Digital Brands Group, Inc. Segments Disclosure
NOTE 16: SEGMENT REPORTING
The Company operates as a 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.
In 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.
The 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.
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenue | $ | 7,380,921 | $ | 11,555,656 | ||||
| Significant segment expenses: | ||||||||
| Cost of net revenues | 6,326,300 | 7,911,536 | ||||||
| General and administrative | 9,674,699 | 8,652,361 | ||||||
| Sales and marketing | 14,596,126 | 2,896,698 | ||||||
| Distribution | 643,569 | 907,843 | ||||||
| Impairment of goodwill and intangible assets | 5,674,004 | 1,388,000 | ||||||
| Total significant segment expenses | 36,914,698 | 21,756,438 | ||||||
| Other segment items (a) | ||||||||
| Other income (expense), net: | ||||||||
| Change in fair value of SBP liability | 1,714,790 | |||||||
| Interest expense | (514,584 | ) | (2,941,171 | ) | ||||
| Other non-operating income (expenses) | 81,013 | (83,680 | ) | |||||
| Total other income (expense), net | 1,281,219 | (3,024,851 | ) | |||||
| Income tax benefit (provision) | 119,044 | |||||||
| 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 segment.
All 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.
About Segments Disclosures
Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.
Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.