Digital Brands Group, Inc. announced that it has entered into a security purchase agreement for private placement of promissory notes at a principal amount of $4,000,000 for gross proceeds of $3,200,000 on January 4, 2023. The notes are issued at a discount of 20% which is $800,000. The notes will mature on February 15, 2023.

The company will have an option to prepay the notes. The notes are convertible into common shares of the company. If the notes are not repaid in full by the Maturity Date, the Notes will be automatically increased to 120%; if such default continues for 14 or more calendar days, the Notes shall become convertible at the option of the Investors into shares of the Company?s Common Stock at a conversion price equal to the Nasdaq closing price of the Company?s common stock, par value $0.0001 per share.

The company will issue securities pursuant to exemption provided under Regulation D. The company also issued 469,480 warrants in the transaction. The warrants can be exercised at price of $4.26 shares for a period of 5 years from the closing of the transaction.