Digital Brands Group received a notice from the Nasdaq Stock Market that it is not in compliance with the requirement that shares list for at least $1 for 30 consecutive business days.
The notice was received on June 28, according to a company filing. The lack of compliance could be used as another reason for the brand’s securities to be delisted from Nasdaq. Digital Brands Group — which has a portfolio of apparel brands including Sundry and Stateside — was not eligible for a 180-day grace period to regain compliance because it was already subject to review.
Digital Brands Group intends to address its bid price deficiency and its plans to regain compliance with a minimum stockholders’ equity requirement at an upcoming Nasdaq Hearings Panel.
The latest notice from Nasdaq adds to a growing list of challenges for Digital Brands Group.
In the company’s annual report from April, Digital Brands Group revealed it received a slew of letters from Nasdaq throughout 2022. That included a notice about being below common stock bid price requirements in May of that year, and another in January that its common stock Market Value of Listed Securities was below the $35 million minimum.
In November 2022, the company initiated a reverse stock split to regain compliance with a $0.10 threshold price deficiency and the $1 bid price deficiency. Digital Brands in January said it received notification from the Nasdaq Hearings Panel that it was in compliance with continued listing requirements, but would remain subject to a 12-month monitoring period.
The news comes after Digital Brands Group reported its fourth-quarter earnings in April. The company’s revenue declined 15.8% year over year to $3.4 million and net loss increased from $9.7 million last year to $15.8 million. For the full fiscal year 2022, revenue increased 84.2% from $7.6 million to $14 million, while net loss increased from $32.4 million to $38 million.
Additionally, Digital Brands Group’s annual filing said that it was in technical default on at least two promissory notes with aggregate principal amounts worth millions of dollars. The company said it was “currently unable to repay or refinance these borrowings so any such action by these lenders could force us into bankruptcy or liquidation,” and declined to provide comment at the time to Retail Dive regarding the debts.