Digital Brands Group, Inc. Enters Major NIL Consulting Agreement with Athlete Capital Sports LLC

Key Highlights

• Material Consulting Agreement Signed: On March 12, 2026, Digital Brands Group, Inc. (“DBGI” or the “Company”) entered into a significant three-year Consulting Agreement with Athlete Capital Sports LLC. This move positions DBGI to become an active participant in The Pennsylvania State University’s (PSU) name, image, and likeness (NIL) program for student-athletes.
• Equity Compensation Worth \$3 Million: As partial payment for services, DBGI will issue shares of its common stock (par value \$0.0001 per share) to Athlete Capital Sports, with the number of shares calculated by dividing \$3 million by the lower of (i) the volume-weighted average price per share for the five trading days immediately preceding the share delivery date, or (ii) the closing price on the trading day immediately preceding the share delivery date. The Share Delivery Date is set for April 11, 2026.
• Make-Whole Provision for Share Value: The shares issued are subject to a guaranteed make-whole provision. If Athlete Capital Sports is not able to realize the full \$3 million value after selling the shares (net of all fees, costs, and expenses), DBGI will be required to pay the difference in cash. This guarantee covers a period until the later of (i) 15 months from the Effective Date, or (ii) 6 months after the registration statement for resale of the shares becomes effective. This provision is highly shareholder-relevant, as it could result in future cash outflows if the stock price declines.
• Proxy Voting Rights: Athlete Capital Sports has appointed DBGI’s CEO, John Hilburn Davis IV, as its proxy for voting all shares received under this agreement, consolidating voting power with current management.
• Commitment to PSU Student Athlete Funds: DBGI will invest \$500,000 per year for three years (totaling \$1.5 million) in university student-athlete funds, as directed by Athlete Capital Sports, under a separate mutually agreed agreement.
• Resale Registration Statement: DBGI has committed to file a resale registration statement for the shares by April 26, 2026, ensuring liquidity for Athlete Capital Sports and potential market impact from share sales.
• Unregistered Securities and Exemption: The shares issued as part of this agreement are unregistered and are being offered under Section 4(a)(2) of the Securities Act, relying on a private placement exemption.

Analysis for Shareholders

• Potential Share Dilution: The issuance of up to \$3 million worth of new common stock could dilute existing shareholders, especially if the stock price is low at the calculation date. The make-whole provision means DBGI is exposed to potentially significant cash liabilities if the share price falls, which could pressure future cash flow and affect the Company’s valuation.
• Strategic Expansion into NIL Market: This agreement marks DBGI’s strategic entry into the fast-growing NIL (name, image, and likeness) collegiate market, providing potential branding opportunities and partnerships with high-profile student-athletes. If executed well, this could enhance brand value and revenue prospects, potentially supporting share price appreciation.
• Insider Voting Control: The assignment of proxy voting rights to the CEO for all shares issued gives current management greater control, potentially reducing the risk of shareholder activism from this new equity holder, but also centralizing decision-making.
• Future Cash Outflows: The make-whole guarantee and the additional \$1.5 million investment in student-athlete funds over three years are significant future cash commitments. Investors should monitor the Company’s liquidity and capital position closely.
• Potential Selling Pressure: Once the resale registration statement becomes effective, Athlete Capital Sports may liquidate some or all of its shares, potentially creating selling pressure in the market.

Other Relevant Details

• Exhibit 10.1: The full text of the Consulting Agreement is available as Exhibit 10.1 to the 8-K filing for further review.
• Emerging Growth Company Status: DBGI is not classified as an emerging growth company as of this filing.
• Trading Information: DBGI’s common stock is listed on The Nasdaq Stock Market LLC (symbol not provided in the extract).

Conclusion

This transaction is highly material and price-sensitive. The guaranteed \$3 million equity issuance with a make-whole provision, combined with additional cash commitments, could significantly impact DBGI’s capital structure, liquidity, and future earnings. At the same time, the entry into the NIL market offers potential upside if DBGI can leverage new partnerships for brand expansion and revenue growth. Investors should carefully consider the dilution risk, cash flow impact, and the execution of the Company’s NIL strategy.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consult with their financial advisors before making any investment decisions regarding Digital Brands Group, Inc. or any other securities.

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