Greetings, and welcome to the Digital Brands Group, Inc. Q4 and Full Year 2022 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce to your host, John McNamara of Investor Relations. Thank you, Mr. McNamara. You may begin.

Thank you, Kimora. Good afternoon, everybody. On behalf of Digital Brands Group, I'd like to welcome you to the company's 2022 fourth quarter and full year earnings conference call and webcast. With us on the line from Digital Brands is Hil Davis, Chief Executive Officer. Hil we'll begin the call with an overview of the fourth quarter and the full year, and then we'll open up the lines to questions. We will remind you before we begin that this earnings call may contain forward-looking statements as defined in Section 27A of the Securities Act of 1933, as amended, including statements regarding, among other things the company's business strategy and growth strategy. Expressions which identify forward-looking statements speak only as of the date, the statement is made. These forward-looking statements are based largely on our company's expectations, and are subject to a number of risks and uncertainties, some of which cannot be predicted or quantified and are beyond our control. Future developments and actual results could differ materially from those set forth, in contemplated or underlying the forward-looking statements. In light of these risks and uncertainties, there can be no assurance that the forward looking information will prove to be accurate. As Kimora noted, this call is being recorded. And with that, I'd like to turn the call over to Hil Davis, Chief Executive Officer. Go ahead, Hil.

Yes, thank you, John, and good afternoon, everyone. I wanted to start by providing some historical context for where we are and where we have been. The goal of providing this context is the following three reasons: One, explain why the Sundry acquisition is so transformative; two, how we have flipped from a negative working cap cycle model to a positive working capital cycle model; and three, how we should generate over $500,000 monthly free cash flow starting this fall. So let's start with some background. We went public in May of 2021, which was earlier and smaller than we would have liked. This was driven by the fact that we had two acquisitions that would join our company once we were public, but not prior to being public. We also knew there were several other acquisitions that were interested once we’re public. We knew these two acquisitions would allow us to achieve the cash flow and EBITDA positive that we needed to really scale and grow this business. In short, we had the path to profitability, and we had the acquisitions to make this happen. The first acquisition was Stateside, which we closed in August of 2021. The second acquisition was Sundry, which we had hoped to close in January of 2022. However, the day the SEC approved our S-1 to finance the deal, the Fed announced that they were planning to raise rates 5 times for the next 12 months, and the markets crashed. Not only did the markets crash that day, the markets crashed even further after Russia invaded Ukraine and then the markets kept sliding after that. This meant our Sundry acquisition was pushed out to December 30 of 2022, less than four months ago. So why does this matter? As I stated earlier, we needed…

[Operator Instructions]

I do have a couple of questions that were emailed in. Sorry, if there are no questions that come from the Q&A, I do have a couple of questions that were emailed ahead of time. Okay, perfect. John, can I move forward with us?

Yes. I am sorry, we were cross-talking. Go ahead with your questions that came in over the email.

Yes. So the first question we had was asking about our basically data-driven e-commerce and what's happening there. As we discussed in the call, the transition is going very well. We just had our 60-day audit last week. And the data we have now on repeat customers, products, brands is a goldmine. And we're moving forward with that. We're also seeing meaningful increase in our e-commerce on a daily basis, the cross-merchandise is an incredibly strong. And we're excited about what we're seeing both on a brand to brand basis, cross-merchandising between individual brands and the Bailey Shop. And this is very high margin revenue for us as you get the benefit of the wholesale markup as well as our retail markup. There's also a very clear path to drive this revenue at a much lower customer acquisition cost than we experienced last year and it is significant. We're already seeing this since they took over in mid-February. So we're excited about what we have and what we can do there. The other question I had was an update on going private. We're still evaluating that. But as we discussed regarding the free cash flow, the valuations that we're getting are very low relative to where we are with that free cash flow coming into the business starting in October. We have a lot of options with that from acquisitions to opening stores and catalogs, which we've been looking at, to share buybacks, which we will definitely do if that is a benefit to our shareholders. This leads to our any going private and to reflect a fair free cash flow multiple. And right now a $20 million to $30 million market cap is not -- or acquisition offer is not fair relative to where we think and what we know the free cash flow should -- what we think the free cash flow should look like just on the MCA alone, not to mention the other drivers as well. We also have seen how brands have performed like Solo and Rent the Runway as they've turned the corner. And we believe that that's also opportunistic for our investors. And finally have this pre-acquiring Bonobos and the reaction to that stock when they announced that even though Bonobos is our understanding losing capital. So post all that, in the best interest of the shareholders, we can see where the value of our company should be, especially when we move into October and that free cash flow cycle. So those are the two questions that I've been emailed multiple times in the last couple of weeks. Any other questions?

There are no questions in the queue at this time. We have one question from [Mike Ripley] [ph], who is a private investor. Please proceed with your question.

Yes. Congratulations on an outstanding update on the ER report. Appreciate that. And congratulations on the cross-branding, the product lines. Any projections on percentage of increase of sales with the cross-branding or a percentage of possible revenue?

It's hard to say right now, because on a brand-by-brand basis, we're testing into it. On the Bailey Shop, we saw -- we've seen very significant 100%, 200% increases. On the brand-by-brand as an example, what we talked about is over the weekend for four days at least, we have the results from -- we just did a curated Stateside capsule and put it on the Sundry website, just emailed to Sundry customers only. And we saw our e-commerce revenue, which is significant for Sundry, which we had already doubled since we acquired it, increased by another 50% on a daily basis so far. And we're starting talk some really meaningful numbers here. And we're planning to do that with a couple of our other brands. And we're looking at the audit to determine what collections and what brands we cross merchandise. So we know it works. We also have interest from third parties that we could bring in and do a revenue share deal with as well, which is really interesting, because we get their email list, and we're able to cross-merchandise and put together and look to get a revenue share with no incremental cost. So there's a lot of interesting opportunities here with not only our brand, but also looking a lot more like a revolve or a Nordstrom's where we don't own the inventory, but we can put together looks and styles across different categories. Like for instance, do we really want to be in shoes? We're going to have a -- we're launching a third-party with a shoe brand in the next month or two, and then there's Vince shorts or different things like that. What categories do we want to be in? And what categories do we think we can cross-merchandise? And that basically is just a rev share deal, which is pretty meaningful with no real incremental cost to that and we don't own the inventory of the third-party brand. Does that make sense?

Yes, thank you.

There are no further questions at this time. I would like to turn the floor back over to CEO, Hil Davis, for closing comments.

Well, thanks, everyone for the call. Hopefully everyone is starting to see a picture of what we always thought this would look like, and we're excited to continue to actually execute against it. We're already seeing it show up in our numbers today, and we expect it to only increase going forward. So thanks, everyone, for your time, and we look forward to our Q1 earnings call here just in four to five weeks, I believe. And we'll have more updates there too on our growth drivers by channel as well. So thanks, everyone, for their time, and we look forward to discussing again here in a few weeks.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.