Inc.

(incorporated by reference to Exhibit 3.1 of Digital Brands Group Inc.’s Current Report on Form 8-K filed with the SEC on January 5, 2026).

Certificate of Designations, Preferences and Rights of the Series D Convertible Stock of Digital Brands Group, Inc.

(incorporated by reference to Exhibit 3.1 of Digital Brands Group Inc.’s Current Report on Form 8-K filed with the SEC on February 17, 2026).

Sixth Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.3 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the SEC on January 6, 2022).

1 to the Amended and Restated Bylaws of Digital Brands Group, Inc., as amended (incorporated by reference to Exhibit 3.1 of Digital

Brands Group Inc.’s Form 8-K filed with the SEC on August 12, 2022).

2 to the Amended and Restated Bylaws of Digital Brands Group, Inc., as amended (incorporated by reference to Exhibit 3.2 of Digital

Brands Group Inc.’s Form 8-K filed with the SEC on August 31, 2022).

of Common Stock Certificate (incorporated by reference to Exhibit 4.1 of Digital Brands Group Inc.’s Registration Statement

on Form S-1/A (Reg.

Certificate of Designation of Series A Preferred Stock, dated August 31, 2022 (incorporated by reference to Exhibit 3.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on August 31, 2022).

Certificate of Designation of Series A Convertible Preferred Stock, dated September 29, 2022 (incorporated by reference to Exhibit 3.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on October 5, 2022).

Certificate of Correction of Series A Convertible Preferred Stock, dated October 3, 2022 (incorporated by reference to Exhibit 3.2 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on October 5, 2022).

Certificate of Amendment of Certificate of Incorporation of Digital Brands Group, Inc.

dated October 13, 2022 (incorporated by reference to Exhibit 3.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on October 18, 2022).

Certificate of Amendment of Certificate of Incorporation of Digital Brands Group, Inc.

dated October 21, 2022 (incorporated by reference to Exhibit 3.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on October 26, 2022).

Bylaws of Digital Brands Group, Inc.

(incorporated by reference to Exhibit 3.2 of Digital Brands Group Inc.’s Current Report on Form 8-K filed with the SEC on January 5, 2026).

Amended and Restated Bylaws of Registrant (incorporated by reference to Exhibit 3.5 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the SEC on January 6, 2022).

Agency Agreement, including Form of Warrant Certificate (incorporated by reference to Exhibit 10.1 of Digital Brands Group Inc.’s

Form 8-K filed with the SEC on May 18, 2021).

Representative’s

Warrant Agreement (incorporated by reference to Exhibit 4.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on May

of Lender’s Warrants (incorporated by reference to Exhibit 4.4 of Digital Brands Group Inc.’s Registration Statement

on Form S-1/A (Reg.

Amendment No.

1 to the Amended and Restated Bylaws of Digital Brands Group, Inc., as amended (incorporated by reference to Exhibit 3.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on August 12, 2022).

Amendment No.

2 to the Amended and Restated Bylaws of Digital Brands Group, Inc., as amended (incorporated by reference to Exhibit 3.2 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on August 31, 2022).

Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the SEC on January 6, 2022).

of Promissory Note, dated July 22, 2022, by Digital Brands Group, Inc.

in favor each Investor (incorporated by reference to Exhibit

10.2 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on July 27, 2022).

of Warrant, dated July 22, 2022, by Digital Brands Group, Inc.

in favor each Investor (incorporated by reference to Exhibit 10.3

of Digital Brands Group Inc.’s Form 8-K filed with the SEC on July 27, 2022).

of Promissory Note, dated July 28, 2022, by Digital Brands Group, Inc.

in favor the New Investor (incorporated by reference to Exhibit

10.2 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on August 2, 2022).

of Warrant, dated July 28, 2022, by Digital Brands Group, Inc.

in favor the New Investor (incorporated by reference to Exhibit 10.3

of Digital Brands Group Inc.’s Form 8-K filed with the SEC on August 2, 2022).

of Promissory Notes issued to each of the Sellers, Jenny Murphy and Elodie Crichi (incorporated by reference to Exhibit 10.1 of Digital

Brands Group Inc.’s Form 8-K filed with the SEC on October 18, 2022).

Rights Agreement, dated August 30, 2021, by and between Digital Brands Group, Inc.

and Moise Emquies (incorporated by reference to

Exhibit 4.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on August 31, 2021).

Rights Agreement, dated August 27, 2021, by and between Digital Brands Group, Inc.

and Oasis Capital, LLC (Note) (incorporated by

reference to Exhibit 4.2 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on August 31, 2021).

Rights Agreement, dated August 27, 2021, by and between Digital Brands Group, Inc.

and Oasis Capital, LLC (ELOC) (incorporated by

reference to Exhibit 4.3 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on August 31, 2021).

and Amendment to Registration Rights Agreement, dated October 1, 2021, by and among Digital Brands Group, Inc., Oasis Capital, LLC

and FirstFire Global Opportunities Fund, LLC (incorporated by reference to Exhibit 4.2 of Digital Brands Group Inc.’s Form

8-K filed with the SEC on October 6, 2021).

to Registration Rights Agreement, dated November 16, 2021, by and among Digital Brands Group, Inc., Oasis Capital, LLC and FirstFire

Global Opportunities Fund, LLC (incorporated by reference to Exhibit 4.2 of Digital Brands Group Inc.’s Form 8-K filed with

the SEC on November 19, 2021).

Rights Agreement, dated April 8, 2022, by and among Digital Brands Group, Inc.

and certain Investors (incorporated by reference to

Exhibit 4.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on April 12, 2022).

Rights Agreement, dated July 22, 2022, by and among Digital Brands Group, Inc.

and certain Investors (incorporated by reference to

Exhibit 4.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on July 27, 2022).

Rights Agreement, dated September 29, 2022, by and among Digital Brands Group, Inc.

and the Investor (incorporated by reference to

Exhibit 4.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on October 5, 2022).

Underwriter’s

Warrants issued to Alexander Capital L.P.

on May 5, 2022 (incorporated by reference to Exhibit 4.1 of Digital Brands Group Inc.’s

Form 8-K filed with the SEC on May 10, 2022)

Underwriter’s

Warrants issued to Revere Securities, LLC (incorporated by reference to Exhibit 4.2 of Digital Brands Group Inc.’s Form 8-K

filed with the SEC on May 10, 2022)

of Class B Warrant (incorporated by reference to Exhibit 4.27 to the Registrant’s Registration Statement on Form S-1/A, filed

with the SEC on November 29, 2022 (File no.

Warrant Agency Agreement, including Form of Warrant Certificate (incorporated by reference to Exhibit 10.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on May 18, 2021).

Representative’s Warrant Agreement (incorporated by reference to Exhibit 4.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on May 18, 2021).

Form of Lender’s Warrants (incorporated by reference to Exhibit 4.4 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the SEC on January 6, 2022).

Form of Promissory Note, dated July 22, 2022, by Digital Brands Group, Inc.

in favor each Investor (incorporated by reference to Exhibit 10.2 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on July 27, 2022).

Form of Warrant, dated July 22, 2022, by Digital Brands Group, Inc.

in favor each Investor (incorporated by reference to Exhibit 10.3 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on July 27, 2022).

Form of Promissory Note, dated July 28, 2022, by Digital Brands Group, Inc.

in favor the New Investor (incorporated by reference to Exhibit 10.2 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on August 2, 2022).

Form of Warrant, dated July 28, 2022, by Digital Brands Group, Inc.

in favor the New Investor (incorporated by reference to Exhibit 10.3 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on August 2, 2022).

Form of Promissory Notes issued to each of the Sellers, Jenny Murphy and Elodie Crichi (incorporated by reference to Exhibit 10.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on October 18, 2022).

Registration Rights Agreement, dated August 30, 2021, by and between Digital Brands Group, Inc.

and Moise Emquies (incorporated by reference to Exhibit 4.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on August 31, 2021).

Registration Rights Agreement, dated August 27, 2021, by and between Digital Brands Group, Inc.

and Oasis Capital, LLC (Note) (incorporated by reference to Exhibit 4.2 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on August 31, 2021).

Registration Rights Agreement, dated August 27, 2021, by and between Digital Brands Group, Inc.

and Oasis Capital, LLC (ELOC) (incorporated by reference to Exhibit 4.3 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on August 31, 2021).

Joinder and Amendment to Registration Rights Agreement, dated October 1, 2021, by and among Digital Brands Group, Inc., Oasis Capital, LLC and FirstFire Global Opportunities Fund, LLC (incorporated by reference to Exhibit 4.2 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on October 6, 2021).

Amendment to Registration Rights Agreement, dated November 16, 2021, by and among Digital Brands Group, Inc., Oasis Capital, LLC and FirstFire Global Opportunities Fund, LLC (incorporated by reference to Exhibit 4.2 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on November 19, 2021).

Registration Rights Agreement, dated April 8, 2022, by and among Digital Brands Group, Inc.

and certain Investors (incorporated by reference to Exhibit 4.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on April 12, 2022).

Registration Rights Agreement, dated July 22, 2022, by and among Digital Brands Group, Inc.

and certain Investors (incorporated by reference to Exhibit 4.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on July 27, 2022).

Registration Rights Agreement, dated September 29, 2022, by and among Digital Brands Group, Inc.

and the Investor (incorporated by reference to Exhibit 4.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on October 5, 2022).

Underwriter’s Warrants issued to Alexander Capital L.P.

on May 5, 2022 (incorporated by reference to Exhibit 4.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on May 10, 2022)

Underwriter’s Warrants issued to Revere Securities, LLC (incorporated by reference to Exhibit 4.2 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on May 10, 2022)

Form of Class B Warrant (incorporated by reference to Exhibit 4.27 to the Registrant’s Registration Statement on Form S-1/A, filed with the SEC on November 29, 2022 (File no.

333-268213)).

of Class C Warrant (incorporated by reference to Exhibit 4.28 to the Registrant’s Registration Statement on Form S-1/A, filed

with the SEC on November 29, 2022 (File no.

Form of Class C Warrant (incorporated by reference to Exhibit 4.28 to the Registrant’s Registration Statement on Form S-1/A, filed with the SEC on November 29, 2022 (File no.

333-268213)).

of Pre-Funded Warrant (incorporated by reference to Exhibit 4.29 to the Registrant’s Registration Statement on Form S-1/A,

filed with the SEC on November 29, 2022 (File no.

Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.29 to the Registrant’s Registration Statement on Form S-1/A, filed with the SEC on November 29, 2022 (File no.

333-268213)).

of Placement Agent Warrant (incorporated by reference to Exhibit 4.30 to the Registrant’s Registration Statement on Form S-1/A,

filed with the SEC on November 29, 2022 (File no.

Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.30 to the Registrant’s Registration Statement on Form S-1/A, filed with the SEC on November 29, 2022 (File no.

333-268213)).

Rights Agreement, dated December 29, 2022, by and among Digital Brands Group, Inc.

and the Investors (incorporated by reference to

Exhibit 4.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on January 4, 2023).

Rights Agreement, dated December 30, 2022, by and among Digital Brands Group, Inc.

and Moise Emquies, George Levy, Matthieu Leblan

and Carol Ann Emquies (incorporated by reference to Exhibit 4.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC

on January 4, 2023).

of Common Warrant (incorporated by reference to Exhibit 4.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on January

of Pre-Funded Warrant (incorporated by reference to Exhibit 4.2 of Digital Brands Group Inc.’s Form 8-K filed with the SEC

on January 11, 2023).

of Placement Agent Warrant (incorporated by reference to Exhibit 4.3 of Digital Brands Group Inc.’s Form 8-K filed with the

SEC on January 11, 2023).

Description of Securities.

of Indemnification Agreement between the Registrant and each of its directors and officers (incorporated by reference to Exhibit

10.1 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

Registration Rights Agreement, dated December 29, 2022, by and among Digital Brands Group, Inc.

and the Investors (incorporated by reference to Exhibit 4.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on January 4, 2023).

Registration Rights Agreement, dated December 30, 2022, by and among Digital Brands Group, Inc.

and Moise Emquies, George Levy, Matthieu Leblan and Carol Ann Emquies (incorporated by reference to Exhibit 4.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on January 4, 2023).

Form of Common Warrant (incorporated by reference to Exhibit 4.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on January 13, 2023).

Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.2 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on January 13, 2023).

Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.3 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on January 13, 2023).

Form of Indemnification Agreement between the Registrant and each of its directors and officers (incorporated by reference to Exhibit 10.1 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the SEC on January 6, 2022).

of Option Agreement with each of John “Hil” Davis, Laura Dowling and Reid Yeoman (incorporated by reference to Exhibit

10.2 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

Form of Option Agreement with each of John “Hil” Davis, Laura Dowling and Reid Yeoman (incorporated by reference to Exhibit 10.2 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the SEC on January 6, 2022).

of Board of Directors Agreement, entered into by each of the Director Nominees (incorporated by reference to Exhibit 10.4 of Digital

Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

Form of Board of Directors Agreement, entered into by each of the Director Nominees (incorporated by reference to Exhibit 10.4 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the SEC on January 6, 2022).

Agreement dated as of April 9, 2021 between Alchemy Advisory LLC and Digital Brands Group, Inc.

(incorporated by reference to Exhibit

10.6 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

Consulting Agreement dated as of April 8, 2021 between Alchemy Advisory LLC and Digital Brands Group, Inc.

(incorporated by reference to Exhibit 10.6 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the SEC on January 6, 2022).

1 unchanged sentence

333-261865), filed with the SEC on January 6, 2022).

Note, dated April 10, 2020, between Digital Brands Group (formally known as Denim.LA, Inc.) and JPMorgan Chase Bank, N.A.

(incorporated

by reference to Exhibit 10.16 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed

with the SEC on January 6, 2022).

dated June 25, 2020, between Digital Brands Group and The Small Business Administration, an Agency of the U.S.

Government (incorporated

by reference to Exhibit 10.17 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed

with the SEC on January 6, 2022).

Note, dated April 5, 2020, between JPMorgan Chase Bank, N.A.

and Bailey 44, LLC (incorporated by reference to Exhibit 10.18 of Digital

Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

Promissory Note, dated April 10, 2020, between Digital Brands Group (formally known as Denim.LA, Inc.) and JPMorgan Chase Bank, N.A.

(incorporated by reference to Exhibit 10.16 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the SEC on January 6, 2022).

Agreement between 850-860 South Los Angeles Street LLC and Bailey 44, LLC, dated April 27, 2016 (incorporated by reference to Exhibit

10.23 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

Loan dated June 25, 2020, between Digital Brands Group and The Small Business Administration, an Agency of the U.S.

Government (incorporated by reference to Exhibit 10.17 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the SEC on January 6, 2022).

Agreement between 850-860 South Los Angeles Street LLC and Bailey 44, LLC, dated April 16, 2018 (incorporated by reference to Exhibit

10.24 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

Promissory Note, dated April 5, 2020, between JPMorgan Chase Bank, N.A.

and Bailey 44, LLC (incorporated by reference to Exhibit 10.18 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the SEC on January 6, 2022).

Agreement among 45th Street, LLC, Sister Sam, LLC and Bailey 44, LLC dated January 17, 2013 (incorporated by reference to Exhibit

10.25 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

Lease Agreement between 850-860 South Los Angeles Street LLC and Bailey 44, LLC, dated April 27, 2016 (incorporated by reference to Exhibit 10.23 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the SEC on January 6, 2022).

to Lease Agreement among 45th Street, LLC, Sister Sam, LLC and Bailey 44, LLC dated February 20, 2018 (incorporated by reference

to Exhibit 10.26 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the

SEC on January 6, 2022).

Promissory Note to Norwest Venture Partners XI, LP and Norwest Venture Partners XII, LP of Bailey 44, LLC (incorporated by reference

to Exhibit 10.28 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the

SEC on January 6, 2022).

Purchase Agreement, dated August 27, 2021, by and between Digital Brands Group, Inc.

and Oasis Capital, LLC (incorporated by reference

to Exhibit 10.31 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the

SEC on January 6, 2022).

Secured Convertible Promissory Note, dated August 27, 2021, by Digital Brands Group, Inc.

in favor of Oasis Capital, LLC (incorporated

by reference to Exhibit 10.32 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed

with the SEC on January 6, 2022).

Purchase Agreement, dated August 27, 2021, by and between Digital Brands Group, Inc.

and Oasis Capital, LLC (incorporated by reference

to Exhibit 10.33 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the

SEC on January 6, 2022).

and Restated Securities Purchase Agreement, dated October 1, 2021, by and among Digital Brands Group, Inc., Oasis Capital, LLC and

FirstFire Global Opportunities Fund, LLC (incorporated by reference to Exhibit 10.34 of Digital Brands Group Inc.’s Registration

Statement on Form S-1/A (Reg.

Lease Agreement between 850-860 South Los Angeles Street LLC and Bailey 44, LLC, dated April 16, 2018 (incorporated by reference to Exhibit 10.24 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the SEC on January 6, 2022).

Secured Convertible Promissory Note, dated October 1, 2021, by Digital Brands Group, Inc.

in favor of FirstFire Global Opportunities

Fund, LLC (incorporated by reference to Exhibit 10.35 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

Lease Agreement among 45th Street, LLC, Sister Sam, LLC and Bailey 44, LLC dated January 17, 2013 (incorporated by reference to Exhibit 10.25 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the SEC on January 6, 2022).

Agreement, dated August 27, 2021, by and between Digital Brands Group, Inc.

and Oasis Capital, LLC (incorporated by reference to

Exhibit 10.36 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the SEC

on January 6, 2022).

and Amendment to Security Agreement, dated October 1, 2021, by and among Digital Brands Group, Inc., Oasis Capital, LLC and FirstFire

Global Opportunities Fund, LLC (incorporated by reference to Exhibit 10.37 of Digital Brands Group Inc.’s Registration Statement

on Form S-1/A (Reg.

Amendment to Lease Agreement among 45th Street, LLC, Sister Sam, LLC and Bailey 44, LLC dated February 20, 2018 (incorporated by reference to Exhibit 10.26 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the SEC on January 6, 2022).

Purchase Agreement, dated November 16, 2021, by and among Digital Brands Group, Inc., Oasis Capital, LLC and FirstFire Global Opportunities

Fund, LLC (incorporated by reference to Exhibit 10.40 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

Secured Promissory Note to Norwest Venture Partners XI, LP and Norwest Venture Partners XII, LP of Bailey 44, LLC (incorporated by reference to Exhibit 10.28 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the SEC on January 6, 2022).

Secured Convertible Promissory Note, dated November 16, 2021, by Digital Brands Group, Inc.

in favor of FirstFire Global Opportunities

Fund, LLC (incorporated by reference to Exhibit 10.41 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

Securities Purchase Agreement, dated August 27, 2021, by and between Digital Brands Group, Inc.

and Oasis Capital, LLC (incorporated by reference to Exhibit 10.31 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the SEC on January 6, 2022).

by FirstFire Global Opportunities Fund, LLC, dated November 16, 2021 (incorporated by reference to Exhibit 10.42 of Digital Brands

Group Inc.’s Registration Statement on Form S-1/A (Reg.

Senior Secured Convertible Promissory Note, dated August 27, 2021, by Digital Brands Group, Inc.

in favor of Oasis Capital, LLC (incorporated by reference to Exhibit 10.32 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the SEC on January 6, 2022).

by Oasis Capital, LLC, dated November 16, 2021 (incorporated by reference to Exhibit 10.43 of Digital Brands Group Inc.’s Registration

Statement on Form S-1/A (Reg.

Equity Purchase Agreement, dated August 27, 2021, by and between Digital Brands Group, Inc.

and Oasis Capital, LLC (incorporated by reference to Exhibit 10.33 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the SEC on January 6, 2022).

Rights Agreement, dated April 9, 2022, by among Digital Brands Group, Inc.

and the Investors (incorporated by reference to Exhibit

4.1 of Digital Brands Group Inc.’s Current Report on Form 8-K, filed with the SEC on April 12, 2022).

Purchase Agreement, dated April 9, 2022, by among Digital Brands Group, Inc.

and the Investors (incorporated by reference to Exhibit

10.1 of Digital Brands Group Inc.’s Current Report on Form 8-K, filed with the SEC on April 12, 2022).

of Warrant, dated April 9, 2022, by Digital Brands Group, Inc.

in favor of the Investors (incorporated by reference to Exhibit 10.3

of Digital Brands Group Inc.’s Current Report on Form 8-K, filed with the SEC on April 12, 2022).

for the Purchase and Sale of Future Receipts, dated March 21, 2022, between Digital Brands Group, Inc.

and Advantage Platform Services

d/b/a Advantage Capital Funding (incorporated by reference to Exhibit 10.45 of Digital Brands Group Inc.’s Registration

Statement on Form S-1/A (Reg.

Amended and Restated Securities Purchase Agreement, dated October 1, 2021, by and among Digital Brands Group, Inc., Oasis Capital, LLC and FirstFire Global Opportunities Fund, LLC (incorporated by reference to Exhibit 10.34 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the SEC on January 6, 2022).

Senior Secured Convertible Promissory Note, dated October 1, 2021, by Digital Brands Group, Inc.

in favor of FirstFire Global Opportunities Fund, LLC (incorporated by reference to Exhibit 10.35 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the SEC on January 6, 2022).

Security Agreement, dated August 27, 2021, by and between Digital Brands Group, Inc.

and Oasis Capital, LLC (incorporated by reference to Exhibit 10.36 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the SEC on January 6, 2022).

Joinder and Amendment to Security Agreement, dated October 1, 2021, by and among Digital Brands Group, Inc., Oasis Capital, LLC and FirstFire Global Opportunities Fund, LLC (incorporated by reference to Exhibit 10.37 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the SEC on January 6, 2022).

Securities Purchase Agreement, dated November 16, 2021, by and among Digital Brands Group, Inc., Oasis Capital, LLC and FirstFire Global Opportunities Fund, LLC (incorporated by reference to Exhibit 10.40 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the SEC on January 6, 2022).

Senior Secured Convertible Promissory Note, dated November 16, 2021, by Digital Brands Group, Inc.

in favor of FirstFire Global Opportunities Fund, LLC (incorporated by reference to Exhibit 10.41 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the SEC on January 6, 2022).

Waiver by FirstFire Global Opportunities Fund, LLC, dated November 16, 2021 (incorporated by reference to Exhibit 10.42 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the SEC on January 6, 2022).

Waiver by Oasis Capital, LLC, dated November 16, 2021 (incorporated by reference to Exhibit 10.43 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333-261865), filed with the SEC on January 6, 2022).

Registration Rights Agreement, dated April 8, 2022, by among Digital Brands Group, Inc.

and the Investors (incorporated by reference to Exhibit 4.1 of Digital Brands Group Inc.’s Current Report on Form 8-K, filed with the SEC on April 12, 2022).

Securities Purchase Agreement, dated April 8, 2022, by among Digital Brands Group, Inc.

and the Investors (incorporated by reference to Exhibit 10.1 of Digital Brands Group Inc.’s Current Report on Form 8-K, filed with the SEC on April 12, 2022).

Form of Warrant, dated April 8, 2022, by Digital Brands Group, Inc.

in favor of the Investors (incorporated by reference to Exhibit 10.3 of Digital Brands Group Inc.’s Current Report on Form 8-K, filed with the SEC on April 12, 2022).

Agreement for the Purchase and Sale of Future Receipts, dated March 21, 2022, between Digital Brands Group, Inc.

and Advantage Platform Services Inc.

d/b/a Advantage Capital Funding (incorporated by reference to Exhibit 10.45 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333- 264347), filed with the SEC on May 5, 2022).

for the Purchase and Sale of Future Receipts, dated March 29, 2022, between Digital Brands Group, Inc.

and Advantage Platform Services

d/b/a Advantage Capital Funding (incorporated by reference to Exhibit 10.46 of Digital Brands Group Inc.’s Registration

Statement on Form S-1/A (Reg.

Agreement for the Purchase and Sale of Future Receipts, dated March 29, 2022, between Digital Brands Group, Inc.

and Advantage Platform Services Inc.

d/b/a Advantage Capital Funding (incorporated by reference to Exhibit 10.46 of Digital Brands Group Inc.’s Registration Statement on Form S-1/A (Reg.

333- 264347), filed with the SEC on May 5, 2022).

Amendment to Securities Purchase Agreement, dated July 28, 2022, by and among Digital Brands Group, Inc.

and certain Investors (incorporated

by reference to Exhibit 10.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on August 2, 2022).

Purchase Agreement, dated September 29, 2022, by and among Digital Brands Group, Inc.

and the investor thereto (incorporated by reference

to Exhibit 10.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on October 5, 2022).

of Securities Purchase Agreement, by and between Digital Brands Group, Inc.

and the purchasers party thereto (incorporated by reference

to Exhibit 10.38 to the Registrant’s Registration Statement on Form S-1/A, filed with the SEC on November 29, 2022 (File no.

First Amendment to Securities Purchase Agreement, dated July 28, 2022, by and among Digital Brands Group, Inc.

and certain Investors (incorporated by reference to Exhibit 10.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on August 2, 2022).

Securities Purchase Agreement, dated September 29, 2022, by and among Digital Brands Group, Inc.

and the investor thereto (incorporated by reference to Exhibit 10.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on October 5, 2022).

Form of Securities Purchase Agreement, by and between Digital Brands Group, Inc.

and the purchasers party thereto (incorporated by reference to Exhibit 10.38 to the Registrant’s Registration Statement on Form S-1/A, filed with the SEC on November 29, 2022 (File no.

333-268213)).

Purchase Agreement, dated December 29, 2022, by and among Digital Brands Group, Inc.

and the Investors (incorporated by reference

to Exhibit 10.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on January 4, 2023).

of Promissory Note, dated December 29, 2022, by Digital Brands Group, Inc.

in favor each Investor (incorporated by reference to Exhibit

10.2 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on January 4, 2023).

of Securities Purchase Agreement, dated as of January 11, 2023, by and among the Company and the purchasers party thereto (incorporated

by reference to Exhibit 10.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on January 11, 2023).

of Registration Rights Agreement, dated as of January 11, 2023, by and among the Company and the purchasers party thereto (incorporated

by reference to Exhibit 10.2 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on January 11, 2023).

of Warrant, dated December 29, 2022, by Digital Brands Group, Inc.

in favor each Investor (incorporated by reference to Exhibit 10.3

of Digital Brands Group Inc.’s Form 8-K filed with the SEC on January 4, 2023).

of Securities Purchase Agreement, dated April 7, 2023, by and among Digital Brands Group, Inc.

and the Investors (incorporated by

reference to Exhibit 10.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on April 13, 2023).

of Promissory Note, dated April 7, 2023, by Digital Brands Group, Inc.

in favor each Investor (incorporated by reference to Exhibit

10.2 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on April 13, 2023).

Code of Ethics and Business Conduct.

Insider Trading Policy.

of Subsidiaries of the Registrant.

(incorporated by reference to Exhibit 21.1 of Digital Brands Group Inc.’s Registration Statement

on Form S-1 (Reg.

Securities Purchase Agreement, dated December 29, 2022, by and among Digital Brands Group, Inc.

and the Investors (incorporated by reference to Exhibit 10.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on January 4, 2023).

Form of Promissory Note, dated December 29, 2022, by Digital Brands Group, Inc.

in favor each Investor (incorporated by reference to Exhibit 10.2 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on January 4, 2023).

Form of Securities Purchase Agreement, dated as of January 11, 2023, by and among the Company and the purchasers party thereto (incorporated by reference to Exhibit 10.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on January 13, 2023).

Form of Registration Rights Agreement, dated as of January 11, 2023, by and among the Company and the purchasers party thereto (incorporated by reference to Exhibit 10.2 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on January 13, 2023).

Form of Warrant, dated December 29, 2022, by Digital Brands Group, Inc.

in favor each Investor (incorporated by reference to Exhibit 10.3 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on January 4, 2023).

Form of Securities Purchase Agreement, dated April 7, 2023, by and among Digital Brands Group, Inc.

and the Investors (incorporated by reference to Exhibit 10.1 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on April 13, 2023).

Form of Promissory Note, dated April 7, 2023, by Digital Brands Group, Inc.

in favor each Investor (incorporated by reference to Exhibit 10.2 of Digital Brands Group Inc.’s Form 8-K filed with the SEC on April 13, 2023).

List of Subsidiaries of the Registrant.

(incorporated by reference to Exhibit 21.1 of Digital Brands Group Inc.’s Registration Statement on Form S-1 (Reg.

333-269463), filed with the SEC on January 30, 2023).

Consent of independent registered public accounting firm.

Consent of Macias Gini & O’Connell LLP

Consent of dbbmckennon

Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a)

2 unchanged sentences

Certification of Principal Financial Officer Pursuant to 18 U.S.C.

Compensation Recovery Policy.

XBRL Instance

XBRL Taxonomy Extension Schema

XBRL Taxonomy Extension Calculation

XBRL Taxonomy Extension Labels

XBRL Taxonomy Extension Presentation

Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)

management contract or compensatory plan or arrangement.

Inline XBRL Instance

Inline XBRL Taxonomy Extension

Cover Page Interactive

Data File (embedded within the Inline XBRL and contained in Exhibit 101)

Filed herewith.

Furnished herewith

Indicates management contract

or compensatory plan or arrangement.

FORM 10-K SUMMARY

to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report

to be signed on its behalf by the undersigned, thereunto duly authorized.

BRANDS GROUP, INC.

John Hilburn Davis IV

DIGITAL BRANDS GROUP, INC.

Hilburn Davis IV

and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following

persons on behalf of the registrant and in the capacities and on the dates indicated.

April 15, 2026

John Hilburn Davis IV

President and Chief Executive Officer

Hilburn Davis IV

Executive Officer)

Financial Officer

Financial and Accounting Officer)

John Hilburn Davis IV

Director, President and

Chief Executive Officer

April 15, 2026

John Hilburn Davis IV

(Principal Executive Officer)

Chief Financial Officer

April 15, 2026

(Principal Financial and Accounting Officer)

April 15, 2026

Trevor Pettennude

April 15, 2026

Trevor Pettennude

Jameeka Aaron Green

April 15, 2026

Jameeka Aaron Green

Huong “Lucy” Doan

April 15, 2026

BRANDS GROUP, INC.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID:

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID:

CONSOLIDATED BALANCE SHEETS

6 unchanged sentences

on the Financial Statements

have audited the accompanying consolidated balance sheets of Digital Brands

and Subsidiaries (collectively, the “Company”) as of December 31, 2024 and December 31,2023, and the related consolidated

statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended, and the related consolidated

have audited the accompanying consolidated balance sheet of Digital Brands Group, Inc.

and Subsidiaries (collectively, the “Company”)

as of December 31, 2025, and the related consolidated statements of operations, stockholders’ equity, and cash flows

for the year ended December 31, 2025, and the related consolidated notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December

31, 2025, and the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles

generally accepted in the United States of America.

financial statements are the responsibility of the entity’s management.

Our responsibility is to express an opinion on these financial

statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United

States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities

laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit

we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion

on the effectiveness of the entity’s internal control over financial reporting.

Accordingly, we express no such opinion.

audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or

fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits

provide a reasonable basis for our opinion.

Diego, California

have served as the Company’s auditor since December 2025.

of Independent Registered Public Accounting Firm

of Directors and Stockholders

Digital Brands Group, Inc.

on the Financial Statements

have audited the accompanying consolidated balance sheet of Digital Brands

(the Company) as of December 31, 2024, and the related consolidated

statements of operations, stockholders’ deficit, and cash flows for the year then ended, and the related consolidated

notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in

all material respects, the financial position of the Company as of December 31, 2024 and December 31, 2023, and the results of its operations

and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

all material respects, the financial position of the Company as of December 31, 2024, and the result of its operations

and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

accompanying financial statements have been prepared assuming that the entity will continue as a going concern.

As discussed in Note

2 to the financial statements, the Company’s recurring net losses since inception, negative cash flow from operations and lack

2 to the financial statements, the Company’s recurring net losses since inception, negative cash flows from operations and lack

of liquidity raise substantial doubt about its ability to continue as a going concern.

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financial statements are the responsibility of the entity’s management.

Our responsibility is to express an opinion on these financial

statements based on our audits.

Our responsibility is to express an opinion on the entity’s financial

statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United

2 unchanged sentences

laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of

conducted our audit in accordance with the standards of the PCAOB.

standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of

material misstatement, whether due to error or fraud.

4 unchanged sentences

Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or

audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or

fraud, and performing procedures that respond to those risks.

1 unchanged sentence

the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant

Our audit also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits

provide a reasonable basis for our opinion.

We believe that our audit provides a reasonable basis for our opinion.

Macias Gini & O’Connell LLP

have served as the Company’s auditor since 2023.

began serving as the Company’s auditor in 2023.

In 2025, we became the predecessor auditor.

April 9, 2025

DIGITAL BRANDS GROUP,

BRANDS GROUP, INC.

BALANCE SHEETS

1 unchanged sentence

Cash and cash equivalents

Restricted cash

Accounts receivable, net

4 unchanged sentences

Intangible assets, net

Right of use asset

Prepaid marketing expenses

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

6 unchanged sentences

Loan payable, current

Promissory note payable, net

Right of use liability, current portion

Stock payable

Promissory note payable

Total current liabilities

Share based payment liability

Loans payable

Deferred tax liability

Total liabilities

Commitments and contingencies

Commitments and contingencies (Note 14)

Stockholders’ equity (deficit):

Undesignated preferred stock, $ 0.0001 par, 10,000,000 shares authorized, 0 shares issued and outstanding as of both December 31, 2024 and December 31, 2023

Series A convertible preferred stock, $ 0.0001 par, 6,300 shares designated, 6,300 shares issued and outstanding as of both December 31, 2024 and December 31, 2023

Series C convertible preferred stock, $ 0.0001 par, 1,344 and 4,786 shares issued and outstanding as of December 31, 2024 and December 31, 2023, respectively

Undesignated preferred stock, $ 0.0001 par, 10,000,000 shares authorized, 0 shares issued and outstanding as of both December 31, 2025 and 2024

Series A convertible preferred stock, $ 0.0001 par, 6,300 shares designated, 6,300 shares issued and outstanding as of both December 31, 2025 and 2024

Series C convertible preferred stock, $ 0.0001

shares issued and outstanding as of both December 31, 2025 and 2024, respectively

Series D convertible preferred stock, $ 0.0001 par, 15,906 and 0 shares issued and outstanding as of December 31, 2025 and 2024, respectively

Preferred stock, value

Common stock, $ 0.0001 par, 1,000,000,000 shares authorized, 838,584 and 22,285 shares issued and outstanding as of December 31, 2024 and December 31, 2023, respectively

Common stock, $ 0.0001 par, 1,000,000,000 shares authorized, 8,788,335 and 838,583 shares issued and outstanding as of December 31, 2025 and 2024, respectively

Additional paid-in capital

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Sales and marketing

Impairment of intangible assets

Change in fair value of contingent consideration

( 10,698,475 )

Impairment of goodwill and intangible assets

Total operating expenses

2 unchanged sentences

( 10,200,782 )

Other expense:

Other income (expense):

Change in fair value of share based payment liability

Interest expense

Other non-operating expenses

Total other expense, net

Income tax benefit (provision)

Net loss from continuing operations

( 2,941,171 )

Other non-operating income (expenses)

Total other income (expense), net

( 3,024,851 )

(Loss) from discontinued operations, net of tax

Income tax benefit (provision)

$ ( 28,252,558 )

$ ( 13,106,589 )

Deemed dividend on modification of Series D preferred stock

Net loss attributable to common stockholders

$ ( 30,357,246

$ ( 13,106,589

Weighted average common shares outstanding - basic and diluted

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STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

Series A Convertible

Series C Convertible

Stockholders’

1 unchanged sentence

( 113,994,449 )

$ ( 7,453,174 )

Issuance of common stock pursuant to private placement

Shares and warrants issued with notes

Conversion of notes into preferred stock

Issuance of common stock pursuant to disposition

Common stock issued for services

Exercise of Warrants

Issuance of common stock pursuant to private placement, net of offering

Conversion of preference shares into common stock

Issuance of common stock pursuant

to private placements

Conversion of debt and interest

into common stock

Shares issued for services

Conversion of preferred shares

into common stock

Stock-based compensation

Effect of reverse stock split

( 13,106,589 )

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( 1,328,541 )

Issuance of common stock pursuant to private placements

Conversion of debt and interest into common stock

Shares issued for services

Conversion of preferred shares into common stock

Stock-based compensation

( 127,101,038 )

( 1,328,541 )

Balances at December 31, 2024

Issuance of pre-funded warrants

in connection with services contract

Issuance of common stock and

pre-funded warrants pursuant to private placement offering

Exercise of pre-funded warrants

in connection with private placement offering

Issuance of shares pursuant

to acquisition of intangibles

Issuance of Series D preferred

stock per private placement offering

Conversion of accounts payable

in common stock

Shares issued pursuant to

service contracts

( 28,252,558 )

at December 31, 2025

$ 164,120,717

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Amortization of loan discount and fees

Impairment of intangibles

Loss on extinguishment of debt

Loss on disposition of business

Stock-based compensation

Change in fair value of share based payment liability

( 1,714,790 )

Impairment of goodwill and intangible assets

Loss on conversion of accounts payable into common stock

Shares issued for services

Shares issued for loan interest conversion

Stock-based compensation

Change in credit reserve

Change in fair value of contingent consideration

( 10,698,475 )

Shares issued for loan interest conversion

Non-cash lease expense

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Accrued expenses and other liabilities

Deferred revenue

Accrued interest payable

Due to related parties

Lease liabilities

Due to related parties

Net cash used in operating activities

1 unchanged sentence

( 6,152,338 )

Cash flows from investing activities:

Purchase of property, equipment and software

Net cash provided by investing activities

Cash flows from financing activities:

Repayments from related party advances

Advances from factor

Issuance of loans and note payable

1 unchanged sentence

( 3,869,422 )

( 10,129,811 )

Exercise of warrants

Issuance of common stock in public offering

Proceeds of issuance of Series D preferred stock, net of issuance costs

Proceeds from exercise of warrants

Proceeds for issuance of pre-funded warrants

Issuance of common stock for cash

Net cash provided by financing activities

Net change in cash and cash equivalents

( 1,262,210 )

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

Net change in cash, cash equivalents, and restricted cash

Cash, cash equivalents, and restricted cash at beginning of year

Cash, cash equivalents, and restricted cash at end of year

Reconciliation of cash and restricted cash:

Cash at beginning of year

Restricted cash at beginning of year

Cash and restricted cash at beginning of year

Cash at end of year

Restricted cash at end of year

Cash and restricted cash at end of year

Supplemental disclosure of cash flow information:

2 unchanged sentences

Supplemental disclosure of non-cash investing and financing activities:

Right of use asset

Issuance of pre-funded warrants for prepaid marketing services

Shares issued for prepaid marketing services

Non-cash purchase of intangible assets

Recognition of share-based payment liability

Shares issued for services and conversion of accounts payable

Conversion of preferred shares into common stock

Conversion of notes into preferred stock

the accompanying notes to the consolidated financial statements.

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On the acquisition date, Sundry became a wholly owned subsidiary of the Company.

June 21, 2023, the Company and the former owners of H&J executed a Settlement Agreement and Release (the “Settlement Agreement”)

whereby contemporaneously with the parties’ execution of the Settlement Agreement (i) the Company agreed to make an aggregate cash

payment of $ 229,000 to D.

Jones Tailored Collection, Ltd.

Jones”), (ii) the Company issued 39,052 shares of common

Jones, and (iii) the Company assigned and transferred one hundred percent ( 100 %) of the Company’s membership interest

The H&J Settlement was accounted for a business disposition.

August 21, 2023, the Board of Directors approved a one-for-25 reverse stock split of its issued and outstanding shares of common stock

and a proportional adjustment to the existing conversion ratios for each series of the Company’s preferred stock.

The reverse stock

split became effective as of August 22, 2023.

Accordingly, all share and per share amounts for all periods presented in the accompanying

consolidated financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect this reverse stock

split and adjustment of the preferred stock conversion ratios.

December 11, 2024, the Board of Directors approved a one-for-50 reverse stock split of its issued and outstanding shares of common stock

Effective December 29, 2025, the Company reincorporated from the State

of Delaware to the State of Nevada pursuant to a plan of conversion.

The Company filed a certificate of conversion with the Delaware Secretary

of State and articles of incorporation with the Nevada Secretary of State.

The Reincorporation did not result in any change in the Company’s

business, management, assets, or liabilities.

All outstanding shares continued without change.

The Company’s affairs are now governed

by the Nevada Revised Statutes and its Nevada Articles of Incorporation and Bylaws.

December 11, 2024, the Board of Directors approved a 1-for-50 reverse stock split of its issued and outstanding shares of common stock

and a proportional adjustment to the existing conversion ratios for each series of the Company’s preferred stock.

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GOING CONCERN

accompanying consolidated financial statements have been prepared on a going concern basis.

The Company has not generated profits

since inception, has sustained net losses of $ 13,106,589 and $ 10,247,133 for the years ended December 31, 2024 and 2023,

respectively, and has incurred negative cash flows from operations for the years ended December 31, 2024 and 2023.

The Company has

historically lacked liquidity to satisfy obligations as they come due and as of December 31, 2024, and the Company had a working

capital deficit of $ 16,122,611 .

These factors, among others, arise substantial doubt about the Company’s ability to continue

as a going concern.

The Company expects to continue to generate operating losses for the foreseeable future.

The accompanying

consolidated financial statements do not include any adjustments as a result of this uncertainty.

The Company has not generated profits since inception, has sustained

net losses of $ 28,252,558 and $ 13,106,589 for the years ended December 31, 2025 and 2024, respectively, and has incurred negative cash

flows from operations for the years ended December 31, 2025 and 2024.

The Company expects to continue to generate operating losses for the foreseeable

The accompanying consolidated financial statements do not include any adjustments as a result of this uncertainty.

of December 31, 2025, the Company had an accumulated deficit of $ 155,353,596

and a working capital deficit of $ 5,450,644 ,

calculated as the excess of current liabilities over current assets.

the date the financial statements were available to be issued, the Company has been primarily financed through the issuance of capital

2 unchanged sentences

reduce expenses, which it has done, or obtain financing through the sale of debt and/or equity securities, which it has done.

of additional equity would result in dilution to existing shareholders, which did occur in February 2025.

If the Company is unable to

obtain additional funds when they are needed or if such funds cannot be obtained on terms acceptable to the Company, the Company would

be unable to execute upon the business plan or pay costs and expenses as they are incurred, which would have a material, adverse effect

on the business, financial condition and results of operations.

While the Company has several potential sources of cash including cash

warrants that are registered and exercisable that are in the money, the ability to file for an ELOC and shelf eligibility for an At-The-Market

(“ATM”), no assurance can be given that the Company will be successful in these efforts.

February 2025, the Company completed an offering consisting of the sale of common stock, warrants and pre-funded warrants for gross proceeds

of $ 7,500,000 , before deducting placement agent fees and commissions and other offering expenses.

Refer Note 14 Subsequent events for

further detail.

of April 4, 2025, the date of issuance of these condensed consolidated financial statements, the Company expects that its cash and cash

equivalents of $ 164,433 , together with the net proceeds received from the February 2025 offering, and measures described below, will

be sufficient to fund its operating expenses, debt obligations and capital expenditure requirements for at least one year from the date

these consolidated financial statements are issued.

the next twelve months, the Company intends to fund its operations from the funds raised through the offering.

Additionally, the

Company intends to fund operations from increased revenues due to its new marketing efforts and increased wholesale pricing and a more

wholesale doors, through settlement and renegotiation of aged payables, conversions of outstanding debt and accrued interest, and continuing

its cost cutting measures, which the Company has already made during the first three months of 2025.

The Company also plans to continue to fund its capital funding needs

through a combination of public or private equity offerings, debt financings or other sources.

This includes warrant exercises, an equity

line of credit and At-The-Market (“ATM”) equity financings made available to us.

The Company has 22,730,680 warrants

outstanding in connection with the offering in Registration Statement No.

3330-284508 filed on February 18, 2025.

The Company has

an inducement agreement that was signed by the Company and the investors that allows the Company at its discretion to require the warrant

holders to exercise warrants up to an aggregate value of $ 2 million in warrants per thirty calendar days commencing on April 8,

2025, which would increase the Company’s cash position by $ 15 million over the next eight months.

There can be no assurance as to the availability or terms upon which

such financing and capital might be available in the future.

If the Company is unable to secure additional funding, it may be forced to

curtail or suspend its business plans.

of additional equity would result in dilution to existing shareholders.

If the Company is unable to obtain additional funds when they

are needed or if such funds cannot be obtained on terms acceptable to the Company, the Company would be unable to execute upon the business

plan or pay costs and expenses as they are incurred, which would have a material, adverse effect on the business, financial condition

and results of operations.

While the Company has several potential sources of cash including cash warrants that are registered and exercisable

that are in the money, the ability to initiate an at-the-market (“ATM”) offering under its current shelf registration statement,

no assurance can be given that the Company will be successful in these efforts.

2025, the Company completed several equity raises:

(i) in February 2025, gross proceeds of $ 7,500,000 from common stock, warrants and

pre-funded warrants;

(ii) in August and September 2025, gross proceeds of approximately $ 12,725,000 from Series D Convertible Preferred

Stock and additional warrant exercises of approximately $ 6,642,000 ;

and (iii) at-the-market equity financings under the Company’s

shelf registration.

of December 31, 2025, the Company had cash and cash equivalents of $ 1,934,831 and restricted cash of $ 5,744,174 (aggregate $ 7,679,005 ).

The Company believes its existing cash resources and planned operations—including its collegiate apparel program under agreements

with AAA Tuscaloosa, LLC, Traffic Holdco, LLC, The Grove Collective, LLC, and Buffalo Sports Properties, LLC (Learfield), increased wholesale

pricing, and continued cost reduction measures—will be sufficient to fund operations for at least one year from the date these

financial statements are issued.

Company also notes that the Bailey promissory note with a principal balance of $ 3,500,000 and accrued interest of approximately $ 2,624,000

matured on December 8, 2025 and remains unpaid as of December 31, 2025.

Management is currently in discussions with the lender regarding

repayment or potential extension of the note.

In addition, management continues to monitor the release conditions for the $ 5,744,174

of restricted cash held pursuant to the Series D Securities Purchase Agreement, the release of which would further support liquidity.

the next twelve months, the Company intends to fund its operations from the funds raised through equity offerings, including

at-the-market equity financings, equity line of credits (“ELOC”), further warrant exercises or other public or private

equity offerings.

Additionally, the Company intends to fund operations from increased revenues due to its new marketing efforts,

including its collegiate apparel program and increased wholesale pricing, through settlement and renegotiation of aged payables,

conversions of outstanding debt and accrued interest, and continuing its cost cutting measures, which the Company has already made

during the nine months of 2025.

on the current state of operations, the additional capital sources available to the Company, and the cash on hand of approximately

million (aggregate unrestricted and restricted), management believes that the Company has sufficient capital to meet its financial

obligations for the next 12 months as of the issuance date of these financial statements.

can be no assurance as to the availability or terms upon which such financing and capital might be available in the future.

If the Company

is unable to secure additional funding, it may be forced to curtail or suspend its business plans.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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All inter-company transactions and balances have been eliminated on consolidation.

preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported

amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the

reported amounts of revenues and expenses during the reporting period.

preparation of financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the

reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements

and the reported amounts of revenues and expenses during the reporting period.

Significant estimates include the fair value of equity

instruments, share-based payment liabilities, prepaid marketing assets, goodwill and intangible asset impairment assessments, and income

tax valuation allowances.

Actual results could differ from those estimates.

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at times, may exceed federally insured limits of $ 250,000 .

of December 31, 2025, the Company had restricted cash of $ 5,744,174 held in a segregated bank account pursuant to the terms of the Securities

Purchase Agreement related to the Series D Convertible Preferred Stock offering.

These funds are restricted pending release upon satisfaction

of the applicable conditions, including shareholder approval and SEC effectiveness of the resale registration statement.

As of December

31, 2024, there was no restricted cash.

The Company includes restricted cash with cash and cash equivalents when reconciling the beginning-of-period

and end-of-period total amounts shown in the consolidated statement of cash flows.

Marketing Expenses and Liability-Classified Share-Based Awards

Company enters into long-term marketing, licensing, manufacturing, and sponsorship arrangements with third-party service providers under

which it may issue common stock or equity-linked instruments in exchange for future services, including distribution, licensing access,

product specification support, and marketing and promotional activities.

These arrangements are accounted for as share-based payments

to nonemployees in accordance with ASC 718, Compensation—Stock Compensation .

share-based consideration is determined to be in exchange for distinct goods or services, including those received from a customer, the

Company accounts for such transactions as the purchase of services.

The Company recognizes a prepaid marketing or service asset measured

at the grant-date fair value of the share-based consideration issued, representing the value of services to be received over the contractual

Such prepaid assets are amortized on a straight-line basis over the period in which the related services are received, which generally

corresponds to the contractual service period.

share-based arrangements include make-whole provisions that require the Company to deliver a fixed monetary value using a variable number

of shares, or, in certain cases, cash.

These provisions result in liability classification under ASC 718 and ASC 480, Distinguishing

Liabilities from Equity , as the Company has an obligation to settle a fixed dollar amount rather than a fixed number of shares.

Liability-classified

share-based awards are initially measured at fair value on the grant date and subsequently remeasured at fair value at each reporting

date until settlement.

Changes in fair value are recognized in earnings in the period of change.

Compensation cost is recognized over

the requisite service period, with cumulative adjustments recorded for changes in fair value.

Company evaluates features within these arrangements, including make-whole provisions, under ASC 815, Derivatives and Hedging ,

to determine whether such features should be accounted for separately as derivatives.

The Company has concluded that these features qualify

for the scope exception applicable to share-based payment arrangements and therefore are not accounted for as freestanding or embedded

Accordingly, no bifurcation is required.

fair value of liability-classified share-based awards is estimated using a Monte Carlo simulation model.

This valuation technique incorporates

significant assumptions, including the Company’s stock price, expected volatility, risk-free interest rate, expected term, and

other market-based inputs.

Due to the use of significant unobservable inputs, these measurements are classified within Level 2 of the

fair value hierarchy.

certain contractual marketing investment commitments represent best-efforts obligations and do not create a present obligation or identifiable

Accordingly, such costs are expensed as incurred in accordance with ASC 720, Advertising Costs .

Value of Financial Instruments

Company’s financial instruments consist of cash and cash equivalents, prepaid expenses, accounts payable, accrued expenses, due

to related parties, related party note payable, and convertible debt.

The carrying value of these assets and liabilities is representative

of their fair market value, due to the short maturity of these instruments.

Company measures certain assets and liabilities at fair value on a recurring basis in accordance with ASC 820, Fair Value Measurement.

ASC 820 establishes a three-level hierarchy that prioritizes the inputs used in valuation techniques:

1 — Quoted prices in active markets for identical assets or liabilities.

2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in

active markets, or other inputs that are observable or can be corroborated by observable market data.

3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value measurement.

These inputs reflect the Company’s own assumptions about the assumptions that market participants would use in pricing the asset

or liability.

Company’s only recurring fair value measurements are its share-based payment liabilities arising from the make-whole provisions

in the collegiate apparel agreements.

These are classified as Level 2, as their valuation relies on significant unobservable inputs that are

significant to the overall fair value measurement.

Specifically, the expected stock price volatility is estimated from the Company’s

own historical stock price data;

because the Company does not have actively traded options or other instruments from which implied volatility

could be observed, this input is unobservable.

Under ASC 820-10-35-52, an instrument is classified based on the lowest level input that

is significant to the fair value measurement.

Changes in fair value are recognized in earnings each reporting period.

carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, and short-term debt approximate

fair value due to their short-term nature.

The carrying value of the Company’s long-term SBA loan approximates fair value as the

interest rate is fixed at a rate commensurate with current market rates for similar instruments.

Receivable and Expected Credit Loss

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We do not have any off-balance sheet credit exposure related to our customers.

periodically review accounts receivable, estimate an allowance for bad debts, and simultaneously record the appropriate expense in the

periodically review accounts receivable, estimate an allowance for credit losses, and simultaneously record the appropriate expense in the

statement of operations.

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to mitigate credit risk.

of December 31, 2024 and December 31, 2023, the Company determined an allowance for credit losses of $ 295,837

and $ 41,854 ,

respectively.

of December 31, 2025 and 2024, the Company determined an allowance for credit losses of $ 307,526 and $ 295,837 respectively.

Net accounts receivable was $ 74,833 as of December 31, 2023.

is stated at the lower of cost or net realizable value and accounted for using the weighted average cost method for DSTLD and first-in,

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The estimated useful lives of amortizable intangible assets are as follows:

SCHEDULE OF FINITE-LIVED INTANGIBLE ASSETS ACQUIRED AS PART OF BUSINESS COMBINATION

relationships

OF FINITE-LIVED INTANGIBLE ASSETS ACQUIRED AS PART OF BUSINESS COMBINATION

Customer relationships

Company reviews its long-lived assets (property and equipment and amortizable intangible assets) for impairment whenever events or circumstances

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December 31, 2025, management determined that certain events and circumstances occurred that indicated that the carrying value of the

Company’s brand name assets, and the carrying amount of the reporting units, pertaining to Bailey44, Stateside and Sundry may not

be recoverable.

The qualitative assessment was primarily due to reduced or stagnant revenues of both entities as compared to the Company’s

initial projections at the time of each respective acquisition, as well as the entities’ liabilities in excess of assets.

the quantitative analysis performed, the Company determined that the fair value of the intangible assets and reporting units were greater

than the respective carrying values.

As such, no impairment was recorded.

The Company utilized the enterprise value approach in the impairment

tests of each reporting unit in 2023.

As of December 31, 2023, the Bailey44 reporting unit, which has an attributable goodwill balance

of $ 3,158,123 , has a negative carrying amount.

December 31, 2024, management determined that certain events and circumstances occurred that indicated that the carrying value of the

Company’s brand name assets, and the carrying amount of the reporting units, pertaining to each reporting unit (Bailey44, Stateside

and Sundry) may not be recoverable.

The qualitative assessment was primarily due to reduced or stagnant revenues of each entities as

The qualitative assessment was primarily due to reduced or stagnant revenues of each entity as

compared to the Company’s initial projections at the time of each respective acquisitions, as well as certain entities’ liabilities

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impairment loss of $ 1,260,500 in the consolidated statements of operations, as detailed below by entity.

Additionally, the Company compared

the fair value of the reporting units to the carrying amounts and recorded no impairment loss pertaining to goodwill in the consolidated

statements of operations.

The Company utilized the enterprise value approach in the impairment tests of each reporting unit in 2024.

The Company also compared the

fair value of the reporting units to their carrying amounts and recorded goodwill impairment of $ 3,185,056 ($ 1,081,000 for Bailey and

$ 2,104,056 for Stateside) in the consolidated statements of operations.

No goodwill impairment was recorded for Sundry.

The Company utilized

the enterprise value approach in the impairment tests of each reporting unit in 2025.

following is a summary of goodwill and intangible impairment recorded pertaining to each entity:

SCHEDULE OF GOODWILL AND INTANGIBLE IMPAIRMENT

Bailey brand name

Stateside brand name

Total impairment of intangibles

Total impairment of goodwill

Total impairment

Total goodwill impairment

Intangible assets:

Brand name — Stateside

OpenDaily intangible assets

Brand name - Bailey

Total intangible asset impairment

Total impairment charges

determining the fair value of the respective reporting units, management estimated the price that would be received to sell the reporting

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of a contract with a customer;

● Identification

of the performance obligations in the contract

● Determination

of the transaction price

of the transaction price to the performance obligations in the contract, and

● Recognition

of revenue when or as the performance obligations are satisfied

Identification of the performance

obligations in the contract

Determination of the transaction

Allocation of the transaction

price to the performance obligations in the contract, and

Recognition of revenue

when or as the performance obligations are satisfied

is recognized when performance obligations are satisfied through the transfer of control of promised goods to the Company’s customers

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as a separate performance obligation.

Collegiate Apparel Revenue

in 2025, the Company generates revenue through its collegiate apparel agreements with AAA Tuscaloosa, LLC, Traffic Holdco, LLC, The Grove

Collective, LLC, and Buffalo Sports Properties / Learfield.

Revenue is recognized through two channels:

(i) university store consignment,

under which products are shipped to university campus bookstores and revenue is recognized based on actual sales reported by the store,

and (ii) university online direct-to-consumer, under which revenue is recognized based on Shopify sales data from each university’s

dedicated online portal when products are sold to end customers.

In both cases, products are placed with the counterparty on consignment

and the Company recognizes revenue only when a sale to an end consumer has occurred, consistent with ASC 606-10-55-37.

Revenue from university

channels is tracked separately in dedicated receivable accounts.

of revenues consists primarily of inventory sold and related freight-in.

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Advertising and promotional expense for the years ended December 31, 2025 and 2024 amounted

to approximately $ 138,000 and $ 728,000 , respectively.

to approximately $ 465,000

and $ 138,000 ,

respectively.

The amounts are included in sales and marketing expense.

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brands and reporting units currently report to the Chief Executive Officer.

Each of our brands serve or are expected to serve customers through

our wholesale, in store and online channels, allowing us to execute on our omni-channel strategy.

We have determined that each of our

brands share similar economic and other qualitative characteristics, and therefore the results of our operating businesses

are aggregated into one reportable segment.

All of the operating businesses have met the aggregation criteria and have been aggregated

and are presented as one reportable segment, as permitted by ASC 280.

We continually monitor and review our segment reporting structure

in accordance with authoritative guidance to determine whether any changes have occurred that would impact our reportable segments.

Each of our brands serve or are expected to serve customers

through our wholesale, in store and online channels, allowing us to execute on our omni-channel strategy.

We have determined that each

of our brands share similar economic and other qualitative characteristics, and therefore the results of our operating businesses are

aggregated into one reportable segment.

All of the operating businesses have met the aggregation criteria and have been aggregated and

are presented as one reportable segment, as permitted by ASC 280.

We continually monitor and review our segment reporting structure in

accordance with authoritative guidance to determine whether any changes have occurred that would impact our reportable segments.

Company uses the liability method of accounting for income taxes as set forth in ASC 740, Income Taxes.

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Series C convertible preferred stock

Series D convertible preferred stock

Common stock warrants

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stock options and warrants above are out-of-the-money as of December 31, 2025 and 2024.

As of December

31, 2025, there were 10,240,894 pre-funded warrants included in the denominator of weighted average shares outstanding, as shown below:

SCHEDULE OF WEIGHTED

AVERAGE SHARES OUTSTANDING

Weighted average common shares outstanding

Weighted average pre-funded warrants outstanding

Weighted average common shares outstanding — basic

January 1, 2022, the Company adopted ASC 842, Leases , as amended, which supersedes the lease accounting guidance under Topic 840,

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Accounting Pronouncements

November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures, which requires

disclosure of incremental segment information on an annual and interim basis, primarily disclosure of significant segment expense categories

and amounts for each reportable segment.

The new standard is effective for annual periods beginning after December 15, 2023, and interim

periods within fiscal years beginning after December 15, 2024.

The Company adopted ASU 2023-07 in the annual financial statements for

the twelve months ended December 31, 2024, and for interim periods beginning in 2025.

The Company believes the amendments of ASU 2023-07

will not have a significant impact on the Company’s consolidated financial statements and will include all required disclosures

upon adoption.

December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures, which requires greater

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2024, and early adoption is permitted.

The Company believes the amendments of ASU 2023-09 will not have a significant impact on the Company’s

consolidated financial statements and will include all required disclosures upon adoption.

The Company adopted ASU 2023-09 on January 1, 2025 and it did not have any material impact on the

consolidated financial statements.

In November 2024, the FASB issued ASU No.

2024-03, Income Statement—Reporting

Comprehensive Income (Topic 220):

Expense Disaggregation Disclosures.

This update requires entities to disaggregate operating expenses

into specific categories, such as salaries and wages, depreciation, and amortization, to provide enhanced transparency into the nature

and function of expenses.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, with early adoption permitted.

ASU 2024-03 may be applied retrospectively or prospectively.

The Company is currently evaluating the impact of this standard on its financial

statement presentation and disclosures.

does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the accompanying

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As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances.

BUSINESS COMBINATIONS

December 30, 2022, the Company completed its previously announced acquisition (the “ Sundry Acquisition”) of all of the issued

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Each Sundry Note

bears interest at eight percent ( 8 %) per annum and matured on February 15, 2023 (see Note 7).

The Company issued 90,909 shares of common

stock to the Sundry Sellers on December 30, 2022 at a fair value of $ 1,000,000 .

bears interest at eight percent ( 8 %) per annum and matured on February 15, 2023.

The Sundry Notes have been fully settled.

issued 90,909 shares of common stock to the Sundry Sellers on December 30, 2022 at a fair value of $ 1,000,000 .

Company evaluated the acquisition of Sundry pursuant to ASC 805 and ASU 2017-01, Topic 805, Business Combinations.

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represents primarily the potential economic benefits that the Company believes may arise from the acquisition.

fair value of the purchase price consideration was determined as follows:

SCHEDULE OF COMPONENTS OF PURCHASE PRICE CONSIDERATION

Promissory notes payable

Purchase price consideration

Company has made an allocation of the purchase price in regard to the acquisition related to the assets acquired and the liabilities

assumed as of the purchase date.

The following table summarizes the purchase price allocation:

SCHEDULE OF ASSETS AND LIABILITIES ACQUIRED IN BUSINESS COMBINATION

Purchase Price

Cash and cash equivalents

Accounts receivable, net

Due from factor, net

Prepaid expenses and other current assets

Property, equipment and software, net

Intangible assets

Accounts payable

Accrued expenses and other liabilities

Purchase price consideration

customer relationships and will be amortized on a straight-line basis over their estimated useful lives of three years .

The brand name

is indefinite-lived.

The Company used the relief of royalty and income approach to estimate the fair value of intangible assets acquired.

is primarily attributable to the go-to-market synergies that are expected to arise as a result of the acquisition and other intangible

assets that do not qualify for separate recognition.

The goodwill is not deductible for tax purposes.

The results of Sundry have been

included in the consolidated financial statements since the date of acquisition.

February 12, 2020, the Company acquired 100 % of the membership interests of Bailey.

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The total purchase price consideration was $ 15,500,000 .

agreed that if at that date which is one year from the closing date of the IPO, the product of the number of shares of Parent Stock issued

under the Merger multiplied by the sum of the closing price per share of the common stock of the Company on such date, plus Sold Parent

Stock Gross Proceeds (as that term is defined in the Merger Agreement), does not exceed the sum of $ 11,000,000 less the value of any

Holdback Shares cancelled further to the indemnification provisions of the Merger Agreement, then the Company shall issue to the Holders

pro rata an additional aggregate number of shares of common stock of the Company equal to the valuation shortfall at a per share price

equal to the then closing price per share of the common stock of the Company.

August 30, 2021, the Company entered into a Membership Interest Purchase Agreement (the “MIPA”) with Moise Emquies

pursuant to which the Company acquired all of the issued and outstanding membership interests of MOSBEST, LLC, a California limited

liability company (“Stateside” and such transaction, the “Stateside Acquisition”).

Pursuant to the MIPA,

Moise Emquies, as the holder of all of the outstanding membership interests of Stateside, exchanged all of such membership interests

for $ 5.0 million in cash and 22,031 shares of the Company’s common stock (the “Shares”), which number of Shares

was calculated in accordance with the terms of the MIPA.

Of such amount, $ 375,000 in cash and a number of Shares equal to $ 375,000 ,

or 1652 shares (calculated in accordance with the terms of the MIPA), is held in escrow to secure any working capital adjustments

and indemnification claims.

The MIPA contains customary representations, warranties and covenants by Moise Emquies.

Company evaluated the acquisition of Stateside pursuant to ASC 805 and ASU 2017-01, Topic 805, Business Combinations.

The acquisition

method of accounting requires, among other things, that the assets acquired and liabilities assumed in a business combination be measured

at their estimated respective fair values as of the closing date of the acquisition.

Goodwill recognized in connection with this transaction

represents primarily the potential economic benefits that the Company believes may arise from the acquisition.

fair value of the purchase price consideration was determined as follows:

SCHEDULE OF FAIR VALUE OF PURCHASE PRICE CONSIDERATION

Purchase price consideration

Company has made an allocation of the purchase price in regard to the acquisition related to the assets acquired and the liabilities

assumed as of the purchase date.

The following table summarizes the purchase price allocation:

SCHEDULE OF ALLOCATION OF PURCHASE PRICE IN REGARD TO ACQUISITION

Purchase Price

Cash and cash equivalents

Accounts receivable, net

Due from factor, net

Prepaid expenses and other current assets

Property, equipment and software, net

Intangible assets

Accounts payable

Accrued expenses and other liabilities

price consideration

customer relationships and will be amortized on a straight-line basis over their estimated useful lives of three years .

The brand name

is indefinite-lived.

The Company used the relief of royalty and income approach to estimate the fair value of intangible assets acquired.

is primarily attributable to the go-to-market synergies that are expected to arise as a result of the acquisition and other intangible

assets that do not qualify for separate recognition.

The goodwill is not deductible for tax purposes.

DISCONTINUED OPERATIONS

June 21, 2023, the Company and the former owners of H&J executed a Settlement Agreement and Release (the “Settlement Agreement”)

whereby contemporaneously with the parties’ execution of the Settlement Agreement (i) the Company agreed to make an aggregate cash

payment of $ 229,000 to D.

Jones Tailored Collection, Ltd.

Jones”), (ii) the Company issued 39,052 shares of common stock

Jones, and (iii) the Company assigned and transferred one hundred percent ( 100 %) of the Company’s membership interest in

This transaction is known as the “H&J Settlement”.

H&J Settlement was accounted for a business disposition in accordance with ASC 810-40-40-3A.

As of June 21, 2023, the Company no

longer consolidated the assets, liabilities, revenues and expenses of H&J.

The components of the disposition are as follows:

SCHEDULE OF COMPONENTS OF DISPOSITION

Cash payment due to H&J Seller

$ ( 229,000 )

Common shares issued to H&J Seller*

( 1,357,043 )

Total fair value of consideration received (given)

$ ( 1,586,043 )

Carrying amount of assets and liabilities

Cash and cash equivalents

Accounts receivable, net

Prepaid expenses and other current assets

Intangible assets, net

Accounts payable

Accrued expenses and other liabilities

Deferred revenue

Due to related parties

Contingent consideration

( 1,400,000 )

Note payable - related party

Total carrying amount of assets and liabilities

Loss on disposition of business

$ ( 1,523,940 )

Represents the fair value of 39,052 shares of common stock

December 31, 2023, the Company has made payments to D.

Jones totaling $ 200,000 .

The remaining balance of $ 29,000 is included in accrued

expenses and other liabilities on the consolidated balance sheet.

loss of disposition of business of $ 1,523,940 was included in income (loss) from discontinued operations, net of tax in the consolidated

statements of operations.

accordance with the provisions of ASC 205-20, the Company has excluded the results of discontinued operations from its results of continuing

operations in the accompanying consolidated statements of operations for the year ended December 31, 2023.

of the discontinued operations of HJ for the year ended December 31, 2023 consist of the following:

Cost of net revenues

Operating expenses:

General and administrative

Sales and marketing

Total operating expenses

Loss from operations

Other income (expense):

Interest expense

Loss on disposition of business

August 30, 2021, the Company entered into a Membership Interest Purchase Agreement (the “MIPA”) with Moise Emquies pursuant

to which the Company acquired all of the issued and outstanding membership interests of MOSBEST, LLC, a California limited liability

company (“Stateside” and such transaction, the “Stateside Acquisition”).

Pursuant to the MIPA, Moise Emquies,

as the holder of all of the outstanding membership interests of Stateside, exchanged all of such membership interests for $ 5.0 million

in cash and 22,031 shares of the Company’s common stock (the “Shares”), which number of Shares was calculated in accordance

with the terms of the MIPA.

Of such amount, $ 375,000 in cash and a number of Shares equal to $ 375,000 , or 1,652 shares (calculated in

accordance with the terms of the MIPA), is held in escrow to secure any working capital adjustments and indemnification claims.

contains customary representations, warranties and covenants by Moise Emquies.

April 1, 2025, the Company entered into an Asset Purchase Agreement with Open Daily Technologies Inc., pursuant to which the Company

acquired intellectual property and related assets for total consideration of $ 3,000,000 .

The consideration was settled through issuance

of 344,827 shares of restricted Common Stock at $ 8.70 per share.

The transaction closed on April 2, 2025.

acquired assets primarily comprise technology infrastructure (including the Outfit platform, iOS applications, Shopify-integrated web

application, and related source code), registered intellectual property such as patents and trademarks, proprietary technical knowledge,

and strategic business relationships.

No liabilities were assumed as part of the transaction.

transaction has been accounted for as an asset acquisition in accordance with ASC 805-10, as substantially all of the fair value of the

gross assets acquired is concentrated in a group of similar identifiable intangible assets, thereby satisfying the concentration test.

Additionally, no substantive processes or workforce were transferred, further supporting the conclusion that the transaction does not

constitute a business combination.

total purchase consideration has been allocated to the acquired assets on a relative fair value basis as follows:

OF ASSET ACQUISITION

Technology Assets – $ 1,500,000

Strategic Relationships – $ 750,000

Registered Intellectual Property – $ 250,000

Proprietary Know-How – $ 250,000

no goodwill has been recognized.

The total consideration has been measured based on the acquisition-date fair value of the equity instruments

issued, determined using the quoted market price of the Company’s common stock on the acquisition date.

The aggregate cost recognized

amounts to $ 2,948,276 , reflecting the fair value of 344,827 shares issued on the closing date.

consideration transferred has been measured based on the fair value of equity instruments issued.

While the transaction was initially

recorded at $ 8.70 per share (as agreed in the Asset Purchase Agreement), subsequent evaluation of observable market data indicates that

the closing market price of the Company’s common stock on April 30, 2025 was $ 8.55 per share.

Accordingly, a difference of $ 0.15

per share resulted in a total adjustment of $ 51,724 ( 344,827 shares × $ 0.15 ), and the aggregate consideration has been revised

to $ 2,948,276 based on the acquisition-date fair value of the equity consideration.

The $ 51,724 adjustment was allocated proportionately

in all acquired intangible assets.

acquired intangible assets meet the asset recognition criteria under U.S.

GAAP, as they embody probable future economic benefits, are

controlled by the Company, and arise from a completed transaction.

Further, none of the acquired assets qualify as in-process research

and development under ASC 730, as the technology and related assets are fully developed and commercially deployable.

The acquired technology assets were placed into service during 2025 and

are being amortized on a straight-line basis over their estimated useful lives.

Amortization expense is included in operating expenses.

PREPAID MARKETING EXPENSES

2025, the Company entered into multi-year marketing, licensing, sponsorship, and service agreements under which it provides equity instruments,

pre-funded warrants, or cash as consideration.

Amounts paid or the fair value of instruments issued in excess of amounts currently expensed

are recorded as prepaid assets and amortized over the contractual service period on a straight-line basis.

Marketing Agreements

Tuscaloosa, LLC — University of Alabama

July 16, 2025, the Company entered into a three-year Exclusive Private Label Manufacturing Agreement with AAA Tuscaloosa, LLC (“AAA”),

pursuant to which the Company manufactures University of Alabama–branded apparel.

AAA is responsible for marketing and selling

the products through its website and campus bookstores and is considered the Company’s customer under ASC 606;

revenue is recognized

upon sale of products to end customers through AAA’s distribution channels.

consideration, the Company agreed to issue common stock valued at $ 1,000,000 per year over the three-year term (total equity commitment

of $ 3,000,000 ).

On December 12, 2025, the Company issued 285,714 shares of common stock

at a grant-date fair value of $ 7.92 per share (grant date:

September 22, 2025;

aggregate equity fair value:

$ 2,262,855 ).

Total other income (expense), net

The share-based consideration represents payment for distinct services, including licensing access, distribution, and marketing

services, and is accounted for under ASC 718.

The total consideration, including the equity component and the initial fair value of the

make-whole provision at grant date, was $ 4,341,104 .

The Company recorded a prepaid asset equal to the fair value of consideration provided,

amortized on a straight-line basis over the three-year term.

For the year ended December 31, 2025, the Company recognized $ 666,032 of

marketing expense, representing 168 days of amortization.

As of December 31, 2025, the prepaid balance was $ 3,675,072 , of which $ 1,357,173

is classified as current and $ 2,317,899 as non-current.

agreement includes a 15-month make-whole provision (through March 12, 2027), under which the Company is required to issue additional

shares or cash if the fair value of shares delivered falls below the $ 3,000,000 commitment;

accordingly, the award is liability-classified

under ASC 718.

See Note 9 for the fair value detail and Monte Carlo assumptions.

Holdco, LLC — Collegiate NIL Program

July 16, 2025, the Company entered into a three-year Exclusive Private Label Manufacturing Agreement with Traffic Holdco, LLC (“Traffic”),

pursuant to which the Company obtained exclusive apparel manufacturing rights for collegiate Name, Image and Likeness (“NIL”)

programs at a minimum of three universities.

Traffic is responsible for licensing, marketing, and distribution through university channels

and is considered the Company’s customer under ASC 606;

revenue is recognized upon sale of products to end customers through Traffic’s

distribution channels.

consideration, the Company agreed to issue common stock valued at $ 1,000,000 per university per year over the three-year term (minimum

total equity commitment of $ 9,000,000 ).

On December 12, 2025, the Company issued 857,143 shares of common stock at a grant-date fair

value of $ 7.92 per share (grant date:

September 22, 2025;

aggregate equity fair value:

$ 6,788,573 ).

Income tax benefit (provision)

Net loss from discontinued operations

The share-based consideration represents

payment for distinct services, including licensing access, distribution, marketing, and compliance services, and is accounted for under

The total consideration, including the equity component and the initial fair value of the make-whole provision, was $ 13,023,328 .

The Company recorded a prepaid asset equal to the fair value of consideration provided, amortized on a straight-line basis over the three-year

For the year ended December 31, 2025, the Company recognized $ 1,998,100 of marketing expense, representing 168 days of amortization.

As of December 31, 2025, the prepaid balance was $ 11,025,228 , of which $ 4,341,109 is classified as current and $ 6,684,119 as non-current.

agreement includes a 15-month make-whole provision (through March 12, 2027), under which the Company is required to issue additional

shares or cash if the fair value of shares delivered falls below the guaranteed commitment;

accordingly, the award is liability-classified

under ASC 718.

See Note 9 for the fair value detail and Monte Carlo assumptions.

Grove Collective, LLC — University of Mississippi

November 19, 2025, the Company entered into a three-year Exclusive Private Label Manufacturing Agreement with The Grove Collective, LLC

(“Grove”), pursuant to which the Company will exclusively manufacture apparel products to be sold through Grove’s website

and retail channels.

The agreement supports marketing and brand development initiatives related to the University of Mississippi NIL

Grove is considered the Company’s customer under ASC 606;

revenue is recognized upon sale of products to end customers

through Grove’s channels.

consideration, the Company issued 385,107 shares of common stock at a grant-date fair value of $ 7.50 per share (aggregate equity fair

$ 2,888,303 ), representing a total equity commitment of $ 3,000,000 .

The share-based consideration is accounted for as payment for

distinct marketing, distribution, and related services under ASC 718.

The total consideration, including the equity component and the

initial fair value of the make-whole provision at grant date, was $ 4,970,835 .

The Company recorded a prepaid asset equal to the fair

value of consideration provided, amortized on a straight-line basis over the three-year term.

For the year ended December 31, 2025, the

Company recognized $ 190,662 of marketing expense, representing 42 days of amortization.

As of December 31, 2025, the prepaid balance

was $ 4,780,173 , of which $ 1,656,945 is classified as current and $ 3,123,228 as non-current.

agreement includes a 15-month make-whole provision;

accordingly, the award is liability-classified under ASC 718.

See Note 9 for the

fair value detail and Monte Carlo assumptions.

Sports Properties / Learfield — University of Colorado

December 3, 2025, the Company entered into a three-year Marketing and Sponsorship Agreement with Buffalo Sports Properties, LLC and Learfield

(the “Provider”) for the University of Colorado athletic program.

Under the agreement, the Company receives sponsorship,

media, and NIL marketing benefits in exchange for a combination of cash and equity consideration.

The Provider is considered the Company’s

customer under ASC 606;

revenue is recognized upon delivery of sponsorship and marketing benefits over the term.

consideration, the Company agreed to pay $ 550,000 per year over the three-year term, consisting of $ 350,000 per year in common stock

(total equity commitment:

$ 1,050,000 ) and $ 200,000 per year in cash (total cash:

On December 12, 2025, the Company issued

193,036 shares of common stock at $ 6.68 per share (grant date:

December 3, 2025;

aggregate equity fair value:

$ 1,289,480 ).

Weighted average common shares outstanding - basic and diluted

Net income (loss) from discontinued operations per common share - basic and diluted

component is accounted for as payment for distinct sponsorship, media, and marketing services under ASC 718.

The total consideration,

including the equity component and the initial fair value of the make-whole provision, was $ 2,014,433 .

The Company recorded a prepaid

asset equal to the fair value of consideration provided, amortized on a straight-line basis over the three-year term.

For the year ended

December 31, 2025, the Company recognized $ 51,881 of marketing expense, representing 29 days of amortization.

As of December 31, 2025,

the prepaid balance was $ 1,962,551 , of which $ 671,478 is classified as current and $ 1,291,073 as non-current.

The cash component is recognized

as prepaid sponsorship expense and amortized as benefits are received;

the first cash installment is due under the January 2026 billing

agreement includes an 18-month make-whole provision (through June 12, 2027), under which the Company is required to issue additional

shares or cash if the fair value of shares delivered falls below the guaranteed amount;

accordingly, the award is liability-classified

under ASC 718.

See Note 9 for the fair value detail and Monte Carlo assumptions.

Marketing Agreements

Consulting LLC

In January 2025, the Company entered into a two-year

marketing services agreement with MavDB Consulting LLC for content production, social media marketing, student athlete engagement, and

event staffing.

The consideration was satisfied through the issuance of 2,068,965 pre-funded warrants with an aggregate fair value of

$ 2,689,656 , accounted for as share-based consideration for marketing and advisory services.

The warrants are equity-classified with no

make-whole provision.

The Company recognized $ 1,269,193 of marketing expense for the year ended December 31, 2025, representing 344 days

of amortization over the two-year term.

As of December 31, 2025, the prepaid balance was $ 1,420,463 , of which $ 1,344,828 is classified

as current and $ 75,635 as non-current.

In September 2025, the Company entered into a two-year

cash-based marketing agreement with MavDB Consulting LLC for $ 1,240,000 .

The Company recognized $ 1,240,000 of marketing expense for the

year ended December 31, 2025, representing the full contract value.

No prepaid balance remains as of December 31, 2025.

In March 2025, Bailey entered into a five-year cash-based

marketing services agreement with MavDB Consulting LLC for $ 2,500,000 .

The Company recognized $ 2,500,000 of marketing expense for the

year ended December 31, 2025, representing the full contract value.

No prepaid balance remains as of December 31, 2025.

MavDB is controlled by a shareholder

who holds a significant amount of warrants and prefunded warrants.

See Notes 10 and 11 for further detail on the equity transactions

related to MavDB.

In September 2025, the Company entered into a one-year

agreement with Velora Marketing Services for $ 350,000 and a one-year agreement with i2i Marketing for $ 425,000 .

The Company recognized

$ 350,000 and $ 425,000 of marketing expense, respectively, for the year ended December 31, 2025, representing the full contract value of

each agreement.

No prepaid balance remains as of December 31, 2025.

In September 2025, Bailey entered into a one-year

marketing agreement with Candlelight Ventures for $ 350,000 .

The Company recognized $ 350,000 of marketing expense for the year ended December

31, 2025, representing the full contract value.

No prepaid balance remains as of December 31, 2025.

Costs associated with all cash-based agreements are

recognized as prepaid assets and expensed over the respective contractual service periods.

of Consideration and Prepaid Balances

following table summarizes the consideration provided under each agreement and the resulting prepaid marketing balances as of December

OF CONSIDERATION AND PREPAID BALANCES

Consideration

Prepaid Balance as of December 31, 2025

MavDB (Jan 2025)

Traffic Holdco

Shares + MW**

AAA Tuscaloosa

* PFW = pre-funded

warrants, equity-classified with no make-whole provision.

** Shares + MW = common

stock issued plus a make-whole provision guaranteeing the counterparty a minimum aggregate share value.

The make-whole creates a liability-classified

share-based award under ASC 718, measured at fair value via Monte Carlo simulation.

following table disaggregates total consideration for the share-based agreements between the equity component (fair value of shares or

warrants issued, recorded in equity) and the liability component (initial fair value of the make-whole provision, recorded as share-based

payment liability on the consolidated balance sheet):

OF DISAGGREGATES TOTAL CONSIDERATION FOR SHARE BASED AGREEMENTS

Fair Value of Equity (Shares & PFW)

Share-Based Payment Liability

Traffic Holdco

AAA Tuscaloosa

aggregate consideration for all share-based agreements was $ 24,349,700 at initial recognition, comprising $ 13,229,211 in equity fair

value and $ 11,120,489 in share-based payment liability (make-whole provisions).

At December 31, 2025, the total share-based payment liability

was remeasured to $ 9,405,699 , resulting in a recognized gain of $ 1,714,790 .

Classification

and Future Amortization

marketing expenses are classified as current or non-current based on the portion of each agreement expected to be amortized within the

next twelve months from the balance sheet date.

Current prepaid balances represent the pro-rata share of total consideration allocable

to services to be received in the twelve months ending December 31, 2026.

Non-current prepaid balances represent the remaining unamortized

consideration allocable to periods beyond December 31, 2026.

agreements where amortization commenced during 2025, the current portion reflects the next twelve months of straight-line amortization

based on the original contract term.

For agreements entered into near year-end (primarily Learfield, commencing December 3, 2025), the

current portion reflects the estimated twelve-month share based on the contractual service start date.

Amortization begins on the service

commencement date of each agreement.

prepaid marketing expenses recognized during the year ended December 31, 2025 was $ 3,978,943 .

Estimated future amortization of prepaid

marketing expenses as of December 31, 2025 is as follows:

OF AMORTIZATION OF PREPAID MARKETING EXPENSES

Year Ended December 31,

Prepaid marketing expenses

DUE FROM FACTOR

Company, via its subsidiaries, Bailey, Stateside and Sundry, assigns a portion of its trade accounts receivable to third- party

factoring companies, who assumes the credit risk with respect to the collection of non-recourse accounts receivable.

The Company may

request advances on the net sales factored at any time before their maturity date.

The factor charges a commission on the net sales

factored for credit and collection services.

For one factoring company, interest on advances is charged as of the last day of each

month at a rate equal to the LIBOR rate plus 2.5 % for Bailey.

For Stateside and Sundry, should total commission and fees payable be

less than $ 30,000 in a single year, then the factor shall charge the difference between the actual fees in said year and $ 30,000 to

Interest on advances is charged as of the last day of each month at a rate equal to the greater of either, (a) the

Chase Prime Rate + ( 2.0 )% or (b) ( 4.0 )% per annum.

For another factoring company, interest is charged at one-thirty-third (1/33) of

one percent per day, such rate to increase or decrease in accordance with changes in the “Prime Rate”, which such prime

rate to be deemed to be 4.25 % on the date of the agreement.

Company, via its subsidiaries, Bailey, Stateside and Sundry, assigns a portion of its trade accounts receivable to third- party factoring

companies, who assumes the credit risk with respect to the collection of non-recourse accounts receivable.

The Company may request advances

on the net sales factored at any time before their maturity date.

The factor charges a commission on the net sales factored for credit

and collection1 services.

For one factoring company, interest on advances is charged as of the last day of each month at a rate equal

to the Term SOFR rate plus 2.5 % for Bailey.

For Stateside and Sundry, should total commission and fees payable be less than $ 30,000 in

a single year, then the factor shall charge the difference between the actual fees in said year and $ 30,000 to the Company.

on advances is charged as of the last day of each month at a rate equal to the greater of either, (a) the Chase Prime Rate + ( 2.0 )% or

(b) ( 4.0 )% per annum.

For another factoring company, interest is charged at one-thirty-third (1/33) of one percent per day, such rate

to increase or decrease in accordance with changes in the “Prime Rate”, which such prime rate to be deemed to be 4.25 % on

the date of the agreement.

are collateralized by a security interest in substantially all of the companies’ assets.

8 unchanged sentences

GOODWILL AND INTANGIBLE ASSETS

Company recorded goodwill from each of its business combinations.

The following is a summary of goodwill by entity for the years ended

December 31, 2024 and 2023:

SCHEDULE OF GOODWILL ATTRIBUTABLE TO EACH BUSINESS COMBINATION

The Company recorded

goodwill from each of its business combinations.

As part of its 2025 annual impairment testing, the Company recorded goodwill impairment

charges of $ 3,185,056 ($ 1,081,000

for the Bailey reporting unit and $ 2,104,056

for the Stateside reporting unit).

goodwill impairment was recorded in 2024.

The following is a summary of goodwill activity by entity for the years ended December 31,

2025 and 2024:

OF GOODWILL ACTIVITY BY ENTITY

December 31, 2024

December 31, 2025

$ ( 1,081,000 )

( 2,104,056 )

$ ( 3,185,056 )

Intangible Assets

For the year ended December 31,

2025, the Company recorded intangible asset impairment charges of $ 2,488,948 , comprising:

(i) $ 1,260,500 related to the Stateside brand

name (indefinite-lived), reflecting the Company’s assessment that the carrying value exceeded the estimated fair value based on

the reporting unit’s performance;

and (ii) $ 1,228,448 related to the OpenDaily technology asset and associated intangible assets

acquired in April 2025 pursuant to the asset acquisition of Open Daily Technologies, Inc., which were fully impaired based on a reassessment

of recoverability.

No intangible asset impairment was recorded in 2024, other than $ 1,388,000 related to HJ customer relationships.

impairment charges (goodwill and intangible assets) for the year ended December 31, 2025 were $ 5,674,004 .

following table summarizes information relating to the Company’s identifiable intangible assets as of December 31, 2025 and 2024:

3 unchanged sentences

$ ( 8,634,560 )

Technology asset

( 1,228,448 )

4 unchanged sentences

$ ( 2,488,948 )

$ ( 9,052,896 )

December 31, 2024

2 unchanged sentences

( 6,968,401 )

$ ( 1,388,000 )

$ ( 6,968,401 )

Indefinite-lived:

$ ( 1,388,000 )

$ ( 6,968,401 )

to Note 3 for discussion on the intangible asset impairment recorded in 2025.

Company recorded amortization expense of $ 2,474,178 and $ 1,993,616 during the years ended December 31, 2024 and 2023, respectively, which

is included in general and administrative expenses in the consolidated statements of operations.

amortization expense at December 31, 2024 is as follows:

SCHEDULE OF FUTURE AMORTIZATION EXPENSE

Year Ending December 31,

Company recorded amortization expense of $ 2,084,496 and $ 2,474,178 during the years ended December 31, 2025 and 2024, respectively,

which is included in general and administrative expenses in the consolidated statements of operations.

technology asset acquired from Open Daily Technologies Inc.

(see Note 3) was placed in service during 2025 and is being amortized on

a straight-line basis over its estimated useful life.

Amortization expense is included in operating expenses.

LIABILITIES AND DEBT

Expenses and Other Liabilities

Company accrued expenses and other liabilities line in the consolidated balance sheets is comprised of the following as of December 31,

2024 and 2023:

expenses and other liabilities is comprised of the following:

SCHEDULE OF ACCRUED EXPENSES AND OTHER LIABILITIES

5 unchanged sentences

other liabilities

related liabilities are primarily related in DBG and Bailey44 payroll taxes due to remit to federal and state authorities.

are subject to further penalties and interest.

of December 31, 2024, accrued expenses included $ 535,000 in accrued common stock issuances pursuant to an advisory agreement for services

related liabilities are primarily related to overdue payroll taxes due to be remitted to federal and state authorities by Digital Brands

The amounts may be subject to further penalties and interest.

of December 31, 2025, accrued expenses include $ 535,000 in accrued common stock issuances pursuant to an advisory agreement for services

performed in 2022.

The 4 shares of common stock owed per the agreement are expected to be issued in the second quarter of 2025.

of December 31, 2024 and 2023, there was $ 100,000 remaining in outstanding principal that was not converted into equity (see table below).

Capital Convertible Promissory Note

April 30, 2024, the Company issued a convertible promissory note in the original principal amount of $ 250,000

(the “Note”) to Target Capital 1

LLC, an Arizona limited liability company (the “Note Holder”), with a maturity date of April

30, 2025 (the “Maturity Date”).

to the terms of the Note, the Company agreed to pay the principal sum and a one-time interest charge of $ 50,000

to the Note Holder.

In May 2024, the Company

fully repaid the Note Holder $ 300,000 ,

including the principal and interest.

The Company issued 1,000

shares of common stock to the Note Holder as

commitment shares.

Payable — PPP and SBA Loan

April 2022, Bailey received notification of full forgiveness of its 2 nd PPP Loan totaling $ 1,347,050 and partial forgiveness

of its 1 st PPP Loan totaling $ 413,705 .

As of December 31, 2024 and December 31, 2023, Bailey had an outstanding PPP Loan balance

of $ 933,295 and matures in 2026.

Merchant Advances

Sales Receipts

2022 through 2024, the Company obtained several merchant advances.

These advances are, for the most part, secured by expected future

sales transactions of the Company with expected payments on a weekly basis.

The Company made total cash repayments, pertaining to principal

and interest, of $ 1,838,682 for the year ending December 31, 2024.

following is a summary of the merchant advances as of December 31, 2024 and 2023:

The shares of common stock owed under the agreement are expected to be issued in early 2026.

interest payable of $ 2,787,506 as of December 31, 2025 (December 31, 2024:

$ 2,328,078 ) relates primarily to unpaid interest on the Bailey

sellers’ promissory note and is presented separately on the Consolidated Balance Sheet.

following table summarizes the Company’s outstanding debt obligations as of December 31, 2025 and 2024:

OF OUTSTANDING DEBT OBLIGATIONS

Merchant cash advances

Sunnyside Shopify loan, net of discount

B44 PPP note payable

Convertible note payable, net

Promissory note payable, net

Notes payable

Total current debt

Notes payable (long-term)

Total non-current debt

February 20, 2025, the Company settled the remaining convertible debt principal in cash, along with $ 47,000 of accrued interest.

December 31, 2025 and 2024, the outstanding principal balance was $ 0 and $ 100,000 , respectively.

Payable — PPP, SBA, and Shopify

April 2022, Bailey received notification of full forgiveness of its second SBA Paycheck Protection Program (“PPP”) loan totaling

$ 1,347,050 and partial forgiveness of its first PPP loan totaling $ 413,705 .

As of December 31, 2025 and December 31, 2024, Bailey had

an outstanding PPP loan balance of $ 933,294 , classified as current.

The loan matures in April 2026 .

No additional forgiveness was recognized

June 2020, the Company received an SBA Economic Injury Disaster Loan of $ 150,000

bearing interest at 3.75 %

per annum, maturing

The outstanding balance was $ 150,000

as of December 31, 2025 and 2024, classified as current in 2025 due to technical default.

Company’s Sunnyside subsidiary maintains a Shopify Capital loan with an outstanding balance of $ 58,296 as of December 31, 2025,

classified as current.

2022 through 2024, the Company obtained several merchant cash advances secured by expected future sales receipts, with repayments made

on a weekly basis.

The Company made total cash repayments of $ 374,998

for the year ended December 31, 2025.

The advances are

non-interest bearing.

The following is a summary

of the merchant advances:

SCHEDULE OF MERCHANT ADVANCES

unamortized debt discount

( 1,966,881 )

Merchant cash advances, net

Company has outstanding merchant advances with Shopify Capital.

During the year ending December 2024, the Company made repayments of

As of December 31, 2024, the remaining principal outstanding was $ 6,664 .

These advances are, for the most part, secured by expected

future sales transactions of the Company with expected payments on a daily basis.

Company also had outstanding merchant advances with Gynger, Inc.

In May 2024, the Company converted the outstanding principal and accrued

interest of $ 313,816 owed to Gynger for 2,120 shares of common stock.

of December 31, 2024, and 2023, the outstanding principal on the note to the sellers of Bailey was $ 3,500,000 .

On July 5, 2023, the parties

agreed to extend the maturity date to June 30, 2024.

Interest expense was $ 420,000 and $ 420,000 for the years ended December 31, 2024

and 2023 respectively, which was accrued and unpaid as of December 31, 2024.

The aforesaid mentioned Promissory note are in default as

of December 31 2024 and the parties are currently working on an extension.

March 2023, the Company and various purchasers executed a Securities Purchase Agreement (“March 2023 Notes”) whereby the

investors purchased from the Company promissory notes in the aggregate principal amount of $ 2,458,750 , consisting of original issue discount

of $ 608,750 .

The Company received net proceeds of $ 1,850,000 after additional fees.

The March 2023 Notes are due and payable on September

30, 2023 (the “Maturity Date”).

If the Company completes a debt or equity financing of less than $ 7,500,000 , the Company

is required to repay 50 % of the remaining balance of the March 2023 Notes.

Following such 50 % repayment, the Company must also use any

proceeds from any subsequent debt or equity financing to repay the March 2023 Notes.

Upon the closing of any debt or equity financing

of $ 7,500,000 or greater, the Company is required to repay 100 % of the Notes with no penalties.

There is no additional interest after

the 20 % original interest discount.

Upon the Company’s equity financing in September 2023, the Company repaid an aggregate $ 1,247,232

principal to the respective noteholders.

The Company recognized a debt discount of $ 608,750 , which was fully amortized through December

The notes contain certain conversion provisions upon an event of default.

May 2024, the Company repaid $ 500,000 of

The parties mutually extended the maturity date to November 4, 2024 which initially had maturity date of September 30,

2024 and acknowledged that the default provisions had not been triggered.

The remaining outstanding amount of $ 1,230,741 was

fully repaid on November 4, 2024.

During the year ended December 31, 2024, the Company fully amortized the debt discount pertaining

to these notes.

following is a summary of promissory notes payable, net:

SCHEDULE OF PROMISSORY NOTES PAYABLE, NET

March 2023 Notes - principal

March 2023 Notes - unamortized debt discount

Promissory note payable, net

of December 31, 2025 and 2024, the outstanding principal on the note payable to the sellers of Bailey 44, LLC was $ 3,500,000 .

bears interest at 12 % per annum, payable quarterly.

Interest expense was $ 420,000 for the year ended December 31, 2025 ($ 105,000 per

Accrued and unpaid interest was $ 2,624,000 as of December 31, 2025, recorded separately as accrued interest payable on the

consolidated balance sheet.

note matured on December 8, 2025.

As of December 31, 2025, the note has not been repaid and is in technical default.

The Company is currently

in discussions with the lender regarding repayment, extension, or refinancing of the obligation.

Management has not identified any cross-default

provisions in other material agreements that would be triggered by this default.

This default has been considered in the Company’s

going concern assessment.

to December 31, 2025, the note remains outstanding and unpaid.

The Company continues to accrue interest at the contractual rate of 12 %

No formal acceleration notice has been received from the lender as of the date these financial statements were available to

Capital Convertible Promissory Note

April 30, 2024, the Company issued a convertible promissory note in the original principal amount of $ 250,000 (the

“Note”) to Target Capital 1 LLC, an Arizona limited liability company (the “Note Holder”), with a maturity

date of April 30, 2025 (the “Maturity Date”).

Pursuant to the terms of the Note, the Company agreed to pay the

principal sum and a one-time interest charge of $ 50,000 to the Note Holder.

In May 2024, the Company fully repaid the Note

Holder $ 300,000 , including the principal and interest.

The Company issued 1,000 shares of common stock to the Note Holder

as commitment shares.

SHARE-BASED PAYMENT LIABILITY

Company’s collegiate apparel agreements (AAA Tuscaloosa, Traffic Holdco, Grove Collective, Buffalo Sports / Learfield – see

Note 5) include make-whole provisions under which the Company is required to deliver a guaranteed aggregate dollar value through a variable

number of common shares.

Because the number of shares required for settlement varies based on the Company’s stock price, these

arrangements are classified as liability-classified share-based payment awards under ASC 718.

At inception, the Company measures the

liability at fair value using a Monte Carlo simulation model, with a corresponding prepaid marketing asset recognized.

The liability

is remeasured at fair value at each subsequent reporting date, with changes recognized in earnings.

The prepaid marketing asset is amortized

on a straight-line basis over the contractual service period.

See Note 5 for prepaid marketing balances.

share-based payment liability is classified within Level 2 of the fair value hierarchy under ASC 820.

The primary inputs to the Monte

Carlo simulation model — including the Company’s stock price, risk-free interest rate, and contractual term — are observable

market inputs.

Accordingly, the Company classifies these liabilities as Level 2.

There were no transfers between levels during the year

ended December 31, 2025.

following assumptions were used in the Monte Carlo simulation model at initial recognition and remeasurement as of December 31, 2025

of each make-whole liability:

OF ASSUMPTIONS WERE USED IN SHARE BASED PAYMENT LIABILITY

Initial Recognition

Risk-Free Rate

Fair Value per Share

Total Fair Value

Traffic Holdco (Sep 22)

AAA Tuscaloosa (Sep 22)

Grove (Nov 19)

Learfield (Dec 3)

Remeasurement (December 31, 2025)

Risk-Free Rate

Fair Value per Share

Total Fair Value

Traffic Holdco (Dec 31)

AAA Tuscaloosa (Dec 31)

Grove (Dec 31)

Learfield (Dec 31)

was estimated based on the historical stock price of the Company over the applicable measurement period.

The risk-free rate is based

Treasury yield curve for the instrument’s remaining term as of the measurement date.

The strike price represents the

minimum guaranteed aggregate value per the respective agreement divided by the number of shares issued.

following is a summary of activity of the share-based payment liability for the year ended December 31, 2025:

OF ACTIVITY OF SHARE BASED PAYMENT LIABILITY

Share-Based Payment

Balance, December 31, 2024

Initial recognition - make-whole provisions

Change in fair value (gain)

( 1,714,790 )

Balance, December 31, 2025

were no transfers between levels during the year ended December 31, 2025.

STOCKHOLDERS’ EQUITY (DEFICIT)

to Certificate of Incorporation

August 21, 2023, the Board of Directors approved a one-for-25 reverse stock split of its issued and outstanding shares of common stock

and a proportional adjustment to the existing conversion ratios for each series of the Company’s preferred stock.

The reverse stock

split became effective as of August 22, 2023.

Accordingly, all share and per share amounts for all periods presented in the accompanying

consolidated financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect this reverse stock

split and adjustment of the preferred stock conversion ratios.

December 11, 2024, the Board of Directors approved a one-for-50 reverse stock split of its issued and outstanding shares of common stock

and a proportional adjustment to the existing conversion ratios for each series of the Company’s preferred stock.

The reverse stock

split became effective as of December 11, 2024.

Accordingly, all share and per share amounts for all periods presented in the accompanying

consolidated financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect this reverse stock

split and adjustment of the preferred stock conversion ratios.

Company had 1,000,000,000 shares of common stock authorized with a par value of $ 0.0001 as of December 31, 2024.

to Certificate of Incorporation and Reincorporation

December 29, 2025, the Company reincorporated from the State of Delaware to the State of Nevada pursuant to a plan of conversion approved

by the Board of Directors.

The reincorporation did not affect the Company’s authorized capital structure, par values, or outstanding

of December 31, 2025, the Company had 1,000,000,000 shares of common stock, $ 0.0001 par value per share, authorized.

As of December 31,

2025 and December 31, 2024, there were 8,788,335 and 838,583 shares of common stock issued and outstanding, respectively.

stockholders have voting rights of one vote per share.

1 unchanged sentence

subject to and qualified by the rights, powers, and preferences of preferred stockholders.

May 3, 2024, the Company entered into that certain inducement offer to exercise common stock purchase warrants with the Investor

(the “Inducement Agreement”), pursuant to which (i) the Company agreed to lower the exercise price of the Existing

Warrants to $ 156.50 per share and (ii) the Investor agreed to exercise the Existing Warrants into 20,555 shares of common stock (the

“Exercise Shares”) by payment of the aggregate exercise price of $ 3,216,857 .

Common Stock Transactions

the year ended December 31, 2025, the Company issued common stock and equity instruments in the following transactions:

In January 2025, the Company issued 2,068,965 pre-funded warrants to MavDB

Consulting LLC as consideration for a two-year marketing services agreement.

The fair value of those warrants ($ 2,689,656 ) was recorded

as a prepaid marketing asset.

In February 2025, the Company

issued 125,535 shares of common stock and 11,239,805 pre-funded warrants for net proceeds of $ 6,642,433 .

See the February 2025 Offering

section below.

During 2025, 4,012,375 shares were subsequently issued upon exercise of those pre-funded warrants.

In April 2025, the Company

issued 344,827 shares as consideration for the acquisition of technology assets from Open Daily Technologies Inc., at a fair value

of $ 2,948,276 .

In August and September

2025, the Company raised $ 11,387,000 in net proceeds through the Series D Convertible Preferred Stock offering.

See the Series D

section below.

In 2025, the Company issued 1,721,000 shares under the four collegiate apparel

agreements (AAA Tuscaloosa 285,714 ;

Traffic Holdco 857,143 ;

The Grove Collective 385,107 ;

Learfield/Buffalo Sports 193,036 ).

were valued at their accounting grant-date fair value and recorded as prepaid marketing assets.

The Company issued 11,582

shares to settle $ 113,851

of outstanding accounts payable to vendors.

The Company also issued 44,988 shares to consultants for services performed for a fair value of $ 145,226 .

2025, warrant holders exercised an aggregate of 5,701,820 Common Share Purchase Warrants, resulting

in the issuance of shares of common stock and aggregate proceeds of $ 5,807,576 to the Company.

During August 2025, certain

warrant holders exercised Common Share Purchase Warrants at $ 0.66 per share generating aggregate proceeds of approximately $ 5.0 million

for which the underlying shares had not been issued as of December 31, 2025.

These proceeds are reflected as stock payable on the

consolidated balance sheet.

2025 Offering

February 13, 2025, the Company entered into securities purchase agreements with certain accredited investors, pursuant to which the Company

agreed to issue and sell in a best efforts offering 11,365,340 units at a purchase price of $ 0.66 per unit, including:

(i) 125,535 units

consisting of one share of common stock and two common stock purchase warrants;

and (ii) 11,239,805 units consisting of one pre-funded

warrant (exercisable at $ 0.0001 per share with no expiration) and two common stock purchase warrants.

The common stock purchase warrants

are exercisable for an aggregate of 22,730,680 shares of common stock at $ 0.66 per share.

The February 2025 Offering closed on February

18, 2025, generating net proceeds of $ 6,642,433 after placement agent fees and expenses.

Warrants were offered to purchasers whose purchase of common stock would have resulted in beneficial ownership exceeding 4.99% (or 9.99%

at the purchaser’s election) of outstanding common stock.

Pre-Funded Warrants are immediately exercisable, do not expire, and may

be exercised on a cashless basis if no effective registration statement is available .

As of December 31, 2025, stock payable of $ 4,951,128

represents amounts received from warrant holders for exercises in which the underlying shares of common stock had not yet been issued

as of December 31, 2025.

During August 2025, certain warrant holders exercised Common Share Purchase Warrants at $ 0.66 per share for aggregate

proceeds of approximately $ 5.0 million;

the shares had not been issued as of December 31, 2025 and accordingly the proceeds were recorded

as stock payable.

As of December 31, 2025, the Company had exercised warrants representing an obligation to issue shares of common stock.

Upon issuance, the balance will be reclassified to stockholders’ equity.

See Note 17 for shares issued subsequent to December 31,

Common Stock Transactions

May 3, 2024, the Company entered into that certain inducement offer to exercise common stock purchase warrants with the Investor (the

“Inducement Agreement”), pursuant to which (i) the Company agreed to lower the exercise price of the Existing Warrants to

$ 156.50 per share and (ii) the Investor agreed to exercise the Existing Warrants into 20,555 shares of common stock (the “Exercise

Shares”) by payment of the aggregate exercise price of $ 3,216,857 .

The closing occurred on May 7, 2024.

Company has issued all of the 20,555 shares of common stock underlying the Existing Warrants.

The Company received the entire gross

proceeds of $ 3,216,857 in May 2024, which represents the exercise of the entire 20,555 warrants at the $ 156.50 exercise price.

Company received net proceeds of $ 2,877,475 after placement agent fees and expenses.

In addition, pursuant to the Inducement

Agreement, the Company issued to the Investor a Series A-1 common share purchase warrant to purchase up to 20,555 shares of Common

Stock (“Series A-1 Warrant”) and Series B-1 common share purchase warrant to purchase up to 20,555 shares of Common

Stock (“Series B-1 Warrant”, and collectively with the Series A-1 Warrant, the “Warrants”) on May 7, 2024,

each at an initial exercise price equal to $ 144 per share of Common Stock.

The Series A-1 Warrant are exercisable immediately upon

issuance and expires five and one-half ( 5.5 ) years following the issuance date and the Series B-1 Warrant are exercisable

immediately upon issuance and expires fifteen ( 15 ) months following the issuance date.

In connection with the Inducement Agreement,

we entered into an engagement agreement with H.C.

Wainwright & Co., LLC (“Wainwright”), pursuant to which we have,

among other things, issued to Wainwright’s designees warrants to purchase up to 1,541 shares of Common Stock (the

“Wainwright Warrants”).

The terms of the Wainwright Warrants are substantially the same as the terms of the Series A-1

Warrant except that they have an exercise price of $ 195.63 per share.

The Company has issued

all of the 20,555 shares of common stock underlying the Existing Warrants.

The Company received the entire gross proceeds of $ 3,216,857

in May 2024, which represents the exercise of the entire 20,555 warrants at the $ 156.50 exercise price.

The Company received net proceeds

of $ 2,877,475 after placement agent fees and expenses.

In addition, pursuant to the Inducement Agreement, the Company issued to the Investor

a Series A-1 common share purchase warrant to purchase up to 20,555 shares of Common Stock (“Series A-1 Warrant”) and Series

B-1 common share purchase warrant to purchase up to 20,555 shares of Common Stock (“Series B-1 Warrant”, and collectively

with the Series A-1 Warrant, the “Warrants”) on May 7, 2024, each at an initial exercise price equal to $ 144 per share of

Common Stock.

The Series A-1 Warrant are exercisable immediately upon issuance and expires five and one-half (5.5) years following the

issuance date and the Series B-1 Warrant are exercisable immediately upon issuance and expires fifteen (15) months following the issuance

In connection with the Inducement Agreement, we entered into an engagement agreement with H.C.

Wainwright & Co., LLC (“Wainwright”),

pursuant to which we have, among other things, issued to Wainwright’s designees warrants to purchase up to 1,541 shares of Common

Stock (the “Wainwright Warrants”).

The terms of the Wainwright Warrants are substantially the same as the terms of the Series

A-1 Warrant except that they have an exercise price of $ 195.63 per share.

July 1, 2024 and October 22, 2024, the Company issued and sold 105,125 shares of Common Stock (the “Recent ATM Share Sales”)

5 unchanged sentences

and received net proceeds of $ 278,160 .

October 28, 2024, the Company entered into securities purchase agreements (the “Purchase Agreements”) with certain

accredited investors named therein (the “Purchasers”), pursuant to which the Company agreed to issue and sell, in a best

efforts offering (the “Offering”):

(i) 124,673 shares of common stock (the “Common Stock”), at a purchase

price of $ 5.00 per share of Common Stock, and (ii) 482,187 pre-funded warrants (“Pre-Funded Warrants”) to purchase

Common Stock, at a purchase price of $ 4.995 per Pre-Funded Warrant, immediately exercisable at an exercise price of $ 0.005 per

The Purchase Agreement contained customary representations and warranties and agreements of the Company and the Purchasers

and customary indemnification rights and obligations of the parties.

October 28, 2024, the Company entered into securities purchase agreements (the “Purchase Agreements”) with certain accredited

investors named therein (the “Purchasers”), pursuant to which the Company agreed to issue and sell, in a best efforts offering

(the “Offering”):

(i) 124,673 shares of common stock (the “Common Stock”), at a purchase price of $ 5.00 per share

of Common Stock, and (ii) 482,187 pre-funded warrants (“Pre-Funded Warrants”) to purchase Common Stock, at a purchase price

of $ 4.995 per Pre-Funded Warrant, immediately exercisable at an exercise price of $ 0.005 per share.

The Purchase Agreement contained

customary representations and warranties and agreements of the Company and the Purchasers and customary indemnification rights and obligations

of the parties.

The Offering closed on October 30, 2024.

10 unchanged sentences

above for net proceeds of $ 9,374,441 .

the year ended December 31, 2024, the Company issued an aggregate of 2,582 shares of common stock pursuant to services and conversion

of accounts payable totaling a fair value of $ 312,634 .

the year ended December 31, 2024, 3,442 shares of Series C Convertible Preferred Stock converted into 3,840 shares of common stock.

the year ended December 31, 2024, the Company issued an aggregate of 1,000

shares of common stock pursuant to conversion of accrued interest of a loan totaling a fair value of $ 4,950 .

May 2024, the Company converted the outstanding principal and accrued interest of $ 313,817 owed to Gynger for 2,120 shares of common

A Convertible Preferred Stock

September 29, 2022, the Company filed the Certificate of Designation designating up to 6,800 shares out of the authorized but unissued

shares of its preferred stock as Series A Convertible Preferred Stock

for stock dividends or distributions for which adjustments are to be made pursuant to the Certificate of Designation, the holders of

the Series A Preferred Stock (the “Holders”) shall be entitled to receive, and the Company shall pay, dividends on shares

of the Series A Preferred Stock equal (on an as-if-converted-to-Common-Stock basis) to and in the same form as dividends actually paid

on shares of the Common Stock when, as and if such dividends are paid on shares of the Common Stock.

No other dividends shall be paid

on shares of the Series A Preferred Stock.

respect to any vote with the class of Common Stock, each share of the Series A Preferred Stock shall entitle the Holder thereof to cast

that number of votes per share as is equal to the number of shares of Common Stock into which it is then convertible.

Series A Preferred Stock shall rank (i) senior to all of the Common Stock;

(ii) senior to any class or series of capital stock of the

Company hereafter created specifically ranking by its terms junior to any Preferred Stock (“Junior Securities”);

parity with any class or series of capital stock of the Corporation created specifically ranking by its terms on parity with the Preferred

Stock (“Parity Securities”);

and (iv) junior to any class or series of capital stock of the Company hereafter created specifically

ranking by its terms senior to any Preferred Stock (“Senior Securities”), in each case, as to dividends or distributions

of assets upon liquidation, dissolution or winding up of the Company, whether voluntarily or involuntarily.

share of the Series A Preferred Stock shall be convertible, at any time and from time to time from and after September 29, 2022 at the

option of the Holder thereof, into that number of shares of Common Stock determined by dividing the Stated Value of such share of the

Series A Preferred Stock ($ 1,000 as of September 29, 2022) by the Conversion Price.

The conversion price for each share of the Series

A Preferred Stock is the closing price of the Common Stock on September 29, 2022, which was $ 9.30 .

of December 31, 2024 and December 31, 2023, there were 6,300 shares of Series A Convertible Preferred Stock issued and outstanding.

September 29, 2022, the Company designated up to 6,800 shares of Series A Convertible Preferred Stock, par value $ 0.0001 , with a stated

value of $ 1,000 per share.

Each share of Series A Preferred Stock is convertible at the holder’s option into a number of shares

of common stock determined by dividing the stated value ($ 1,000 ) by the conversion price of $ 9.30 (the closing price on September 29,

Series A holders are entitled to vote with the holders of common stock on an as-converted basis.

Series A Preferred Stock ranks

senior to common stock and junior to Senior Securities as to dividends and liquidation.

of December 31, 2025 and December 31, 2024, there were 6,300 shares of Series A Convertible Preferred Stock issued and outstanding, with

an aggregate liquidation preference of $ 6,300,000 .

C Convertible Preferred Stock

June 21, 2023, the Company, on the one hand, and Moise Emquies, George Levy, Matthieu Leblan, Carol Ann Emquies, Jenny Murphy and

Elodie Crichi (collectively, the “Sundry Investors”), on the other hand, executed a Securities Purchase Agreement (the

“Sundry SPA”) whereby the Company issued 5,761 shares of Series C Convertible Preferred Stock, par value $ 0.0001 per

share (the “Series C Preferred Stock”) to the Sundry Investors at a purchase price of $ 1,000 per share.

Preferred Stock is convertible into a number of shares of the Company’s Common Stock equal to $ 1,000 divided by an initial

conversion price of $ 0.717 which represents the lower of (i) the closing price per share of the Common Stock as reported on the

Nasdaq on June 20, 2023, and (ii) the average closing price per share of Common Stock as reported on the Nasdaq for the five trading

days preceding June 21, 2023.

The shares of Series C Preferred Stock were issued in consideration for the cancellation of certain

promissory notes issued by the Company to the Sundry Investors dated December 30, 2022 (the “Sundry Loan Documents”).

The following is a summary of the rights and preferences of the Series C Convertible Preferred Stock

June 21, 2023, the Company filed the Certificate of Designation with the Secretary of State for the State of Delaware designating up

to 5,761 shares out of the authorized but unissued shares of its preferred stock as Series C Convertible Preferred Stock.

The following

is a summary of the principal terms of the Series C Preferred Stock.

for stock dividends or distributions for which adjustments are to be made pursuant to the Certificate of Designation, the holders of

the Series C Preferred Stock (the “Series C Holders”) shall be entitled to receive, and the Company shall pay, dividends

on shares of the Series C Preferred Stock equal (on an as-if-converted-to-Common-Stock basis) to and in the same form as dividends actually

paid on shares of the Common Stock when, as and if such dividends are paid on shares of the Common Stock.

No other dividends shall be

paid on shares of the Series C Preferred Stock.

Series C Holders are entitled to vote as a class as expressly provided in the Certificate of Designation.

The Series C Holders are also

entitled to vote with the holders of shares of Common Stock, voting together as one class, on all matters in which the Series C Holders

are permitted to vote with the class of shares of Common Stock.

respect to any vote with the class of Common Stock, each share of the Series C Preferred Stock shall entitle the Holder thereof to cast

that number of votes per share as is equal to the number of shares of Common Stock into which it is then convertible (subject to the

ownership limitations specified in the Certificate of Designation) using the record date for determining the stockholders of the Company

eligible to vote on such matters as the date as of which the conversion price is calculated.

Series C Preferred Stock shall rank (i) senior to all of the Common Stock;

(ii) senior to Junior Securities;

(iii) on parity with Parity

and (iv) junior to Senior Securities, in each case, as to dividends or distributions of assets upon liquidation, dissolution

or winding up of the Company, whether voluntarily or involuntarily.

Subject to any superior liquidation rights of the holders of any

Senior Securities of the Company and the rights of the Company’s existing and future creditors, upon a Liquidation, each Holder

shall be entitled to be paid out of the assets of the Company legally available for distribution to stockholders, prior and in preference

to any distribution of any of the assets or surplus funds of the Company to the holders of the Common Stock and Junior Securities and

pari passu with any distribution to the holders of Parity Securities, an amount equal to the Stated Value (as defined in the Certificate

of Designation) for each share of the Series C Preferred Stock held by such Holder and an amount equal to any accrued and unpaid dividends

thereon, and thereafter the Series C Holders shall be entitled to receive out of the assets, whether capital or surplus, of the Company

the same amount that a holder of Common Stock would receive if the Series C Preferred Stock were fully converted (disregarding for such

purposes any conversion limitations hereunder) to Common Stock which amounts shall be paid pari passu with all holders of Common Stock.

share of the Series C Preferred Stock shall be convertible, at any time and from time to time from and after June 21, 2023 at the option

of the Holder thereof, into that number of shares of Common Stock determined by dividing the Stated Value of such share of the Series

C Preferred Stock ($ 1,000 as of June 21, 2023) by the Conversion Price.

The conversion price for each share of the Series C Preferred

Stock is $ 0.717 , which is the lower of (a) the closing price per share of the Common Stock as reported on the Nasdaq on June 20, 2023

(the trading day before the date of the Sundry SPA), and (b) the average closing price per share of Common Stock as reported on the Nasdaq

for the five trading days preceding the date of the Sundry SPA, subject to adjustment herein (the “Series C Conversion Price”).

Company has the option to redeem any or all of the then outstanding Series C Preferred Stock at 112 % of the then Stated Value any time

after June 21, 2023 and so long as there is an effective Registration Statement covering the shares issuable upon conversion of the Series

C Preferred Stock.

October 2023, 975 shares of Series C Convertible Preferred Stock converted into 1,088 shares of common stock.

the year ended December 31, 2024, 3,442 shares of Series C Convertible Preferred Stock converted into 3,840 shares of common stock.

of December 31, 2024 and December 31, 2023, there were 1,344 and 4,786 shares of Series C Convertible Preferred Stock issued and outstanding.

RELATED PARTY TRANSACTIONS

of December 31, 2024 and 2023, the Company made net repayments for amounts due to related parties totaling $ 11,909 and $ 130,205 ,

respectively.

As of December 31, 2024 and 2023, amounts due to related parties were $ 411,921 and $ 400,012 , respectively.

advances are unsecured, non-interest bearing and due on demand.

Amounts due to related parties consist of current and former

executives, and a board member.

of December 31, 2024 and 2023, due to related parties includes advances from the former officer, Mark Lynn, who also serves as a director,

totaling $ 104,568 and $ 104,568 , respectively, and accrued salary and expense reimbursements of $ 87,221 and $ 87,221 , respectively, to

current officers.

October 2022, the Company received advances from a director, Trevor Pettennude, totaling $ 325,000 .

The advances are unsecured, non-interest

bearing and due on demand.

As of December 31, 2024 and 2023, the amounts $ 190,000 and $ 175,000 , respectively, were outstanding.

SHARE-BASED PAYMENTS

June 21, 2023, the Company issued 5,761 shares of Series C Convertible Preferred Stock, par value $ 0.0001 , with a stated value of $ 1,000

per share, to the Sundry sellers in exchange for cancellation of promissory notes issued in December 2022.

Each share of Series C Preferred

Stock is convertible at the holder’s option into common stock at a conversion price of $ 0.717 per share (the lower of the closing

price on June 20, 2023 and the five-day average preceding the issuance date).

The Company may redeem all or any portion of the outstanding

Series C shares at 112% of the then-current stated value at any time after June 21, 2023, provided an effective registration statement

Series C holders are entitled to vote with common stockholders on an as-converted basis.

Series C ranks pari passu with

Series A and senior to common stock.

of December 31, 2025 and December 31, 2024, there were 1,344 shares of Series C Convertible Preferred Stock issued and outstanding, with

an aggregate liquidation preference of $ 1,344,000 .

D Convertible Preferred Stock

August 13, 2025, the Company completed the initial closing of a private placement, issuing 14,031.25 shares of Series D Convertible Preferred

Stock, par value $ 0.0001 per share, with a stated value of $ 1,000 per share, for gross cash proceeds of approximately $ 11.2 million (aggregate

stated value of $ 14.0 million).

September 26, 2025, pursuant to an amendment to the Securities Purchase Agreement, the Company issued an additional 1,875 shares of Series

D Preferred Stock to an investor for gross cash proceeds of $ 1.5 million, at a stated value of $ 1,150 per share (aggregate stated value

of $ 2.16 million for this tranche).

gross proceeds from the Series D offerings were $ 12.7 million.

Net proceeds received, after deducting offering costs, were $ 11.4 million.

of December 31, 2025, there were 15,906 shares of Series D Convertible Preferred Stock issued and outstanding.

Each share of Series D Preferred Stock is convertible at the holder’s option into common stock at a price equal to 80% of the lowest

closing price of the Company’s common stock for the five trading days immediately preceding the conversion date, subject to beneficial

ownership limitations of 4.99% (adjustable to 9.99%) .

Series D holders are entitled to receive dividends equal (on an as-converted basis) to dividends paid on common stock, when and if declared.

No dividends have been declared or paid.

Series D holders vote with holders of common stock on an as-converted basis, subject to ownership limitations.

Series D ranks senior to common stock and Junior Securities, pari passu with Series A and Series C, and junior to Senior

Upon liquidation, each Series D holder is entitled to receive the greater of:

(i) the stated value plus accrued dividends,

or (ii) the amount such holder would receive if Series D were converted to common stock immediately prior to such liquidation.

December 31, 2025, the aggregate liquidation preference of the Series D Preferred Stock was approximately $ 23,859,375 .

Company is required to hold the offering proceeds in a segregated bank account.

As of December 31, 2025, $ 5,744,174 remains in the segregated

account as restricted cash, pending release upon:

(i) shareholder approval of the reverse stock split and 20% rule , and (ii) SEC effectiveness

of the resale registration statement.

480 and 815 Analysis

Company evaluated the Series D Convertible Preferred Stock under ASC 480, ASC 815, and ASC 480-10-S99-3A.

ASC 480, the Series D does not meet the definition of a mandatorily redeemable instrument, as there are no mandatory redemption provisions

or obligations requiring the Company to deliver cash or other assets to holders.

The instrument is therefore not classified as a liability

under ASC 480.

ASC 815, the Company evaluated all embedded features of the Series D Preferred Stock, including the conversion option, participating

dividends, price protection, protective rights, and liquidation preference.

The Company determined that all such features are clearly

and closely related to the equity host and do not require bifurcation as separate derivative instruments.

The conversion option is equity-settled,

the ownership limitations maintain equity characteristics, and there are no put features, mandatory repurchase provisions, or redemption

rights exercisable at the option of holders or upon events outside the Company’s control.

ASC 480-10-S99-3A, the Company evaluated whether the Series D should be classified as temporary equity.

Because there are no redemption

features exercisable at the option of the holder or upon the occurrence of events not solely within the Company’s control, the

Series D Preferred Stock does not meet the criteria for temporary equity classification.

Accordingly, the Series D is classified as permanent

equity in the Consolidated Balance Sheets.

On September 23, 2025, the Company amended the Certificate of

Designations for the Series D Convertible Preferred Stock to increase the stated value from $ 1,000 to $ 1,150 per share and expand

the authorized shares from 15,000 to 17,500 .

The amendment was accounted for as a modification by analogy to ASC 718-20, and the

Company recognized a deemed dividend of $ 2,104,688 , representing the aggregate increase in stated value transferred to preferred

shareholders.

of December 31, 2025, the aggregate liquidation preferences of the Company’s preferred stock were as follows:

SCHEDULE OF LIQUIDATION PREFERENCE

Liquidation Preference

Series A Convertible Preferred Stock

Series C Convertible Preferred Stock

Series D Convertible Preferred Stock

WARRANTS AND STOCK OPTIONS

Stock Warrants

summary of information related to common stock warrants for the years ended December 31, 2024 and 2023 is as follows:

SUMMARY OF INFORMATION RELATED TO COMMON STOCK WARRANTS

summary of common stock warrant activity for the years ended December 31, 2025 and 2024 is as follows:

SCHEDULE OF INFORMATION RELATED TO COMMON STOCK WARRANTS

Exercise Price

Outstanding - December 31, 2024

( 5,701,820 )

Outstanding - December 31, 2025

1 unchanged sentence

Exercisable at December 31, 2025

of December 31, 2024 and December 31, 2023, the Company had 31 stock options outstanding with a weighted average exercise price of $ 452,500

compensation expense of $ 169,614 and $ 408,810 was recognized for the year ended December 31, 2024 and 2023.

Consulting LLC Pre-Funded Warrants

On January 21, 2025, in connection with a two-year marketing services agreement,

the Company issued 2,068,965 pre-funded warrants to MavDB Consulting LLC at an exercise price of $ 0.01 per share.

The fair value of

the pre-funded warrants was $ 2,689,656 ($ 1.30 per share), recorded as a prepaid marketing asset.

The warrants are immediately exercisable

and expire two years from issuance.

2025 Offering Warrants

In February 2025, the Company issued 33,970,485 warrants pursuant to the

February 2025 Offering (see Note 10), including 11,239,805 pre-funded warrants exercisable at $ 0.0001 per share with no expiration date,

and 22,730,680 common stock purchase warrants exercisable at $ 0.66 per share.

During the year ended December 31, 2025, 8,730,796 warrants

were exercised for shares of common stock, generating aggregate proceeds of $ 5,807,576 .

The Company also issued placement agent warrants

to purchase up to 748,705 shares of common stock at $ 0.76 per share in connection with the February 2025 Offering.

As of December 31, 2025, stock payable of $ 4,951,128 represents amounts

received from warrant holders for exercises in which the underlying shares of common stock had not yet been issued as of December 31,

During August 2025, certain warrant holders exercised Common Share Purchase Warrants at $ 0.66 per share for aggregate proceeds of

approximately $ 5.0 million;

the shares had not been issued as of December 31, 2025 and accordingly the proceeds were recorded as stock

of December 31, 2025 and 2024, the Company had 31 stock options outstanding with a weighted average exercise price of $ 452,500 per share.

All outstanding options are exercisable.

No options were granted, exercised, or forfeited during the year ended December 31, 2025.

compensation expense of $ 0 and $ 169,614 was recognized for the years ended December 31, 2025 and 2024, respectively.

There is no unrecognized

compensation cost related to outstanding stock options as of December 31, 2025.

2020 Omnibus Incentive Stock Plan (the “2020 Plan”) authorizes an aggregate of 26 shares of common stock for awards.

December 31, 2025, grants covering 22 shares have been made and 4 shares remain available for future issuance under the 2020 Plan .

RELATED PARTY TRANSACTIONS

of December 31, 2025 and 2024, amounts due to related parties was $ 370,921 and $ 411,921 , respectively.

The advances are

unsecured, non-interest bearing and due on demand.

Amounts due to related parties consist of amounts due to current and former executives,

and a board member.

of December 31, 2025 and 2024, due to related parties includes $ 87,222 in advances from Mark Lynn, a director and former

officer of the company, and accrued salary and expense reimbursements of $ 134,699 to current officers of the company.

October 2022, the Company received advances from a director, Trevor Pettennude, totaling $ 325,000 .

The advances are unsecured, non-interest

bearing and due on demand.

As of December 31, 2025 and December 31, 2024, $ 149,000 and $ 190,000 , respectively, was outstanding.

LEASE OBLIGATIONS

8 unchanged sentences

approximately 42,000 square feet with a monthly base rent of $ 12,000 .

The second property, situated in Los Angeles, California, functions

as a Showroom, covering approximately 2,000 square feet with a monthly base rent of $ 25,000 .

The second property is a showroom or office location also operated

on a month-to-month basis.

Because both leases are month-to-month with terms of 12 months or less, the Company has elected the short-term

lease practical expedient and no right-of-use asset or lease liability has been recognized.

Rent expense related to these leases is recognized

on a straight-line basis over the applicable monthly periods.

Refer to Note 17 for detail on a lease entered into 2026.

COMMITMENTS AND CONTINGENCIES

Agreement Commitments

Company has entered into multi-year marketing and sponsorship agreements with AAA Tuscaloosa, LLC, Traffic Holdco, LLC, The Grove Collective,

LLC, and Buffalo Sports Properties/Learfield, each of which includes equity and, in some cases, cash commitments over three-year terms.

Certain of these agreements include make-whole provisions under which the Company may be required to issue additional shares or cash

if the fair value of shares delivered falls below the guaranteed commitment during the protection period.

These arrangements are accounted

for as liability-classified share-based payment awards;

the related liabilities are measured at fair value at each reporting date using

Monte Carlo simulation models.

See Note 5 for the prepaid marketing balances and Note 9 for the fair value of those liabilities as of

December 31, 2025.

Contingencies

On March 21, 2023, a vendor filed a lawsuit against Digital

Brands Group related to trade payables totaling approximately $ 43,501 .

Such amounts include interest due, and are included in accounts

payable, net of payments made to date, in the accompanying consolidated balance sheets.

The Company does not believe it is probable that

the losses in excess of such trade payables will be incurred.

On November 16, 2023 a vendor filed a lawsuit against Digital

Brands Group related to trade payables totaling approximately $ 345,384 , which represents past due fees and late fees.

Such amounts are

included in the accompanying balance sheets.

The Company does not believe it is probable that the losses in excess of such pay trade

payables will be incurred.

December 21, 2023, a former employee from over two years ago filed a wrongful termination

lawsuit against the Company.

The Company is disputing this claim and has been awarded arbitration

for this matter.

March 20, 2024, a former employee from over two years ago filed a wrongful termination lawsuit

against the Company.

Company is subject to various legal proceedings arising in the ordinary course of business.

Liabilities are recorded when losses are

considered probable and reasonably estimable.

· On March 20, 2024, a former temporary worker engaged through a third-party placement agency, who was never

an employee of the Company, filed a wrongful termination lawsuit against the Company.

The Company is disputing this claim.

This person was not a Company employee

at any time and was temporary worker we used from a third party placement agency.

April 17, 2024, a former employee filed a wrongful termination lawsuit against the Company.

The Company is disputing this claim and has been awarded arbitration for this matter.

This employee was part of the marketing team.

The marketing team was let go and the Company

moved to a third-party outsourced marketing solution.

A vendor filed a lawsuit against Bailey 44 related to a retail

store lease in the amount of $ 1.5 million.

settled this matter in March 2026 for $ 16,000 .

· On April 17, 2024, a former employee filed a wrongful termination lawsuit against the Company.

was part of the marketing team, which was fully transitioned to a third-party outsourced marketing solution.

The Company disputed the

claim and initially pursued arbitration;

however, the matter was settled in May 2025 for a payment by the company of $ 81,000 .

amount, $ 41,000 was paid in June 2025, with the remaining $ 40,000 to be paid in three equal installments of $ 13,000 in July, August 2025,

and September 2025.

The Company has made all the payments and the lawsuit is dismissed.

· In June 2021, a vendor filed a lawsuit against Bailey related to a retail store lease in the amount

of $ 1,500,000 .

The Company is disputing the claim for damages and the matter is ongoing.

The vendor has recently

updated the claim to now be $ 450,968 after signing a long-term lease with another brand for this location.

The Company is disputing this

new amount after review of the lease.

On November 15, 2023, a vendor filed a lawsuit against Digital

Brands Group related to trade payables totaling approximately $ 582,208 , which represents “double damages.” The amount due

to the vendor is $ 292,604 .

Such amounts are included in the accompanying balance sheets.

The Company does not believe it is probable

that losses in excess of such pay trade payables will be incurred.

The matter was settled for $ 400,000 and is currently on a monthly

payment plan.

claims above, to the extent management believes it will be liable, have been included in accounts payable and accrued expenses and other

liabilities in the accompanying consolidated balance sheet as of December 31, 2024.

on the nature of the proceeding, claim, or investigation, we may be subject to monetary damage awards, fines, penalties, or

injunctive orders.

Furthermore, the outcome of these matters could materially adversely affect our business, results of operations,

and financial condition.

The outcomes of legal proceedings, claims, and government investigations are inherently unpredictable and

subject to significant judgment to determine the likelihood and amount of loss related to such matters.

While it is not possible to

determine the outcomes, we believe based on our current knowledge that the resolution of all such pending matters will not, either

individually or in the aggregate, have a material adverse effect on our business, results of operations, cash flows, or financial

as may be set forth above the Company is not a party to any legal proceedings, and the Company is not aware of any claims or actions

pending or threatened against us.

In the future, the Company might from time to time become involved in litigation relating to claims

arising from its ordinary course of business, the resolution of which the Company does not anticipate would have a material adverse impact

on our financial position, results of operations or cash flows.

taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes.

The differences relate primarily to depreciable assets using accelerated depreciation methods for income tax purposes, indefinite-lived intangibles, and for net operating loss carryforwards.

As of December 31, 2024, and 2023, the Company had net deferred tax assets before

valuation allowance of $ 20,288,246 and $ 17,882,335 , respectively.

The following table presents the deferred tax assets and liabilities

The vendor has recently updated the claim to now be $ 450,968

after signing a long-term lease with another brand for this location.

The Company is disputing this new amount after review of the

In the summer of 2024, Century City Mall, LLC obtained a judgment against Bailey 44, LLC in the amount of approximately

million, inclusive of both damages for unpaid rent and attorney fees and costs.

This amount is included within the liabilities of

Bailey 44, LLC in these accompanying financial statements.

In this action, Century City Mall is attempting to hold Digital liable

for the judgment against Bailey 44 on the theory that Digital is Bailey 44’s “alter ego.” The case is set for

trial on July 21, 2026.

The Company is unable to weigh in on the likely outcome of the case but will vigorously defend.

● In June 2022, a dispute originated due to a contractual arrangement involving

alleged unpaid service fees of approximately $ 28,000 , as well as additional disputed amounts, and counterclaims asserted by the Company

for damages arising from website-related issues.

A default judgment of approximately $ 28,000 was entered against the Company in January

The Company is currently challenging the judgment and has initiated a new action reasserting its claims.

· On November 15, 2023, a vendor, Simon Showroom, filed a lawsuit against the company related to trade payables

totaling approximately $ 582,208 , representing “double damages,” while the actual amount due to the vendor was $ 292,604 .

case was settled in full on December 10, 2024, for a total settlement amount of $ 400,000 .

As part of the settlement, the Company paid

$ 50,000 in December 2024, followed by a $ 60,000 payment in February 2025.

As of December 31, 2025, the Company had an outstanding balance

of $ 130,000 remaining, with monthly payments of $ 30,000 being made under the terms of the settlement agreement.

The Company has made all

payments, and the lawsuit is dismissed.

All claims above, to the extent

management believes it will be liable, have been included in accounts payable and accrued expenses and other liabilities in the accompanying

consolidated balance sheet as of December 31, 2025.

Company accounts for income taxes using the asset and liability method.

Deferred tax assets and liabilities are recognized for temporary

differences between the financial statement and tax bases of assets and liabilities, using enacted tax rates expected to apply in the

years in which those differences are expected to reverse.

The Company maintains a full valuation allowance against all net deferred tax

assets due to its history of operating losses.

Tax Provision

For the year ended December 31, 2025, the Company recorded no current or

deferred income tax expense or benefit.

For the year ended December 31, 2024, the Company recorded a deferred income tax benefit of $ 119,044 .

The components of the income tax provision are as follows:

SCHEDULE OF COMPONENTS INCOME TAX PROVISION

Year Ended December 31,

State (California)

Total current

State (California)

Total deferred

Total income tax expense (benefit)

$ ( 119,044 )

Tax Assets and Liabilities

Company’s deferred tax assets arise primarily from net operating loss carryforwards.

The Company has recorded a full valuation

allowance against its net deferred tax assets as it is not more likely than not that these assets will be realized.

The following table

presents deferred tax assets and liabilities as of December 31, 2025 and 2024:

SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES

1 unchanged sentence

Net operating loss carryforwards

Total gross deferred tax assets

Deferred tax liabilities:

Indefinite lived intangible assets

Depreciation timing differences

$ ( 1,840,170 )

Total deferred tax liabilities

$ ( 1,840,170 )

valuation allowance

1 unchanged sentence

$ ( 23,182,884 )

Net deferred tax assets

Net deferred tax asset (liability)

$ ( 248,990 )

Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized.

making such a determination, the Company considers all available positive and negative evidence, including future reversals of

existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations.

The Company assessed the need for a valuation allowance against its net deferred tax assets and determined a full valuation

allowance is required due, cumulative losses through December 31, 2024, and no history of generating taxable income.

valuation allowances of $ 20,883,467 and $ 17,882,335 were recorded as of December 31, 2024 and 2023, respectively.

allowance increased by $ 3,001,132 and $ 2,620,909 during the years ended December 31, 2024 and 2023, respectively.

assets were calculated using the Company’s combined effective tax rate, which it estimated to be approximately 28.0 %.

effective rate is reduced to 0 % for 2024 and 2023 due to the full valuation allowance on its net deferred tax assets.

has permanent differences, consisting of non- deductible impairments of goodwill and intangible assets of $ 1.4 million and

amortization of non-cash debt issuance costs of $ 2.4 million.

Company’s ability to utilize net operating loss carryforwards will depend on its ability to generate adequate future taxable income.

At December 31, 2024 and 2023, the Company had net operating loss carryforwards available to offset future taxable income in the amounts

of approximately $ 78,274,991 and $ 69,241,882 , for which losses from 2018 forward can be carried forward indefinitely.

a result of prior operating losses, the Company has net operating loss, or “NOL,” carryforwards for federal income tax purposes.

The ability to utilize NOL carryforwards to reduce taxable income in future years could become subject to significant limitations under

Section 382 of the Internal Revenue Code if the Company undergoes an ownership change.

The Company would undergo an ownership change

if, among other things, the stockholders who own, directly or indirectly, 5 % or more of our common stock, or are otherwise treated as

“5% shareholders” under Section 382 of the U.S.

Internal Revenue Code and the regulations promulgated thereunder, increase

their aggregate percentage ownership of the Company’s stock by more than 50 percentage points over the lowest percentage of the

stock owned by these stockholders at any time during the testing period, which is generally the three-year period preceding the potential

ownership change.

Company has evaluated its income tax positions and has determined that it does not have any uncertain tax positions.

The Company will

recognize interest and penalties related to any uncertain tax positions through its income tax expense.

Company is not presently subject to any income tax audit in any taxing jurisdiction, though all tax years from 2020 on remain open to

Tax Rate Reconciliation

Company adopted ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, effective for the year ended December

This standard requires the effective tax rate reconciliation to be presented in tabular format using both dollar amounts

and percentages, disaggregated into prescribed categories.

The reconciliation from the U.S.

federal statutory rate of 21 %

to the Company’s effective rate of 0 %

and 0.9 % , respectively, for the years ended December 31, 2025 and 2024 is as follows:

SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION

Tax at federal statutory rate ( 21 %)

$ ( 5,933,037 )

$ ( 2,777,383 )

Stock-based compensation

Non-deductible items

Impairment of goodwill and intangibles

Change in valuation allowance

Total income tax expense (benefit)

$ ( 119,044 )

Company paid no federal, state, or local income taxes for the years ended December 31, 2025 and 2024.

Company maintained a full valuation allowance against its net deferred tax assets as of December 31, 2025 and 2024, due to its

history of operating losses and uncertainty regarding the generation of future taxable income.

The valuation allowance increased by

during 2025 and decreased by $ 5,419,573

during 2024, reflecting growth in net operating loss carryforwards.

Operating Loss Carryforwards

of December 31, 2025, the Company had federal net operating loss carryforwards of approximately $ 108.7 million.

Approximately $ 15.7 million

relates to pre-2018 tax years and expires between 2033 and 2038.

The remaining $ 93.7 million of post-2017 losses carry forward indefinitely

but are subject to an annual 80% taxable income limitation under IRC §172.

The Company also had California state NOL carryforwards

of approximately $ 108.7 million, subject to a 20 -year carryforward period.

ability to utilize these carryforwards could become subject to annual limitations under Section 382 of the Internal Revenue Code if the

Company undergoes an ownership change, generally defined as a cumulative shift of more than 50 percentage points in ownership among 5 %-or-greater

stockholders over a three-year period.

Tax Positions

Company has not identified any uncertain tax positions as of December 31, 2025 or 2024, and has recorded no related liabilities.

Company is subject to examination by U.S.

federal and California state tax authorities for all tax years from 2021 forward.

SEGMENT REPORTING

Company operates as a 1 single reportable segment — direct-to-consumer (“DTC”) fashion brands.

The Company’s Chief

Executive Officer has been identified as the Chief Operating Decision Maker (“CODM”).

The CODM reviews consolidated financial

results to evaluate performance, allocate resources, and make operating decisions for the Company as a whole.

accordance with ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, effective for annual periods

beginning after December 15, 2023, the Company is required to disclose significant segment expenses regularly provided to the CODM and

included in the reported measure of segment profit or loss, even as a single reportable segment entity.

CODM uses net loss as the measure of segment profit or loss to assess performance and allocate resources.

The significant segment expenses

regularly provided to the CODM are presented in the table below.

SCHEDULE OF SIGNIFICANT SEGMENT EXPENSES

Year Ended December 31,

Significant segment expenses:

Cost of net revenues

General and administrative

Sales and marketing

Impairment of goodwill and intangible assets

Total significant segment expenses

Other segment items ( a )

Other income (expense), net:

Change in fair value of SBP liability

Interest expense

( 2,941,171 )

Other non-operating income (expenses)

Total other income (expense), net

( 3,024,851 )

Income tax benefit (provision)

Segment net loss (CODM measure)

$ ( 28,252,558 )

$ ( 13,106,589 )

(a) Other segment items

consists of change in fair value of contingent consideration, change in credit reserve, and other immaterial items not separately identified

as significant segment expenses.

Since the Company operates as a single reportable segment, there are no reconciling items between segment

totals and consolidated totals.

Total segment assets as of December 31, 2025 and 2024 were $ 44,489,380

and $ 19,890,327 , respectively, equal to total consolidated assets.

All assets are attributable to the Company’s single operating

revenues and long-lived assets are attributable to operations within the United States.

No single customer accounted for more than 10 %

of net revenues during either period presented.

SUBSEQUENT EVENTS

or around January 17, 2025, the Company closed a private placement pursuant to a securities purchase agreement with a certain accredited

investor, pursuant to which the Company agreed to issue and sell, in a private placement, a promissory note in the principal amount of

$ 121,900 (the “January 2025 Note”).

The January 2025 Note is convertible into common stock upon default at a conversion price

equal to 61 % of the lowest closing bid price during the ten trading days prior to the conversion date.

The January 2025 Note provides

that the total number of shares of common stock that may be issued upon conversion thereof shall not exceed 19.99 % of the shares of Common

Stock outstanding as of the issuance date of the January 2025 Note.

or around January 20, 2025, the Company entered into a vendor agreement (the “Vendor Agreement”) with MavDB Consulting

LLC (the “Vendor”).

The engagement of the Vendor is for a five ( 5 ) year period and the vendor services to be provided

include, but are not limited to, product content production, social media marketing, engagement of influencers and student athletes

for product awareness, and event and staffing costs (the “Services”).

In consideration for the Services, the Company

will pay the Vendor a vendor fee equal to $ 3,000,000 (the “Cash Fee”) within thirty calendar days after the date of the

Vendor Agreement (the “Payment Period”), provided, however, that Vendor may elect to receive the Vendor Shares (as

defined below) and/or Vendor Pre-Funded Warrants (as defined below) as described below in lieu of the Cash Fee by providing written

notice to the Company of such election during the Payment Period (the “Written Notice”).

The “Vendor Shares”

shall mean a number of Common Stock equal to the Cash Fee divided by $ 1.45 , provided, however, if the issuance of any of the Vendor

Shares would cause the Vendor to exceed 4.99% of the of the outstanding Common Stock, as determined in accordance with Section 16 of

the Exchange Act and the regulations promulgated thereunder, then the Company shall instead issue to Vendor pre-funded warrants (the

“Vendor Pre-Funded Warrants”) for the purchase of the amount of Vendor Shares in excess of the beneficial ownership

limitation, provided, further, that if the Vendor specifies in the Written Notice that the Vendor elects to receive Vendor

Pre-Funded Warrants in lieu of the entire amount of the Vendor Shares, then the Company shall instead issue to Vendor the Vendor

Pre-Funded Warrants to purchase the entire amount of the Vendor Shares.

The Vendor delivered the Written Notice to the Company

during the Payment Period and the Company issued the Vendor Pre-Funded Warrants for the purchase of 2,068,965 shares of Common Stock

to Vendor on January 21, 2025.

Vendor Pre-Funded Warrants have an initial exercise price per share of Common Stock equal to $ 0.01 .

The Vendor Pre-Funded Warrants

are immediately exercisable and will expire five ( 5 ) years after the issuance date of the Vendor Pre-Funded Warrants.

price and number of shares of Common Stock issuable upon exercise is subject to appropriate adjustment in the event of share

dividends, share splits, reorganizations or similar events.

The Vendor Pre-Funded Warrants will be exercisable, at the option of the

Vendor, in whole or in part, by delivering to us a duly executed exercise notice accompanied by payment in full for the number of

shares of Common Stock purchased upon such exercise (except in the case of a cashless exercise).

The Vendor (together with its

affiliates) may not exercise any portion of the Vendor Pre-Funded Warrants to the extent that the Vendor would own more than 4.99%

of the outstanding shares of Common Stock immediately after exercise, except that upon at least 61 days’ prior notice from the

Vendor to us, the Vendor may increase the amount of beneficial ownership of outstanding shares after exercising the Vendor’s

Pre-Funded Warrants up to 9.99 % of the number of our shares of Common Stock outstanding immediately after giving effect to the

exercise, as such percentage ownership is determined in accordance with the terms of the Vendor Pre-Funded Warrants.

making the cash payment otherwise contemplated to be made to us upon such exercise in payment of the aggregate exercise price, the

Vendor may elect instead to receive upon such exercise (either in whole or in part) the number of shares of Common Stock determined

according to a formula set forth in the Vendor Pre-Funded Warrants.

January 22, 2025, the Company issued a promissory note in the principal amount of $ 260,000.00 (the “Second Note”) to an accredited

investor (“Investor”), pursuant to which the Investor made a loan to the Company.

The Second Note carries an original issue

discount of $ 60,000.00 , and accordingly the purchase price of the Second Note is $ 200,000.00 .

The Second Note matures on April 22, 2025 ,

and contains customary events of default.

Upon the occurrence of any event of default under the Second Note, the Second Note will become

immediately due and payable in an amount equal to the outstanding principal and accrued interest under the Second Note plus default interest

at the rate of sixteen percent ( 16 %) per annum.

Purchase Agreement

February 13, 2025, the Company entered into securities purchase agreements (the “Purchase Agreements”) with certain accredited

investors named therein (the “Purchasers”), pursuant to which the Company agreed to issue and sell, in a best efforts offering

(the “Offering”) 11,365,340 units (the “Units”), including (i) 125,535 units consisting of one share of common

stock, par value $ 0.0001 per share (the “Common Stock”) and two warrants to purchase one share of Common Stock each (the

“Share Unit Warrants”), at a purchase price per unit equal to $ 0.66 , and (ii) 11,239,805 units consisting of a pre-funded

warrant to purchase one share of Common Stock (“Pre-Funded Warrants”), immediately exercisable at an exercise price of $ 0.0001

per share, and two warrants to purchase one share of Common Stock each (the “PFW Unit Warrants, and collectively with the Share

Unit Warrants, the “Warrants”), at a purchase price per unit equal to $ 0.6599 .

The Warrants may be exercised for an aggregate

of 22,730,680 shares of Common Stock at an exercise price equal to $ 0.66 per share, subject to adjustment for stock splits and similar

The Purchase Agreement contains customary representations and warranties and agreements of the Company and the Purchasers and

customary indemnification rights and obligations of the parties.

The Offering closed on February 18, 2025.

Company offered Pre-Funded Warrants to those Purchasers whose purchase of Common Stock in the Offering would have resulted in the Purchaser,

together with its affiliates and certain related parties, beneficially owning more than 4.99% (or at the election of the Purchaser, 9.99%)

of our Common Stock immediately following the consummation of the Offering in lieu of the Common Stock that would otherwise result in

ownership in excess of 4.99% (or at the election of the purchaser, 9.99%) of the outstanding Common Stock of the Company.

The Pre-Funded

Warrants may be exercised commencing on the issuance date and do not expire.

The Pre-Funded Warrants are exercisable for cash;

however that they may be exercised on a cashless exercise basis if, at the time of exercise, there is no effective registration statement

registering, or no current prospectus available for, the issuance or resale of the Common Stock issuable upon exercise of the Pre-Funded

The exercise of the Pre-Funded Warrants will be subject to a beneficial ownership limitation, which will prohibit the exercise

thereof, if upon such exercise the holder of the Pre-Funded Warrants, its affiliates and any other persons or entities acting as a group

together with the holder or any of the holder’s affiliates would hold 4.99% (or, upon election of a Purchaser prior to the issuance

of any shares, 9.99%) of the number of Common Stock outstanding immediately after giving effect to the issuance of Common Stock issuable

upon exercise of the Pre-Funded Warrant held by the applicable holder, provided that the holder may increase or decrease the beneficial

ownership limitation (up to a maximum of 9.99%) upon 60 days advance notice to the Company, which 60 day period cannot be waived

Warrants may be exercised commencing on the issuance date and expire one year from issuance.

The Warrants are exercisable for cash at

an exercise price of $ 0.66 per share;

provided, however that they may be exercised on a cashless exercise basis if, at the time of exercise,

there is no effective registration statement registering, or no current prospectus available for, the issuance or resale of the Common

Stock issuable upon exercise of the Warrants.

The exercise of the Warrants will be subject to a beneficial ownership limitation, which

will prohibit the exercise thereof, if upon such exercise the holder of the Warrants, its affiliates and any other persons or entities

acting as a group together with the holder or any of the holder’s affiliates would hold 4.99% (or, upon election of a Purchaser

prior to the issuance of any shares, 9.99%) of the number of Common Stock outstanding immediately after giving effect to the issuance

of Common Stock issuable upon exercise of the Warrants held by the applicable holder, provided that the holder may increase or decrease

the beneficial ownership limitation (up to a maximum of 9.99%) upon 60 days advance notice to the Company, which 60 day period cannot

the closing of the Offering, the Company issued warrants to RBW Capital Partners LLC, acting through Dawson James Securities, Inc.

“Placement Agent”), for the purchase of 568,267 shares of Common Stock at an exercise price of $ 0.759 per share (the “Placement

Agent Warrants”), which is equal to 115 % of the price per Unit.

The Placement Agent Warrants are exercisable at any time commencing

six (6) months from the date of commencement of sales in the Offering and expiring five (5) years from the commencement of sales in the

During the aforementioned six (6) month period, the Placement Agent Warrant may not be sold, transferred, assigned, pledged,

or hypothecated, or be the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective

economic disposition of the Placement Agent Warrant pursuant to FINRA Rule 5110(e)(1)(A).

Common Stock, Pre-Funded Warrants, Common Stock issuable upon exercise of the Pre-Funded Warrants, Warrants, Common Stock issuable upon

exercise of the Warrants, Placement Agent Warrants, and Common Stock issuable upon exercise of the Placement Agent Warrants were offered

pursuant to a registration statement on Form S-1 (File No.

333-284508), as filed with the Securities and Exchange Commission (the “Commission”)

on January 27, 2025, as amended, and was declared effective on February 11, 2025 (the “Registration Statement”).

Placement Agent acted as the exclusive placement agent for the Offering pursuant to a Placement Agency Agreement dated February 13, 2025

(the “Placement Agency Agreement”) by and between the Company and the Placement Agent.

The Placement Agency Agreement contains

customary conditions to closing, representations and warranties of the Company, and termination rights of the parties, as well as certain

indemnification obligations of the Company and ongoing covenants for the Company.

Offering resulted in gross proceeds to the Company of approximately $ 7,500,000 , before deducting placement agent fees and commissions

and other offering expenses, and excluding proceeds to the Company, if any, that may result from the future exercise of the Pre-Funded

Warrants or Warrants issued in the Offering.

As compensation to the Placement Agent, as the exclusive placement agent in connection with

the Offering, the Company paid to the Placement Agent a cash fee of 8.0 % of the aggregate gross proceeds raised in the Offering (which

amount shall not include any additional proceeds the Company may receive from the exercise of the Warrants, or the Pre-Funded Warrants,

issued in this Offering) and reimbursement of up to $ 150,000 for expenses of legal counsel and other actual out-of-pocket expenses.

Asset Purchase Agreement

1, 2025, the Company entered into an Asset Purchase Agreement (the “Open Daily APA”) with Open Daily Technologies Inc.

Pursuant to the terms of the Open Daily APA, the Company agreed to purchase, and Open Daily agreed to sell certain intellectual

property owned by Open Daily, including, but not limited to, patent applications, trademarks, and software products and platforms (the

“Open Daily Assets”), but not any liability or obligation of Open Daily in connection with the Company’s purchase of

the Open Daily Assets, in exchange for the issuance by the Company of 344,827 shares of the Company’s common stock (the “Open

Daily Acquisition”).

The Open Daily Acquisition closed on April 2, 2025.

Daily APA contains certain covenants, representations, warranties and closing conditions customary for an agreement of this type, including,

but not limited to, non-competition and non-solicitation provisions.

of Pre-Funded Warrants

February 2025, an aggregate of 2,728,750 pre-funded warrants were exercised for shares of common stock.

The Company has evaluated subsequent events through April 15, 2026, the

date the financial statements were available to be issued.

Company’s promissory note payable to Bailey, with a principal balance of $ 3,500,000 , matured on December 8, 2025 .

As of the date

of issuance of these financial statements, the note has not been repaid and remains outstanding.

The Company is currently evaluating

its options, including potential extension or refinancing of the obligation.

The status of this note may have implications on the Company’s

liquidity and going concern assessment.

See Note 8 for further details.

Warrant Exchange

On February 13, 2026, the Company entered into letter

agreements with certain holders of Common Share Purchase Warrants originally issued in the February 2025 offering at an exercise price

of $ 0.66 per share.

Pursuant to the agreements, the holders exercised 2,365,968 existing warrants generating aggregate proceeds to the

Company of approximately $ 1.6 million.

In exchange, the Company issued 9,634,032 new Common Share Purchase Warrants exercisable at $ 0.66

per share expiring June 17, 2026 .

Certain holders received pre-funded warrants in lieu of common stock to the extent issuance would exceed

their 4.99% beneficial ownership limitation.

The Company agreed to register the shares issuable upon exercise of the new warrants on

a Form S-3 registration statement to be filed by February 27, 2026.

In February 2026, a holder of certain Company common stock warrants exercised 660,000 warrants at an exercise price

of $ 0.66 per share, resulting in aggregate proceeds of approximately $ 1,000,000 .

The Company is in the process of issuing the related

shares, which have been recorded in stock payable.

Marketing NIL Agreement

On March 12, 2026, the Company entered into a three-year

consulting agreement with Athlete Capital Sports LLC to participate in The Pennsylvania State University’s name, image and likeness (“NIL”)

program for student-athletes.

As consideration, the Company agreed to issue shares of common stock with an aggregate value of $ 3.0 million

(determined based on the five-day VWAP or prior-day closing price, whichever is lower) on April 11, 2026.

The shares are subject to a

make-whole provision through the later of 15 months from the effective date or six months following effectiveness of the resale registration

The Company also agreed to invest $ 500,000 per year for three years into University student-athlete funds as directed by Athlete

Capital Sports.

Stock Issuances

to December 31, 2025 and through April 15, 2026, the Company issued an aggregate of 7,541,036 shares of common stock in the following

transactions:

(i) shares issued in satisfaction of stock payable obligations to investors in connection with warrant and pre-funded warrant

exercises completed during 2025 for which the underlying shares had not yet been delivered as of December 31, 2025;

(ii) shares issued

upon the exercise of pre-funded warrants and cash warrants by investors;

and (iii) shares issued pursuant to vendor marketing agreements.

The Company continues to issue shares in the ordinary course as outstanding stock payable obligations are settled and warrants are exercised.

Lease Agreement

December 1, 2025, the Company entered into a lease agreement for approximately 70,301

square feet of warehouse and office space located at Round

The lease commences on February 1, 2026 and has a term of 89

months, expiring on approximately June 30, 2033.

provides for a rent-free period from February 1, 2026 through June 30, 2026.

Monthly base rent begins at approximately $ 45,627

in July 2026 and escalates annually, ranging from approximately

per month over the remaining term.

Total base rent over the

lease term is approximately $ 6.9

The Company is also responsible for its proportionate

share of operating expenses, including taxes, insurance, and common area maintenance costs, initially estimated at approximately $ 16,783

A security deposit of $ 140,500

was paid at signing, of which $ 70,250

is returnable after the 30th month of the term provided no

default has occurred.

The lease includes one five 5 -year

renewal option at fair market rent.

The Company will account for this lease as an operating lease under ASC 842, with a right-of-use

asset and corresponding lease liability to be recognized on the commencement date of February 1, 2026.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures